Tensions flared among members of the House Intelligence Committee Wednesday as the normally collegial lawmakers engaged in sharp partisan sniping over the panel’s treatment of Jared Kushner.Kushner, a top White House aide and son-in-law of President Donald Trump, was grilled for three hours by the committee behind closed doors on Tuesday as part of its inquiry into Russian meddling in the 2016 election and whether any Trump campaign associates aided the influence campaign. Afterward, Republicans emerged and largely praised Kushner for his answers and poise.But on Wednesday morning, the committee’s top Democrat, Rep. Adam Schiff of California, reportedly swiped at Rep. Trey Gowdy (R-S.C.) for what he said was protecting Kushner."Mr. Gowdy took the role as a second attorney for Mr. Kushner," Schiff said, per a Bloomberg report.The broadside prompted a fierce rebuke from another GOP committee member.“I totally disagree with that. That’s horseshit,” said Rep. Tom Rooney (R-Fla.), who learned of Schiff’s comment from reporters after he had just finished describing the committee’s closed door proceedings as fairly bipartisan. After he asked reporters for Schiff’s specific comment, he repeated his rebuke. “I agree with what I said before, that’s horseshit.”Schiff declined to comment on Rooney's remarks.It’s a renewal of partisan tensions that nearly unraveled the committee’s investigation in the spring, when Chairman Devin Nunes and Schiff battled over the focus of the probe, and Nunes made a much-criticized decision to brief Trump on elements of the investigation.Nunes later stepped aside from the probe amid Ethics Committee scrutiny over his handling of classified information — an issue he dismissed as a partisan smear campaign.Since then, Rep. Mike Conaway (R-Texas) has handled the probe, and tensions on the committee had largely cooled. Until now.Republicans complained that Democrats’ questioning of Kushner was frustratingly repetitive.“To say that after three-plus hours of asking questions of which some started getting repeated, then you’re just sort of getting into — OK this guys’ been here long enough,” Rooney said, adding, “I don’t like wasting time.”But Rooney said the committee has been largely harmonious — especially in closed door interviews without TV cameras or media. Lines of questioning don’t necessarily hew along partisan lines, he said.“The Intelligence Committee has, I think, always sort of separated itself from other committees in that we’re not very partisan when we’re down there,” he said. “There’s no cameras on. There’s no speeches to be made because you guys aren’t in there and so there’s no grandstanding. People are trying to get to the bottom of what they truly believe might be, you know, an issue, here or there.”He said most of the tension arises over the scheduling of witnesses, “and that’s not really a fight.”Conaway and other committee Republicans said Tuesday they were pleased with Kushner’s testimony and found him candid and responsive. But Democrats raised the prospect that they might call Kushner back for more questioning.
Performance stands in sharp contrast to other domestic producers
From 2011 to the start of this year, the US$ has been pretty strong, as it rallied nearly 30% in 6-years. Over the past 30-weeks, King Dollar has been rather weak. Below looks at the US$ over the past 18-years, with 30-week performance applied- CLICK ON CHART TO ENLARGE King Dollar has declined over 9% in the last 30-weeks at (1). As one can see, this sharp of a decline in 30-weeks hasn’t taken place a ton of times since the late 1990’s. The decline has the US$ testing the bottom of a 24-month trading range and two rising support lines at the same time at (2). This decline has bullish sentiment towards the US$ at the lowest levels in the past three years, according to Sentimentrader.com, reflected in the chart below. This information is coming to you CLICK ON CHART TO ENLARGE With few investors bullish King Dollar at this time and a triple support test in play after a rare 9% decline in 30-weeks, what the US$ does at (2) in the top chart, could become very important for the Dollar and many commodities. Gold & Silver have not pushed much higher while the US$ has been very weak. This makes the price point in the US$, all the more important to the metals sector, if this triple support test would hold. from Kimble Charting Solutions. We strive to produce concise, timely and actionable chart pattern analysis to save people time, improve your decion-making and results Send us an email if you would like to see sample reports or a trial period to test drive our Premium or Weekly Research Website: KIMBLECHARTINGSOLUTIONS.COM Blog: KIMBLECHARTINGSOLUTIONS.COM/BLOG Questions:[email protected] call us toll free 877-721-7217 international 714-941-9381
