Minsky Moment
From Wikipedia, the free encyclopedia
A Minsky moment is a sudden major collapse of asset values which is part of the credit cycle or business cycle. Such moments occur because long periods of prosperity and increasing value of investments lead to increasing speculation using borrowed money. The spiraling debt incurred in financing speculative investments leads to cash flow problems for investors. The cash generated by their assets no longer is sufficient to pay off the debt they took on to acquire them. Losses on such speculative assets prompt lenders to call in their loans. This is likely to lead to a collapse of asset values. Meanwhile, the over-indebted investors are forced to sell even their less-speculative positions to make good on their loans. However, at this point no counterparty can be found to bid at the high asking prices previously quoted. This starts a major sell-off, leading to a sudden and precipitous collapse in market-clearing asset prices, a sharp drop in market liquidity, and a severe demand for cash.
HH >> What if you own, what if the state is the banking centre ? Does it have a Minsky moment ? And I would say it doesn't.
Friday, November 27, 2015
The Capitulation of Hugh Hendry
Scottish-born, global-macro fund manager Hugh Hendry, renowned for his generally contrarian and bearish outlook, appears to have capitulated in the face of the seemingly endless central-bank-open-market-operations-fuelled global bull market in equities that emerged after the early 2009 bottom of the 2008 equities market crash.
Indeed, his about-face is so dramatic, that one cannot but think that in retrospect he will be famous for either top ticking the bull run and exploding, or for truly being able to live up to his 'plasticine man' moniker by bending himself into sync with a mad market and surviving through conscious adaptation.
Either way, its the death of Hugh the contrarian. The question is how profitable Hugh the momentum junkie is, and whether he will retain this ability to sell at the top, if ever there comes another top before the current ledger is purged in the fires of war.
HH espouses his views in this Nov 2014 Moneyweek interview with Merryn Somerset, recently made available on youtube.
>>
[ On Capitulation ]
HH: And now the problem... the perception I have of the problem... is that that's when the moral curmudgeons step in and say, 'This is all crazy. I disagree with this. I'm not playing.' [comically folds arms]
MSW: So they make their disapproval a reason, a reason not to play the game.
HH: It wouldn't work, and so they don't participate. Equities are overvalued, and I'm going to tough out, I'm just not going to be in that market.
As I say, there was a time in my life when the sun only rose to humiliate me, where perhaps I shared that, and its bunk, its nonsense. It may not work, but presently, the perception is that it will work, and those asset prices are trending, and you should participate.
[ On Distortions Created by Central Bank Intervention ]
If I make segue into that answer by challenging the notion, the popular notion, that quantitative easing has distorted and manipulated public markets. Again, I think I user the term earlier, buttercup, absolute nonsense, absolute nonsense.
JGB (Japanese Government Bonds), if we take an example, are fairly valued. The economy just fell 7% in the last quarter (on an annualised basis), there is no inflation. They've had 25 years of no real GDP growth. Where would you expect JGB bond yields to be for a fiat currency that can issue its own paper currency.
US treasury bonds, where should they be ? You know, you know, I struggle to see... and you know again, Dylan Grice was the great architect of the notion that you can define the upper bound to today's interest rates by trying to determine societies' capabilities to meet those interest rates at higher and higher levels, and what you find is that we can't. We cannot live with a Paul Volker putting interet rates at 15% - it doesn't work. There's so much debt that, if you repriced it, the economy slows down - and you saw that in 2012. I think after the taper tantrum, when 10 year bond yields went over 3% - what happened next ? The economy slowed down.
<<
partial transcript:
Merryn Somerset-Webb: Hi, I’m Merryn Somerset-Webb and I’m here today with Hugh Hendry, manager of the Eclectica Fund. We are going to talk about everything from China to the US, to Europe, to Japan. But Hugh, I just want to start by asking you what you think makes a successful hedge-fund manager and whether you are, under that definition, a successful manager.
Hugh Hendry: I think I’ve always answered that question by relating back to the ability to conceive of a contentious posture. I think if I was to quote from Fight Club, I think there’s a famous saying “Would you rather…” my children would say ,”Would you rather upset God or have God just ignore you?” There’s a degree to which being a successful macro-manager is upsetting, not only God, but to the rest of the world, if you will. By being out there with the articulation of qualitatively intelligent argument, which just isn’t shared by the majority. But which can stand the test of time and come to actually define the future. That is what global macro is all about.
With regard to language the notion of “bullish” and “bearish”, I think, does an injustice to the complexity of the arguments that are necessary to construct a global macro hedge fund. I think if I had my time again, I would have been saying that we’re actually, perhaps, guilty of the misconstruing of a bull market in equities, for what is actually the ongoing degradation in the soundness of the fiat monetary system. I think that’s what I was trying to say.
