Derivatives Trading Legend: “As Little As A 4% Decline In One Day Could Start A Critical Crash”

After building out Merrill’s mortgage trading floor basically from scratch, then moving to the buyside at Pimco, several weeks ago Harley Bassman, more familiar to many traders as the “Convexity Maven” – a legend in the realm of derivatives (he helped design the MOVE Index, better known as the VIX for government bonds) – decided to retire (roughly one year after his shocking suggestion that the Fed should devalue the dollar by buying gold).

But that did not mean he would stop writing, and just a few days after exiting the front door at 650 Newport Center Drive in Newport Beach for the last time, Bassman wrote his first full article as a “free man”, in which the topic was, not surprisingly, derivatives and specifically the recent collapse in vol – and convexity – what prompted it, but most importantly and what everyone wants to know: what threshold would be sufficient to finally launch the next “critical mass” market move (i.e. crash) and, just as importantly, what could catalyze it. Continue reading

Cutting Budgets and Increasing Nuclear Dangers (Part 2)

PART 1 is here – click

The US defense budget was unveiled by the administration and sent to Congress February 9, 2016 and already the “military critics” and their long knives are anticipating how to disembowel critical elements of our nation’s military.

For example, Mr. Gordon Adams, previously at the Office of Management and Budget in the Clinton administration and Mr. Lawrence Korb at the Center for American Progress, are both calling for the dismantlement of the US nuclear deterrent.

Mr. Adam’s proposals not only will save almost no money over the near term, any delay in the acquisition of the new submarine is fraught with danger. For example, already the hull life we are expecting from the current submarines will be greater than any other submarine in our nation’s history. Continue reading

Stocks are a ‘disaster waiting to happen’: Stockman

See the source for the video.

 

David Stockman has long warned that the stock market is on the verge of a massive collapse, and the recent price action has him even more convinced than ever that the bottom is about to fall out.

“I think it’s pretty obvious that the top is in,” the Reagan administration’s OMB director said Thursday on CNBC’s “Futures Now.” The S&P 500 has traded in a historically narrow range for the better part of 2015, having moved just 1 percent higher year to date. “It’s just waiting for the knee-jerk bulls, robo traders and dip buyers to finally capitulate.”

Continue reading

David Stockman: The Global Economy Has Entered The Crack-Up Phase

 

Few people understand the global economy and its (mis)management better than David Stockman — former director of the OMB under President Reagan, former US Representative, best-selling author of The Great Deformation, and veteran financier.

David is now loudly warning that events have entered the crack-up phase, which he predicts will be defined by the following 4 developments: Continue reading

Obama Lifts Ban on Libyans Attending U.S. Flight Schools, Training In Nuke Science

Ban has been in place since 1983

The Obama administration has lifted longtime restrictions on Libyans attending flight schools in the United States and training here in nuclear science, according to a final amendment of the ban recently approved by the Office of Management and Budget (OMB).

Less than two years after the deadly terrorist attacks in Benghazi, Libya that killed four Americans, the Department of Homeland Security (DHS) is poised to sign off on an amendment reversing the ban, which was enacted following a wave or terrorist attacks in 1980s and prevents Libyans from studying these sensitive trades in the United States.

The original law effectively disqualified all Libyan nationals and those “acting on behalf of Libyan entities” from training in “aviation maintenance, flight operations, or nuclear-related fields,” according to the ban.

DHS said the prohibition is irrelevant now since the United States and Libya have worked to “normalize their relationship,” according to the directive approved by the OMB. Continue reading