Liza Alert volunteers conduct searches regularly / Liza Alert On June 10 in the Sverdlovsk Region (1,500 kilometers from Moscow) four-year-old Dima went missing. He had been fishing with his father in a forest not far from their tent where his mother was waiting. His father had sent him to his mother, but he never arrived. The volunteers are always ready for surprises / Liza Alert Over four days the local police, the Emergency Situations Ministry and volunteers from Liza Alert looked for Dima. On the fifth day he was found alive, but exhausted, cold and covered with tick bites. This story ended well because various state and private organizations cooperated in the search, but unfortunately such unity between state services and volunteers is rare in Russia. Usually, only volunteers actively search for and find missing people. Zinaida Gordeeva, found by volunteers / Liza Alert In Liza's name Russia does not have any state services whose sole mission is to look for missing people. So, the task usually falls to the police, but it lacks sufficient resources. People who disappear in the outdoors are searched for by the Emergency Situations Ministry. Since according to law a missing person is not an emergency situation, the ministry is usually slow to get involved in such cases. The Sherp ORV is used during searches / Liza Alert Liza Alert, a private volunteer group founded in Russia in 2010 and named after five-year-old Liza Fomkina who disappeared with her aunt in a forest 100 km from Moscow, is the only organization that specializes in the search for missing people. Liza's disappearance in September 2010 coincided with City Day celebrations. Almost the entire police force was out on duty providing security for the event, but practically none among them went to look for Liza. The search began when information about the missing child appeared on the Internet, and volunteers arrived on the scene even though many did not know how to search for a girl in a forest. Nevertheless, 300 people participated, and on the tenth day Liza and her aunt were found dead. The girl had died on the ninth day. Had volunteers arrived one day earlier, she would have been saved. Faina Nikolaeva, 76 years old, found / Liza Alert Founder of Liza Alert, Grigory Sergeev, participated in that search as a volunteer, and he said that until the situation with Liza he hadn't fully understood the scale of the problem. Like many others, he thought state services look for missing people. "I thought that if you got lost in a forest, they'd go looking for you; but the story with Liza proved that they don't," said Sergeev. Practice with search dogs / Liza Alert After the incident it became clear that a platform was needed to unite volunteers to search for missing people, and so appeared the Liza Alert search group, which resembles the American Amber Alert child abduction search system. How the search is organized In the first quarter of 2017, Liza Alert received 1,317 reports of missing persons. The search units exist in many Russian cities and volunteers conduct searches often. The volunteers react immediately to a missing person report / Liza Alert RBTH spoke to Vladimir Ryabkov, Liza Alert's regional representative, about how the group searches for missing people in Central Russia, for example in the Samara Region (1,000 km south of Moscow). We are speaking with Vladimir in his car, which is packed with search equipment. Telephone calls constantly interrupt us, and Vladimir can't avoid answering - what if someone is missing? Sometimes a person walks by who seems familiar to him. He turns on his phone and compares the passersby with photos of missing people. The searches are conducted also with the help of boats / Liza Alert Liza Alert has been working in the Samara Region since 2014. It does not have an office, and all work is done through the Internet. The group's first principle, which differentiates it from the police, is immediate reaction to a report – volunteers can start the search on the day the report arrives. The second principle is that the group does not receive financial assistance. All donations come in the form of search equipment and other useful items: walkie-talkies, flashlights, telephones, compasses, paper, scotch tape, transportation, gasoline and so on. Children are a priority / Liza Alert "We don't want anyone to think that we make money on searching for missing people," the volunteers explain. The organization has about 40 active search volunteers. These are people who search for missing people on a regular basis, often sacrificing their personal time and family. Among them are people of various ages and professions, ranging from students to pensioners, as well as astrophysicists to teachers. Tatyana Pechenkova, 71 years old, found / Liza Alert "We work only with claims that are filed with the police. Last year we had 390," says Vladimir. "We have an agreement with the police on information sharing, as well as with the dispatch service of the Emergency Situations Ministry. When they need our help in finding someone, they call us and give us the information about the missing person." Since the Samara Region, just like Russia in general, does not have a special service that looks for