Merryn: The interesting thing is that you have a reputation of being something of a perma-bear. People think of Hugh Hendry, they think of bearish. But what they’re really thinking about is your macro-economic ideas, not your investing ideas. So they’re remembering your views on deflation, which by the way you’ve been correct on, right?
They’re remembering your views on deflation and then they’re remembering your previous views on what might happen to markets as a result of that deflation. The change last year was to think about, not to change your views on the economic condition, but to change your views on how they would affect asset markets.
Hugh: Yeah. A very good point and I’m sure everyone’s aware that we, as a business, have experienced quite a substantial amount of redemptions from the fund. There was a degree to which there was that pigeonholing, and that of being a bearish diversifier, if you will, to an investors’ portfolio. After all, I was the guy who made 30% odd in 2008. That’s out there, and of course with the redemptions there was the notion that I turned into, rather than a diversifier, a concentrator.
Merryn: Well, there was also, slightly, the idea that you had somehow capitulated.
Hugh: Indeed.
Merryn: You had given in to a bull market that you had refused to accept previously.
Hugh: Such is my performance cabaret persona, I certainly would have alluded to that notion, and a degree of mea culpa. Again, what it is with me is, I’m weird.
I cannot truly engage, unless I get angry, I don’t think… and possibly it’s back to my Scottish roots and the weather. So if you cast your mind back, the last time I was really angry was late 2010-2011. Where the market, in its wisdom, had yet to configure the changing economic landscape, and it was perceiving that the economy in Europe and elsewhere was recovering. Therefore the fixed income markets were beginning to price in a very high probability that central banks would raise their overnight rates.
To make matters worse, of course the ECB when it was governed by Trichet, actually came to the fore and raised rates. I thought that was just insane, that we weren’t capturing the kind of deflationary zeitgeist that was approaching.
So with that anger, if you will, I really took on a lot of risk. I was long on fixed income and in the vernacular I was receiving interest rates. So essentially I had a large fixed income bet, which said these rate rises will have to be rescinded and the expectation that there would be further rises are just not going to happen. That proved to be correct, if you will, and that was my last moment, really. I have to say when I look back in the last three years it feels as if the sun only rose each day to humiliate me after that point.
Merryn: I doubt it was really quite that bad, was it, really?
Hugh: In my mind, at times, it’s felt bad. But the mea culpa, that I think is very necessary in that I found myself unable to forgive the Federal Reserve and the other central banks for, if you will, bailing out Wall Street from the excess of 2008.
I just couldn’t get over it. I luxuriated in the polemics of Marc Faber and James Grant and Nassim Taleb, in our own country, Albert Edwards, et al. I luxuriated as they ranted and it was fine for them to rant. But I am charged with the responsibility of making money and not being some moral guardian and certainly not a moral curmudgeon. I had to get over that. So again, back to my infamous letter of last year.
That was cathartic for me to say “You know what? I get it.” I think if we’re going to try and explain the qualitative arguments behind why we are more receptive to the notion of not only left tails where markets can fall, but the right-hand tail of the expression, where markets can actually continue to rise if not to accelerate.
Merryn: But the key point from talking about Marc Faber and Albert Edwards, etc is that you don’t disagree with these people on the fundamental economic condition of deflation. You just disagree with them on the effect on the markets of Central Bank behaviour and on the longevity of that behaviour.
Hugh: Increasingly, I have to say I just disagree with them. I literally and with the utmost respect, I’ve turned the volume down to zero. Previously they were like sheet music. When I read it, I could see the trades appear in front of me, and I just don’t hear the sound of music today. That’s my difficulty. So I really feel very, very isolated from their view of the world. Arguably, we’re talking about the here and now and the future’s a long time. But in the future, I’m sure our paths can converge once more.
Merryn: OK. Well, let’s talk about your view of the world now. Last year there was the infamous letter, the great bullish letter, as something you’d be interested in and your clients said, “No, not really.” Can we make mention of it now? Is there something you can say to your clients now that would re-interest them in this concept of the great bull?
Hugh: Well, let’s have a go. Because there are two things unfolding. Hedge funds and within the broad tranche of hedge funds, macro hedge funds are struggling to make money, and there is a dissatisfaction with that. I’m not the only manager to have suffered withdrawals.
Merryn: Why do you think that this sector as whole is failing to make money? What’s going on there?
Hugh: Well, I can’t be a spokesman for other and far better managers.
Merryn: But I’m sure you can allow yourself to comment on them.