missing people, Liza Alert joins each important search. If the person goes missing in the city, volunteers arrive on the scene and post flyers about the person everywhere. They inquire with locals and upload information on the Internet. Liza Alert looks for missing people in various regions / Liza Alert "The best source of information is grandmothers on benches who know everything about everyone, as well as people walking dogs. We also call hospitals. The Russian health system is such that when doctors find people on the streets they don’t report it to anyone." An average of three days is spent on each search. Sometimes a missing person appears by himself. Once a report was filled with the police about a missing old man who had left his house in the morning and did not return. His daughter notified the police, and had called her parents. Her mother said the father had been out for a long time. Police arrived at the house, asked the woman about her missing husband and then called Liza Alert. Galina Kolotovkina, 80 years old, found / Liza Alert "We received information from the police and began the search. We printed flyers and made online posts. We worked until late evening and then learned that the daughter had come home only to discover her father in bed. It turned out that he had never been missing - he came home from his walk and went to sleep. His wife thought he was missing. This means that when police were asking her questions, the old man was snoring in the bedroom." How to find tracks in the forest If a person goes missing in a forest, the search is conducted in a slightly different manner. Relatives are asked where the missing person may have gone, what he/she said before leaving, what his/her health was like and how he/she reacted to stress. Then, volunteers divide themselves into groups and search the area. You have to be sharp and prepare yourself for surprises. An average of three days are spent on a search / Liza Alert "Once we found a person picking mushrooms in a forest," says Vladimir. "He had left for the forest to collect mushrooms and disappeared. We asked his family where he usually goes, they indicated a certain forest but he wasn't there when we checked. Then we asked which mushroom exactly he had gone to collect. They said the 'rich' ones, meaning the white mushrooms (the white mushroom in Russia grows only in certain areas and is very valuable). We asked some mushroom pickers and learned that white mushrooms do not grow in the forest that the man's family had originally indicated. Rather, they grow 30 kilometers from that forest, and that's where we went and found grandpa." Searches are also conducted at night / Liza Alert Another time a man was lost in the forest who was using Nordic walking sticks. We were following his tracks and did not know that we were getting further from him. It turns out that after 12 hours in the forest he had become so tired that he placed the sticks in front of him to lean on. So, it seemed he was going in one direction but it turned out he had gone in the other…" Elena Valyaeva (Khozina), 75 years old, found / Liza Alert Looking for children is most difficult. Teenagers run away from home, and the youngest ones from kindergarten or school. According to statistics, fewer children disappear than adults, but these searches are always most important. "All searches for children under 12 years of age are given high priority," Vladimir notes. "Even if the unit is already conducting a search when a child disappears, a large part of the unit is redirected towards the case. Children often get into trouble, and there is always the possibility that their health will be damaged." Liza Alert holds lectures for children / Liza Alert Who helps? In the Samara Region volunteers receive scant assistance from the state, but they value the little help they get. For example, the Center for Catastrophe Medical Learning at the Samara Region Health Ministry recently held a course for Liza Alert volunteers on how to give first aid. Children get into trouble more often / Liza Alert Businesses provide much assistance. For example, Beeline and Megafon mobile phone operators provide volunteers with free mobile phone service, and the UTair Airline gives them free airline tickets when the unit must conduct a search in another region. Relatives of the missing also thank the group and give them equipment. Liza Alert volunteers dream that one day Russia will have a single unified system to look for missing people: a center that will unite volunteers and state services. For now, however, these ideas are only discussed, and volunteers continue searching for missing people on their own. Because if they don't, who will? Lectures inform children what to do in emergency situations / Liza Alert Read more: Fighting Down Syndrome: A mother teaches kids to be creative
AK Steel Holding Corporation (AKS) was a big mover last session, as the company saw its shares rise over 12% on the day after the company reported solid second-quarter 2017 results.
Sperm count in Western men plunges to record low as scientists blame chemicals in everyday products for crisis Dr. Hagai Levine, who led the study, said: “This is an urgent wake-up call for researchers and health authorities around the world to investigate the causes of the sharp drop in sperm count, with the goal of prevention.” Help us spread the word about the liberty movement, we're reaching millions help us reach millions more. Share the free live video feed link with your friends & family: http://www.infowars.com/show Follow Alex on TWITTER - https://twitter.com/RealAlexJones Like Alex on FACEBOOK - https://www.facebook.com/AlexanderEmerickJones Infowars on G+ - https://plus.google.com/+infowars/ :Web: http://www.infowars.com/ http://www.prisonplanet.com/ http://www.infowars.net/ :Subscribe and share your login with 20 friends: http://www.prisonplanet.tv http://www.InfowarsNews.com Visit http://www.InfowarsLife.com to get the products Alex Jones and his family trust, while supporting the growth of our expanding media operation. [http://bit.ly/2dhnhbS] Biome Defense™ [http://bit.ly/2bnEj91] Bio-True Selenium™ [http://bit.ly/1WYw8jp] Vitamin Mineral Fusion™ [http://bit.ly/1QYBNBv] Joint Formula™ [http://bit.ly/1nNuR3r] Anthroplex™ [http://bit.ly/1ljfWfJ] Living Defense™ [http://bit.ly/1Iobcj2] Deep Cleanse™ [http://bit.ly/1DsyQ6i] Knockout™ [http://bit.ly/1Kr1yfz] Brain Force™ [http://bit.ly/1R5gsqk] Liver Shield™ [http://bit.ly/1cOwQix] ProstaGuard™ [http://bit.ly/1mnchEz3] Child Ease™ [http://bit.ly/1xs9F6t] WinterSunD3™ [http://bit.ly/1L3gDSO] Ancient Defense™ [http://bit.ly/1EHbA6E] Secret-12™ [http://bit.ly/1txsOge] Oxy Powder™ [http://bit.ly/1s6cphV] Occu Power™ [http://bit.ly/1rGOLsG] DNA Force™ [http://bit.ly/1nIngBb] X2 Survival Shield™ [http://bit.ly/1kaXxKL] Super Female Vitality™ [http://bit.ly/1mhAKCO] Lung Cleanse™ [http://bit.ly/1mGbikx] Silver-Bullet - Colloidal Silver™ [http://bit.ly/1xcoUfo] Super Male Vitality™ [http://bit.ly/1z5BCP9] Survival Shield - Nascent Iodine™ [http://bit.ly/1o4sQtc] Patriot Blend 100% Organic Coffee™ [http://bit.ly/1iVL6HB] Immune Support 100% Organic Coffee™ All available at - http://www.infowarsshop.com/ INFOWARS HEALTH - START GETTING HEALTHY BEFORE IT'S TOO LATE - http://www.infowarshealth.com/ Newsletter Sign up / Infowars Underground Insider : http://www.infowars.com/newsletter The Alex Jones Show © copyright, Free Speech Systems .LLC 1995 - 2017 All Rights Reserved. May use for fair use and educational purposes
The resurgence in shale drilling and production could be bumping up against some limits, with output expected to fall far short of market expectations for this year and next, according to a new study. Some of the constraints that shale companies will run into are on the access to oilfield services (OFS), including rigs, equipment and personnel, according to Kayrros, a French research firm backed by the former CEO of OFS giant Schlumberger, and reported on by the FT. Over the past three years, the oil market downturn led to sharp cutbacks in drilling…
In June, most people had the Cubs' World Series chances at about zero. But things have changed. Here's how this team can actually pull off a repeat.
Uzi Rubin Security, Or is it the real deal? The Hwasong-14 missile that arched over North Korea on July 4 was hailed by its leader as an intercontinental ballistic missile (ICBM), “capable of reaching anywhere in the world.” The announcement sparked headlines across the world, prompting frantic diplomatic activity and launching a flood of comment and analysis. This should not be surprising: while most of Kim Jong Un’s missile tests in the last couple of years had only regional implications, the debut of an incipient ICBM has global ones. A nuclear-tipped, global range ICBM in North Korea’s arsenal could change the balance of power not only in East Asia, but the entire world. As a result, the question of what this missile really was, and what it could or couldn’t do, is being fiercely debated between diplomats and analysts. Was it a hoax? Was it a propaganda ploy? Or was it a true ICBM, or at least a precursor to an ICBM? These questions impact directly on the global policies of the major powers – hence the frantic effort to solve the mystery. Let’s examine the three theories aired to date. The View from Moscow: Russia maintains that the July 4 flight involved nothing more than a garden variety medium range missile that reached a modest altitude of 535 km, stayed in the air 14 minutes, and splashed at a distance of 510 km. This data, attributed by the Kremlin to its recently modernized Missile Attack Warning System, stands in sharp contrast to North Korea’s claims that their missile demonstrated ICBM level performance, reaching an altitude of 2802 km, flying for 37 minutes and splashing down at a distance of 955 km. North Korea’s claims are backed by the Japan, the U.S., and South Korea, each with their own long range radars that can detect and track North Korean missiles. It, therefore, stands to reason that their endorsement of North Korea’s claims is more trustworthy. So why did the Russians go on a limb on this issue? Two possibilities: either their Missile Attack Warning System is myopic, or they needed to downplay the July 4 test out of political expediency. The latter is more likely. Trivializing the North Korean achievement provides Russia with an excuse for blocking UN censure of its client while at the same time rebuking that same client for excessive bluster, which rocks the boat of Russia’s power game in East Asia. Read full article
Michy Batshuayi scored two fine goals to help Chelsea to a comfortable win over an under-strength Arsenal 5.31pm BST Related: Antonio Conte praises Chelsea’s Michy Batshuayi after double in Arsenal win 2.39pm BST Peep peep! That’s a good win for Chelsea, with Willian and Cesc Fabregas looking really sharp and Michy Batshuayi scoring two cracking goals. Arsenal were rusty, and Arsene Wenger is a lucky man if he survives this defeat. Thanks for your company, bye! Continue reading...