Hugh: But I can reflect on my own difficulties, if you will. What I’ve found is that macro is distinguished, I believe, by superior risk control. It’s almost analogous to a disaster insurance programme. In 2008, all the good macro managers, they made you money. That’s what you pay them for. The world became profoundly unsettling and you cashed in your insurance policy.
Today, I question the relevancy of that disaster insurance. In a world where the central banks seem to have your back, seem to be underwriting risks and global asset prices, do you require that intense scrutiny of risk?
So when I look at my fund, my fund’s not dissimilar to others. We go out of our way to avoid traumatic periods of losing money. For us, typically, that would be defined as losing 5% or more in one month. Such, I think, is our capability that we have 12 years, in running this fund. So 144 monthly observations. Out of that we have had the indignity of suffering nine such months. Not that many when you consider the tremendous amount of either bull market or bear markets that have gone on.
But it forces you, that disaster scheme if you will, or prevention scheme, it forces you to reduce risk. Which is to say to sell the things you like when they go down in price. Notably this year, I had constructed this argument that I wanted to be bullish, yes, and yet, with risk control, I found myself a seller at lower and lower prices. Lo and behold, it became impossible to fulfil my mandate and to make money. I think that is a problem that I shared with many others.
Now I have, again I’m introvert, and I look and I examine my own behaviour. I have concluded that my risk tolerances were too taut and it was creating too much of my own intervention, in the portfolio, and it was damaging to the client’s performance. So I’ve pulled back or I’ve widened the tolerance of the portfolio.
Merryn: So your basic point here is that if the central banks have your back, there’s no need to have the same kind of risk controls that you used to have.
Hugh: There is less need. Less need. I tell you, I was at a conference with some of the great and the good global macro managers in September in New York and I asked them all the question, “If the S&P is down 12% what do you do? Are you selling more or are you buying?” Guess what? They’re all buying. So the central banks have created a behavioural tic which is becoming self-reinforcing and I believe we saw another manifestation of that behaviour in October.
So when I look at the year, I started the year hugely bullish on Japan. Hugely bullish, let me say, not qualitatively. I’m not an advocate of the three arrows and the resuscitation to the great heights of whatever Japan represented in the 1980s.
I am saying that I can see persistent failure to achieve such honourable ambitions, which leaves no recourse but to intervene again and again and again. Therefore I see the Yen being a weak currency.
The other side of that, the stock market, being higher and higher and higher. But I think four months of the year the Japanese market had fallen 16% from its high, and I had to swallow my pride and I had to reduce position.
I had to sell at lower prices, and yet, such is the foreboding presence or shadow cast by the Bank of Japan, that not even if we mentioned the recent intervention, without that intervention the Nikkei had gone back to its previous highs. So I was wrong in selling.
Again, over the summer the European stock markets had a similar decline, even greater if you look at the banks’ index, I think it was down over 20% and what happened? The ECB responded and took its rates negative and it committed to re-engaging, re-utilising its balance sheet to acquire European risk assets. Prices rapidly rallied from the middle of August into September. Why did I sell?
So thankfully, you only make those mistakes a few times, if you’re wise. So when we came into October, I got it. I got it. That, as a discipline, meant we stayed invested in the month of October and then we were able to buy more equity risk towards the middle of the month. Which is to say, we made money in October. We made money in September and we made money in August.
So if you will, it’s not just the narrative, it’s the risk engagement and giving trade expressions the room to breathe, such that they may prosper.
Merryn: So the simple message here, is in a market like this never sell anything and you’ll be fine.
Hugh: You can say that, but I cannot.
- - -
wikipedia on HH:
>>>
Hugh Hendry is the founding partner and, at various times, the chief investment officer, chief executive officer and chief portfolio manager of Eclectica Asset Management. He began to attract attention when his fund achieved a 31.2 per cent positive return in 2008 in the depths of the financial crisis, earning him a reputation as a contrarian investor, but his claim on wider public notice was based in a series of outspoken media appearances. Hendry has been referred to as "the most high-profile Scot" in the hedge fund sector.
Hendry once said to an interviewer: "To my mind, the three most important principles when it comes to investing are Albert Camus's principles of ethics: God is dead, life is absurd and there are no rules." He suggested that a great fund manager was defined by "an ability to establish a contentious premise outside the existing belief system, and have it go on and be adopted by the rest of the financial community".
<<<
Indeed, his about-face is so dramatic, that one cannot but think that in retrospect he will be famous for either top ticking the bull run and exploding, or for truly being able to live up to his 'plasticine man' moniker by bending himself into sync with a mad market and surviving through conscious adaptation.
Either way, its the death of Hugh the contrarian. The question is how profitable Hugh the momentum junkie is, and whether he will retain this ability to sell at the top, if ever there comes another top before the current ledger is purged in the fires of war.