It’s part two of my MOT – muscle density, heart, lungs. It’s worse than being nakedI am on a treadmill, next to trainer and gympreneur Alexei (Lex) Sharp, opposite a mirror, thinking about how selves are inherently disgusting. I don’t have a problem esteeming mine; I just don’t want to look at it. I am walking at a mild incline with a mask over my mouth, tubes sprouting off me, like a Doctor Who monster with emphysema. I’m not naked, at least. This is my MOT part two: what’s going on between the outside and the inside; my muscle density, heart, lungs. So, you know, worse than naked.I’m having a VO2 (oxygen volume) test, which measures heart and lung efficiency by harrying my muscles into activity and then seeing how much oxygen reaches them. It’s nothing drastic, just walking ever more steeply for 14 minutes, but exercise makes me cantankerous. Continue reading...
I found myself thinking of Bryson’s rollicking account of his attempt to hike all 3,500 treacherous kilometres of the Appalachian TrailAbout 15 minutes into my hike, I remembered that I am a sweaty sort of person. At the end of the first kilometre – which felt like a sharp, sheer ascent into heaven or hell, depending on how you see things – the fine mist that adorned my forehead had graduated to a far less dignified mild drench.For this Santa Barbara trip, I’d brought along a book I’d been promising to read for several years – Fran Ross’s 1974 novel Oreo – but on the hike I was thinking only about the work of the American-British writer Bill Bryson. Bryson was perhaps the first travel writer I read and loved; as a teenager, I was on the reservation list at every library in Newham, waiting to check out everything he’d published. So I found myself thinking of Bryson’s rollicking account of his attempt to hike all 3,500 treacherous kilometres of the Appalachian Trail (A Walk In The Woods; highly recommended) and felt inordinately proud of my own 5km journey on rocky terrain. Continue reading...
Toni Duggan is concentrating on firing England to European Championship glory as she prepares to face Spain and a number of her new club-mates on SundayA shaft of sunlight highlights a minor chip in the otherwise immaculate bright red polish adorning Toni Duggan’s fingernails. It is a high maintenance colour but Barcelona’s new attacking addition is simply not the type of woman to opt for understated neutrals: taupes, beiges and nudes represent the antithesis of one of the game’s most vibrant personalities.As she relaxes on a terrace after training at England’s Euro 2017 Utrecht base, Duggan’s strong Merseyside accent and sharp Scouse wit enliven an atmosphere already buoyant following the Lionesses’ 6-0 win over Scotland in their opening Group D game. Continue reading...