HH espouses his views in this Nov 2014 Moneyweek interview with Merryn Somerset, recently made available on youtube.
>>
[ On Capitulation ]
HH: And now the problem... the perception I have of the problem... is that that's when the moral curmudgeons step in and say, 'This is all crazy. I disagree with this. I'm not playing.' [comically folds arms]
MSW: So they make their disapproval a reason, a reason not to play the game.
HH: It wouldn't work, and so they don't participate. Equities are overvalued, and I'm going to tough out, I'm just not going to be in that market.
As I say, there was a time in my life when the sun only rose to humiliate me, where perhaps I shared that, and its bunk, its nonsense. It may not work, but presently, the perception is that it will work, and those asset prices are trending, and you should participate.
[ On Distortions Created by Central Bank Intervention ]
If I make segue into that answer by challenging the notion, the popular notion, that quantitative easing has distorted and manipulated public markets. Again, I think I user the term earlier, buttercup, absolute nonsense, absolute nonsense.
JGB (Japanese Government Bonds), if we take an example, are fairly valued. The economy just fell 7% in the last quarter (on an annualised basis), there is no inflation. They've had 25 years of no real GDP growth. Where would you expect JGB bond yields to be for a fiat currency that can issue its own paper currency.
US treasury bonds, where should they be ? You know, you know, I struggle to see... and you know again, Dylan Grice was the great architect of the notion that you can define the upper bound to today's interest rates by trying to determine societies' capabilities to meet those interest rates at higher and higher levels, and what you find is that we can't. We cannot live with a Paul Volker putting interet rates at 15% - it doesn't work. There's so much debt that, if you repriced it, the economy slows down - and you saw that in 2012. I think after the taper tantrum, when 10 year bond yields went over 3% - what happened next ? The economy slowed down.
<<
partial transcript:
Merryn Somerset-Webb: Hi, I’m Merryn Somerset-Webb and I’m here today with Hugh Hendry, manager of the Eclectica Fund. We are going to talk about everything from China to the US, to Europe, to Japan. But Hugh, I just want to start by asking you what you think makes a successful hedge-fund manager and whether you are, under that definition, a successful manager.
Hugh Hendry: I think I’ve always answered that question by relating back to the ability to conceive of a contentious posture. I think if I was to quote from Fight Club, I think there’s a famous saying “Would you rather…” my children would say ,”Would you rather upset God or have God just ignore you?” There’s a degree to which being a successful macro-manager is upsetting, not only God, but to the rest of the world, if you will. By being out there with the articulation of qualitatively intelligent argument, which just isn’t shared by the majority. But which can stand the test of time and come to actually define the future. That is what global macro is all about.
With regard to language the notion of “bullish” and “bearish”, I think, does an injustice to the complexity of the arguments that are necessary to construct a global macro hedge fund. I think if I had my time again, I would have been saying that we’re actually, perhaps, guilty of the misconstruing of a bull market in equities, for what is actually the ongoing degradation in the soundness of the fiat monetary system. I think that’s what I was trying to say.
Merryn: The interesting thing is that you have a reputation of being something of a perma-bear. People think of Hugh Hendry, they think of bearish. But what they’re really thinking about is your macro-economic ideas, not your investing ideas. So they’re remembering your views on deflation, which by the way you’ve been correct on, right?
They’re remembering your views on deflation and then they’re remembering your previous views on what might happen to markets as a result of that deflation. The change last year was to think about, not to change your views on the economic condition, but to change your views on how they would affect asset markets.
Hugh: Yeah. A very good point and I’m sure everyone’s aware that we, as a business, have experienced quite a substantial amount of redemptions from the fund. There was a degree to which there was that pigeonholing, and that of being a bearish diversifier, if you will, to an investors’ portfolio. After all, I was the guy who made 30% odd in 2008. That’s out there, and of course with the redemptions there was the notion that I turned into, rather than a diversifier, a concentrator.
Merryn: Well, there was also, slightly, the idea that you had somehow capitulated.
Hugh: Indeed.
Merryn: You had given in to a bull market that you had refused to accept previously.
Hugh: Such is my performance cabaret persona, I certainly would have alluded to that notion, and a degree of mea culpa. Again, what it is with me is, I’m weird.
I cannot truly engage, unless I get angry, I don’t think… and possibly it’s back to my Scottish roots and the weather. So if you cast your mind back, the last time I was really angry was late 2010-2011. Where the market, in its wisdom, had yet to configure the changing economic landscape, and it was perceiving that the economy in Europe and elsewhere was recovering. Therefore the fixed income markets were beginning to price in a very high probability that central banks would raise their overnight rates.
To make matters worse, of course the ECB when it was governed by Trichet, actually came to the fore and raised rates. I thought that was just insane, that we weren’t capturing the kind of deflationary zeitgeist that was approaching.
So with that anger, if you will, I really took on a lot of risk. I was long on fixed income and in the vernacular I was receiving interest rates. So essentially I had a large fixed income bet, which said these rate rises will have to be rescinded and the expectation that there would be further rises are just not going to happen. That proved to be correct, if you will, and that was my last moment, really. I have to say when I look back in the last three years it feels as if the sun only rose each day to humiliate me after that point.
Merryn: I doubt it was really quite that bad, was it, really?
Hugh: In my mind, at times, it’s felt bad. But the mea culpa, that I think is very necessary in that I found myself unable to forgive the Federal Reserve and the other central banks for, if you will, bailing out Wall Street from the excess of 2008.
I just couldn’t get over it. I luxuriated in the polemics of Marc Faber and James Grant and Nassim Taleb, in our own country, Albert Edwards, et al. I luxuriated as they ranted and it was fine for them to rant. But I am charged with the responsibility of making money and not being some moral guardian and certainly not a moral curmudgeon. I had to get over that. So again, back to my infamous letter of last year.
That was cathartic for me to say “You know what? I get it.” I think if we’re going to try and explain the qualitative arguments behind why we are more receptive to the notion of not only left tails where markets can fall, but the right-hand tail of the expression, where markets can actually continue to rise if not to accelerate.
Merryn: But the key point from talking about Marc Faber and Albert Edwards, etc is that you don’t disagree with these people on the fundamental economic condition of deflation. You just disagree with them on the effect on the markets of Central Bank behaviour and on the longevity of that behaviour.
Hugh: Increasingly, I have to say I just disagree with them. I literally and with the utmost respect, I’ve turned the volume down to zero. Previously they were like sheet music. When I read it, I could see the trades appear in front of me, and I just don’t hear the sound of music today. That’s my difficulty. So I really feel very, very isolated from their view of the world. Arguably, we’re talking about the here and now and the future’s a long time. But in the future, I’m sure our paths can converge once more.
Merryn: OK. Well, let’s talk about your view of the world now. Last year there was the infamous letter, the great bullish letter, as something you’d be interested in and your clients said, “No, not really.” Can we make mention of it now? Is there something you can say to your clients now that would re-interest them in this concept of the great bull?
Hugh: Well, let’s have a go. Because there are two things unfolding. Hedge funds and within the broad tranche of hedge funds, macro hedge funds are struggling to make money, and there is a dissatisfaction with that. I’m not the only manager to have suffered withdrawals.
Merryn: Why do you think that this sector as whole is failing to make money? What’s going on there?
Hugh: Well, I can’t be a spokesman for other and far better managers.
Merryn: But I’m sure you can allow yourself to comment on them.
Hugh: But I can reflect on my own difficulties, if you will. What I’ve found is that macro is distinguished, I believe, by superior risk control. It’s almost analogous to a disaster insurance programme. In 2008, all the good macro managers, they made you money. That’s what you pay them for. The world became profoundly unsettling and you cashed in your insurance policy.
Today, I question the relevancy of that disaster insurance. In a world where the central banks seem to have your back, seem to be underwriting risks and global asset prices, do you require that intense scrutiny of risk?
So when I look at my fund, my fund’s not dissimilar to others. We go out of our way to avoid traumatic periods of losing money. For us, typically, that would be defined as losing 5% or more in one month. Such, I think, is our capability that we have 12 years, in running this fund. So 144 monthly observations. Out of that we have had the indignity of suffering nine such months. Not that many when you consider the tremendous amount of either bull market or bear markets that have gone on.
But it forces you, that disaster scheme if you will, or prevention scheme, it forces you to reduce risk. Which is to say to sell the things you like when they go down in price. Notably this year, I had constructed this argument that I wanted to be bullish, yes, and yet, with risk control, I found myself a seller at lower and lower prices. Lo and behold, it became impossible to fulfil my mandate and to make money. I think that is a problem that I shared with many others.
Now I have, again I’m introvert, and I look and I examine my own behaviour. I have concluded that my risk tolerances were too taut and it was creating too much of my own intervention, in the portfolio, and it was damaging to the client’s performance. So I’ve pulled back or I’ve widened the tolerance of the portfolio.
Merryn: So your basic point here is that if the central banks have your back, there’s no need to have the same kind of risk controls that you used to have.