Few have dedicated as much time and effort into explaining the behavioral aspects of trading in a time of central planning (or "metastability") as Deutsche Bank's whimsical derivatives-philosopher, Aleksandar Kocic. Three weeks after becoming the first Wall Street strategist to quantify (and qualify) the concept of market "complacency", and one week after explaining that the Fed has effectively created a state of "permanent state of exception" from conventional asset relations (and logic), one in which everyone is incentivized to perpetuate the "exception" (i.e., sticking their head in the sand and just BTFDing), where QE has become "universal basic Income for the rich", and as a result the Fed is terrified to unwind 8 years of monetary policies, today Kocic released his latest meta-financial stream-of-consciousness explainer, which highlights the choices faced by the current crop of traders every single day. Picking up on a tangent touched upon by Canaccord's Brian Reynolds on Wednesday, who wrote that the relentless lack of volume in recent years "is more reflective of paralysis than complacency among equity investors", and then pointing to the sharp rise in NYSE short interest, countered that "investors are not complacent. Their stances range from extremely aggressive to bearish", Kocic takes the analysis one step further and writes that "the current mode of market functioning is really not so much about complacency as a result of willful blindness or ignorance as it is about difficult choices and high costs associated with those choices." Referencing one of our favorite psychological tropes, namely the "learned helplessness" experimental framework, Kocic writes that "more than eight years of monetary stimulus and forced status quo have created a situation where change has become impossible." And adds that "to facilitate a change that would improve market conditions, there have to be multiple concessions to those forces against which change is directed. This has set in place the swarm effect: You can say no, but it is inconsequential." Never one to shy away from expanding a market analogy into the ontological arena, Kocic, in attempting another explanation for why the market volatility is so low, then writes that "the resulting calm of the markets we have been experiencing lately has a special quality to it, like the calm one sees in people who have been talked into believing that they have found their peace." Just think of going deeper into your cave until you find your power animal... To be sure, it is an uneasy calm: Markets are calm, but they are not content. Although nominally things do not look bad, there is no joy when it comes to the state of the US economy. Despite tapering of Fed purchases, rate hikes and announcement of balance sheet unwind, financial conditions have not tightened. This triggers flashbacks of the troubling aftermath of the 2004-2007 tightening cycle. Then, why is vol so low? This question continues to puzzle market players and inspire its commentators. We know there will be tears at the end, but can we be certain that if we internalize this message and “do the right thing” along the way, there won’t be tears in the meantime? This, in turn forces traders to make a decision: be aligned with the crowd (which is making money), or stay separate and continue suffering an indefinite, slow bleed: Being long convexity means that your prospects are inversely correlated with the fate of the market. You will monetize only in an adverse scenario, when the rest of the market posts losses – your profits have negative correlation to the profits of the market. This is the main feature of an insurance policy - and a reason convexity carries a premium relative to other assets. By selling vol, your prospects are positively correlated with everyone else’s. Those assets generally trade at a discount -- you get paid to sell convexity. At the end, it is all about the decision whether to aligning your prospects with or against everyone else’s. Kocic's punchline follows: a look into the mindset of today's traders. This is how Kocic breaks it down: At the moment, investors face a difficult choice. On one side, you are tempted to join the crowd. After all, the Fed is the “guarantor” so, despite the downsides, embracing the carry trade might not be a totally unsafe option (and you get rewarded for that). For most people who operate over a short time horizon, this is the only option. However, it is well known that collective IQ is always considerably lower than the average IQ (the evidence is purely empirical, but supporting examples are convincing). So, there is some wisdom in not joining the crowds (2008 financial crisis is a good example). If you can endure time decay and negative carry and are looking over a long time horizon, why not go against the consensus? From a practical standpoint, this results in just two possible decision "choices": Framed as a financial decision problem, one faces a choice between two scenarios: 1) A small probability of losing all of your money all at once at an undisclosed time in the future, or 2) A high probability of gradually losing small amounts over an indefinitely long period of time, keeping in mind that persistent small losses over an indefinite time period could lead to large cumulative losses. From this perspective, one can see why Canaccord's take of pervasive trader "paralysis" amid a background or pervasive bearishness has merit. So what are traders to do? Kocic may have just the right trade for you. Read on below for the full excerpt, as well as what the DB strategist believes is the right trade for this environment: * * * The swarm effect: What to do when choices become difficult? Markets are calm, but they are not content. Although nominally things do not look bad, there is no joy when it comes to the state of the US economy. Despite tapering of Fed purchases, rate hikes and announcement of balance sheet unwind, financial conditions have not tightened. This triggers flashbacks of the troubling aftermath of the 2004-2007 tightening cycle. Then, why is vol so low? This question continues to puzzle market players and inspire its commentators. We know there will be tears at the end, but can we be certain that if we internalize this message and “do the right thing” along the way, there won’t be tears in the meantime? The