Hugh: There is less need. Less need. I tell you, I was at a conference with some of the great and the good global macro managers in September in New York and I asked them all the question, “If the S&P is down 12% what do you do? Are you selling more or are you buying?” Guess what? They’re all buying. So the central banks have created a behavioural tic which is becoming self-reinforcing and I believe we saw another manifestation of that behaviour in October.
So when I look at the year, I started the year hugely bullish on Japan. Hugely bullish, let me say, not qualitatively. I’m not an advocate of the three arrows and the resuscitation to the great heights of whatever Japan represented in the 1980s.
I am saying that I can see persistent failure to achieve such honourable ambitions, which leaves no recourse but to intervene again and again and again. Therefore I see the Yen being a weak currency.
The other side of that, the stock market, being higher and higher and higher. But I think four months of the year the Japanese market had fallen 16% from its high, and I had to swallow my pride and I had to reduce position.
I had to sell at lower prices, and yet, such is the foreboding presence or shadow cast by the Bank of Japan, that not even if we mentioned the recent intervention, without that intervention the Nikkei had gone back to its previous highs. So I was wrong in selling.
Again, over the summer the European stock markets had a similar decline, even greater if you look at the banks’ index, I think it was down over 20% and what happened? The ECB responded and took its rates negative and it committed to re-engaging, re-utilising its balance sheet to acquire European risk assets. Prices rapidly rallied from the middle of August into September. Why did I sell?
So thankfully, you only make those mistakes a few times, if you’re wise. So when we came into October, I got it. I got it. That, as a discipline, meant we stayed invested in the month of October and then we were able to buy more equity risk towards the middle of the month. Which is to say, we made money in October. We made money in September and we made money in August.
So if you will, it’s not just the narrative, it’s the risk engagement and giving trade expressions the room to breathe, such that they may prosper.
Merryn: So the simple message here, is in a market like this never sell anything and you’ll be fine.
Hugh: You can say that, but I cannot.
- - -
wikipedia on HH:
>>>
Hugh Hendry is the founding partner and, at various times, the chief investment officer, chief executive officer and chief portfolio manager of Eclectica Asset Management. He began to attract attention when his fund achieved a 31.2 per cent positive return in 2008 in the depths of the financial crisis, earning him a reputation as a contrarian investor, but his claim on wider public notice was based in a series of outspoken media appearances. Hendry has been referred to as "the most high-profile Scot" in the hedge fund sector.
Hendry once said to an interviewer: "To my mind, the three most important principles when it comes to investing are Albert Camus's principles of ethics: God is dead, life is absurd and there are no rules." He suggested that a great fund manager was defined by "an ability to establish a contentious premise outside the existing belief system, and have it go on and be adopted by the rest of the financial community".
<<<
Thursday, November 26, 2015
Who is Rita Katz and What is SITE ?
SITE (wikipedia) has been the source of many propaganda videos purporting to represent the views of previously AQ, and more recently ISIS/ISIL.
Given the allegations that both AQ and ISIS/ISIL are primarily the creations and tools of Western intelligence and Gulf-state money, it would be worth considering the political allegiances of the principal at SITE, Rita Katz.
According to wikipedia:
>>>
Rita Katz (born 1963) is a terrorism analyst and the co-founder of the Search for International Terrorist Entities (SITE) Intelligence Group, a private intelligence firm based in Washington, DC.
The Institute tracks global terrorist networks, and intercepts and distributes secret messages, videos, and advance warnings of suicide bombings from terrorist groups' communications networks.
...
Katz, a fluent Arabic speaker, was born in Basra in Southern Iraq in 1963 to a wealthy Iraqi Jewish family. After the Six Day War and shortly after Saddam Hussein's Ba'ath Party seized power in Iraq in 1968, her father was arrested on charges of spying for Israel. The family's property was confiscated by the state, and the rest of the family put under house arrest in a stone hut. The following year, after having been tortured, Katz's father was convicted and executed in a public hanging in the central square of Baghdad to the roaring applause of more than half a million Iraqis; the government offered free transportation to people from the provinces, and belly dancers performed for the crowd. Katz's mother managed to escape on foot with her three small children to Iran, and from there they made their way to Israel.
...
Katz's SITE Institute, co-founded with Josh Devon in July 2002, was funded by various federal agencies and private groups. It analyzes "corporate records, tax forms, credit reports, video tapes, internet news group postings and owned websites, among other resources, for indicators of illicit activity"
<<<
Given the allegations that both AQ and ISIS/ISIL are primarily the creations and tools of Western intelligence and Gulf-state money, it would be worth considering the political allegiances of the principal at SITE, Rita Katz.
According to wikipedia:
>>>
Rita Katz (born 1963) is a terrorism analyst and the co-founder of the Search for International Terrorist Entities (SITE) Intelligence Group, a private intelligence firm based in Washington, DC.