current mode of market functioning is really not so much about complacency as a result of willful blindness or ignorance as it is about difficult choices and high costs associated with those choices. More than eight years of monetary stimulus and forced status quo have created a situation where change has become impossible. To facilitate a change that would improve market conditions, there have to be multiple concessions to those forces against which change is directed. This has set in place the swarm effect: You can say no, but it is inconsequential. The resulting calm of the markets we have been experiencing lately has a special quality to it, like the calm one sees in people who have been talked into believing that they have found their peace. Safety third (after looking good and having fun) The stakes are high, but what is one to do when nothing can be done? It is instructive to take a trip down memory lane once more, back to the early days of QE, around 2009 (it feels more distant than just eight years ago). Shortly after the Fed started its purchasing program, a select number of macro players, mostly non-rates specialists, came up with a theme that would keep most of the rates vol desks busy for over a year. The trade was high strike payers as a macro hedge against (“inevitable”) sell off in rates due to inflationary effects of excessive liquidity injection. The new macro theme was a welcoming development for the business that had lost its main customer and the street was happy to provide liquidity in times of stressed supply and strict risk management. For about a year, there was near euphoria about high strike payers. Everyone wanted to have a position. A typical structure, which the street saw a lot of, was 5Y30Y payers struck at 6%. With forwards around 4.50%, this was at the time a 150bp OTM, with premium trading in the 700bp range. Vol, although off of its all-time highs, was still elevated, about twice as high as today, and the skew about three times wider. But what had been conceived as a conceptually meaningful hedge in terms of delta, became a (troubling) vega and time decay exposure, that eventually drifted away from the strike, resulting in massive MTM losses. Currently, these strikes on 5Y30Y trade around 80c. When it comes to trading options, there are many more considerations to take into account besides delta. Being long convexity means that your prospects are inversely correlated with the fate of the market. You will monetize only in an adverse scenario, when the rest of the market posts losses – your profits have negative correlation to the profits of the market. This is the main feature of an insurance policy - and a reason convexity carries a premium relative to other assets. By selling vol, your prospects are positively correlated with everyone else’s. Those assets generally trade at a discount -- you get paid to sell convexity. At the end, it is all about the decision whether to aligning your prospects with or against everyone else’s. At the moment, investors face a difficult choice. On one side, you are tempted to join the crowd. After all, the Fed is the “guarantor” so, despite the downsides, embracing the carry trade might not be a totally unsafe option (and you get rewarded for that). For most people who operate over a short time horizon, this is the only option. However, it is well known that collective IQ is always considerably lower than the average IQ (the evidence is purely empirical, but supporting examples are convincing). So, there is some wisdom in not joining the crowds (2008 financial crisis is a good example). If you can endure time decay and negative carry and are looking over a long time horizon, why not go against the consensus? Framed as a financial decision problem, one faces a choice between two scenarios: 1) A small probability of losing all of your money all at once at an undisclosed time in the future, or 2) A high probability of gradually losing small amounts over an indefinitely long period of time, keeping in mind that persistent small losses over an indefinite time period could lead to large cumulative losses. The trade: Straddle/strangle switches Assuming we have understood the problem correctly, the key question in our minds is: Can we find a compromise between these two difficult choices? We believe that straddle/strangle switches are a logical way to proceed. As a consequence of vol selling, the market is locally long gamma. This reinforces the local equilibrium, but positioning is different outside of the 25bp move on each side. At this point, we are sellers of gamma locally and are buyers of tails. We would strike 1X2 straddle/strangle switches so as to reduce local gamma exposure, and limit the downside, but adjust the strikes to keep the upside outside of the 50bp range. As a result, we have a high-leverage trade with limited downside, but the same upside as the 50bp wide strangle. We recommend: Sell $100mn 3M10Y straddles vs. buy $200mn 3M10Y 24bp wide strangles, offer 38c This is a long gamma position (2K). A 1X2 switch with a flat gamma profile is at struck 50bp wide (it trades at positive takeout), while a costless structure is 32bp wide (it is long gamma, around +1.6K). For comparison, a naked 24bp wide strangle costs 120c. The maximum downside on the trade is loss of premium plus additional 12bp running in case we either rally or sell off 12bp relative to forwards, a total of 147c, which is comparable to the maximum loss on the strangles. By changing the “bottom” profile of the strangles, we have managed to change the risk profile in such a way that we improved the time decay and payoff profile, without substantially changing the downside. This change of the “bottom” profile boils down to a change of P&L distribution across different scenarios. The straddle/strangle switch makes money either if nothing happens or if we break out of the range. It loses money in case of limited repricing on both sides that remains in the range. A long strangle position monetizes only outside of the range, while anything within amounts to equal losses. Both trades have a similar time decay (in absolute terms), but the switch has about three times more leverage. 1M carry on both trades is around -40c, although it has less gamma exposure than naked strangle.
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