The Institute tracks global terrorist networks, and intercepts and distributes secret messages, videos, and advance warnings of suicide bombings from terrorist groups' communications networks.
...
Katz, a fluent Arabic speaker, was born in Basra in Southern Iraq in 1963 to a wealthy Iraqi Jewish family. After the Six Day War and shortly after Saddam Hussein's Ba'ath Party seized power in Iraq in 1968, her father was arrested on charges of spying for Israel. The family's property was confiscated by the state, and the rest of the family put under house arrest in a stone hut. The following year, after having been tortured, Katz's father was convicted and executed in a public hanging in the central square of Baghdad to the roaring applause of more than half a million Iraqis; the government offered free transportation to people from the provinces, and belly dancers performed for the crowd. Katz's mother managed to escape on foot with her three small children to Iran, and from there they made their way to Israel.
...
Katz's SITE Institute, co-founded with Josh Devon in July 2002, was funded by various federal agencies and private groups. It analyzes "corporate records, tax forms, credit reports, video tapes, internet news group postings and owned websites, among other resources, for indicators of illicit activity"
<<<
Wednesday, November 25, 2015
In Case You Weren't Paying Attention - A Time-Line of Notable Events in the Ongoing War on You
A Time-Line of Notable Events in the Ongoing War on You
2015-11-13 = Fri 13 November 2015
Multiple co-ordinated attacks on high-profile low-military-value civilian targets across Paris
France is stirred to the pitch of panic through ruthlessly efficient use of random violence.
2015-11-17 = Tue 17 November 2015
French president Francois Hollande successfully proposes a 3-month extension of the initially limited state of emergency previously declared.
An import consequence is that France becomes contractually privileged to demand and draw on economic assistance from its EuroZone partners, notably Germany, and is no obliged to comply with its previously agreed budget.
2015-11-24 = Tue November 24 2015
Russian Su-24 all-weather bomber jet shot down by Turkish forces.
Each side claims that they other violated their sovereign airspace.
Turkish forces claim that multiple prior warning were issued. Russians do not acknowledge receipt of claimed warning.
S&P500 - Price vs Volume - September 2011 to November 2015
Given that the so-called Black Monday of 2011-08-08 (where the markets responded to a downgrade of the US long term credit rating by Standard and Poors) is an extreme event, and arguably marks the next phase of the market, there is some sense in looking at the quality of the market there after.
Volume evaporates on at least two occasions around the current maximums, suggesting that barring further external intervention, we may have reached genuine peak. On the other hand, volume spikes at the support level...
Tuesday, November 24, 2015
In Case You Weren't Paying Attention... Black Monday August 8 2011 - US Credit DownGrade by S&P
So, while I did make a very small amount of money going long in equities starting in 2009, I haven't been an active participant in the markets for some time. I have been acquiring a bricks-and-morter investment in what English law traditionally referred to as the real portion of one's estate.
The upshot of this is that I (somewhat intentionally) haven't been paying very close attention to the financial markets up until very recently, although this is potentially set to change, as I have had a sneaky feeling that things are about to get interesting, and that means potentially profitable!
The previous post asks whether the long-running (since May 2009) global bull market in equities, and more specifically the bull market in US equities, is either set to break, or has already broken.
Looking back, it seems clear that some event in late 2011 resulted in monetary authorities engaging in prolonged material intervention, as evidenced by the unwavering uptrend in equities.
My first guess was that it was the threat of Greece exiting the European Monetary Union (the so-called grexit) that was the catalyst. Looking back at the data, it may also be S&P's downgrade of the US's long term credit rating that was the canary in the coal-mine that triggered a new wave of monetary intervention.
Looking at the intra-day range (100% * (high - low) / close) of the S&P500 index, arguably the simplest metric of volatility, for the period starting around the post-2008 crash lows (March 2009) to present (Nov 2015).
If we arbitrarily consider only days where the intraday range is 4% or greater, the following periods of heightened volatility emerge:
2009 March - April
2011 August - November
2015 August
2009 March
2009-03-02 - 4.262150052795297
2009-03-05 - 4.445095597392138
2009-03-06 - 4.726506482484133
2009-03-10 - 5.603112840466933
2009-03-12 - 5.044356235181288
2009-03-18 - 4.708252029961601
2009-03-23 - 6.204734360569685
2009-03-25 - 4.3507642404285605
2009 April
2009-04-20 - 4.310479462751835
2011 August
2011-08-04 - 5.057204996375217
2011-08-05 - 4.170488085510845
2011-08-08 - 7.074839654833585 ! THE BIG ONE !
2011-08-09 - 6.084279293493569
2011-08-10 - 4.796745065848174
2011-08-11 - 5.542195388183927
2011-08-18 - 5.136544952439391
2011 September October November
2011-09-22 - 4.455717270441582
2011-10-04 - 4.4797366430890975
2011-11-30 - 4.0410277795598795
August 2015
2015-08-24 - 5.183789226851636
2015-08-25 - 4.334956637105361
So, looking into it, August volatility is clearly on the magnitude of a market top or bottom.
Looking further back, 2011-08-08 is the most volatile day for the period, and this is what the wikipedia summary for that day has to say:
In finance and investing, Black Monday 2011 refers to August 8, 2011, when US and global stock markets crashed[1] following the Friday night credit rating downgrade by Standard and Poor's of the United States sovereign debt from AAA, or "risk free", to AA+.[2] It was the first time in history the United States was downgraded.[3] Moody's issued a report during morning trading which said their AAA rating of U.S. credit was in jeopardy, this after issuing a negative outlook in the previous week.[4]
By market close, the Dow Jones Industrial Average lost 634.76 points (-5.55%) to close at 10,809.85, making it the 6th largest drop of the index in history.[5] Black Monday 2011 followed just one trading day behind the 10th largest drop of the Dow Jones Index, a 512.76 (-4.31%) drop on August 4, 2011.
...
The greater context of this being that the US politicans were engaged in a farcical performance wherein it was pretended that US government has any option other than to print more money.
The upshot of this is that I (somewhat intentionally) haven't been paying very close attention to the financial markets up until very recently, although this is potentially set to change, as I have had a sneaky feeling that things are about to get interesting, and that means potentially profitable!
The previous post asks whether the long-running (since May 2009) global bull market in equities, and more specifically the bull market in US equities, is either set to break, or has already broken.
Looking back, it seems clear that some event in late 2011 resulted in monetary authorities engaging in prolonged material intervention, as evidenced by the unwavering uptrend in equities.
My first guess was that it was the threat of Greece exiting the European Monetary Union (the so-called grexit) that was the catalyst. Looking back at the data, it may also be S&P's downgrade of the US's long term credit rating that was the canary in the coal-mine that triggered a new wave of monetary intervention.
Looking at the intra-day range (100% * (high - low) / close) of the S&P500 index, arguably the simplest metric of volatility, for the period starting around the post-2008 crash lows (March 2009) to present (Nov 2015).
If we arbitrarily consider only days where the intraday range is 4% or greater, the following periods of heightened volatility emerge:
2009 March - April
2011 August - November
2015 August
2009 March
2009-03-02 - 4.262150052795297
2009-03-05 - 4.445095597392138
2009-03-06 - 4.726506482484133
2009-03-10 - 5.603112840466933
2009-03-12 - 5.044356235181288
2009-03-18 - 4.708252029961601
2009-03-23 - 6.204734360569685
2009-03-25 - 4.3507642404285605
2009 April
2009-04-20 - 4.310479462751835
2011 August
2011-08-04 - 5.057204996375217
2011-08-05 - 4.170488085510845
2011-08-08 - 7.074839654833585 ! THE BIG ONE !
2011-08-09 - 6.084279293493569
2011-08-10 - 4.796745065848174
2011-08-11 - 5.542195388183927
2011-08-18 - 5.136544952439391
2011 September October November
2011-09-22 - 4.455717270441582
2011-10-04 - 4.4797366430890975
2011-11-30 - 4.0410277795598795
August 2015
2015-08-24 - 5.183789226851636
2015-08-25 - 4.334956637105361
So, looking into it, August volatility is clearly on the magnitude of a market top or bottom.
Looking further back, 2011-08-08 is the most volatile day for the period, and this is what the wikipedia summary for that day has to say:
In finance and investing, Black Monday 2011 refers to August 8, 2011, when US and global stock markets crashed[1] following the Friday night credit rating downgrade by Standard and Poor's of the United States sovereign debt from AAA, or "risk free", to AA+.[2] It was the first time in history the United States was downgraded.[3] Moody's issued a report during morning trading which said their AAA rating of U.S. credit was in jeopardy, this after issuing a negative outlook in the previous week.[4]
By market close, the Dow Jones Industrial Average lost 634.76 points (-5.55%) to close at 10,809.85, making it the 6th largest drop of the index in history.[5] Black Monday 2011 followed just one trading day behind the 10th largest drop of the Dow Jones Index, a 512.76 (-4.31%) drop on August 4, 2011.
...
The greater context of this being that the US politicans were engaged in a farcical performance wherein it was pretended that US government has any option other than to print more money.
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