It is reported that Silicon Valley Bank gave $73,450,000 to “BLM Movement and Related Causes.”
“In five years a number of banks will not be around because of blockchain technology.”
— Joseph DiPaolo, CEO, Signature Bank, 2018
For nearly three months now, 0DTE (options expiring within 24 hours) players have suppressed volatility. Any intraday increase in VIX is quickly met with mean-reversion trading of options which effectively counters all but the strongest of trends. The problem with this is that suppressed volatility eventually breaks out of its cage. The last time this happened was in 2018, and the event is now called “Volmageddon” or “Volpocalypse”. VIX doubled in a short time, which was not too serious for the major indexes but wiped out a number of leveraged VIX-related ETFs. This time the potential risk is much larger because the volatility suppression is really a side effect of an options strategy which is able to directly cause a major move. JP Morgan estimates that a 5% move in the S&P would trigger a further 20% crash as the options writers moved to hedge their positions by selling stocks and futures. But to further aggravate the situation, the open interest in VIX calls is at an all-time record as some traders believe this suppression cannot last indefinitely, and will blow up at some point. A sudden rise in VIX would cause these calls to create a gamma squeeze in VIX, driving VIX still higher and increasing the selling by the options writers. More than $1 trillion notional of 0DTE options are being traded every day. This is idiocy. The selling would be entirely automated, just like the “portfolio insurance” that caused the 1987 crash.
OTOH there’s a lot of idiocy around right now. A clue is that “Mr. 50 cent”, a very large and successful VIX options trader known for the signature habit of buying large quantities of options for, well, 50 cents, has taken a call position. This person (or fund) is not an idiot and has been absent for a while, after racking up an estimated $200 million profit in the 2018 event. In all fairness that $200 million was actually a $400 million profit offset by $200 million in losses stemming from being early. That’s conviction.
Elon Musk has now dismissed 75% of the 7,500 staff that Twitter employed when he took over. The service is better than ever and new features are being rolled out. One wonders what, if anything, all those people were doing all day. One also wonders how this reflects on other companies in the space.
There was a time when I did competitive debating. I was taught that ad hominem tactics were a sure sign of a weak or untenable position. This came to mind when I read of a UBC professor who condemned anyone who supported removal of a mask mandate as being “racist, classist and ableist”. This is typical of the “woke” and it is time that they were called on it. I do see signs of this happening, but there is a long way to go before rational debate can occur. Attack the proposition if you like, but not the proposer.
Reportedly all stations in Russia have been ordered to carry Putin’s speech on Feb 21. Also it is reported that Russia intends to call a UN Security Council meeting on Feb 22 over the “sabotage” of the Nord Stream pipeline. Well-known thorn in the side of the US government Seymour Hersh has issued a detailed report alleging that the US Navy committed the sabotage.
Money, money, money
Must be funny
In the rich man’s world
Money, money, money
Always sunny
In the rich man’s world
A-ha, ah
All the things I could do
If I had a little money
It’s a rich man’s world
(Abba)
Money today is simply a claim on a bank. In the case of cash, it is a claim on the Federal Reserve Bank (Fed). Otherwise it is a liquid deposit in a commercial bank, S&L, credit union or similar institution which can be converted to cash. By law, any debt, public or private, can be settled with cash.
Banks do not lend depositors’ money. Or anyone else’s money. Nor do they lend their reserves (money banks deposit in the Fed). They create the money that they lend. The proceeds of a loan transaction are deposited in the borrower’s bank account. The money is not transferred from anywhere. The loan is added the asset side of the bank’s balance sheet and a deposit is added to the liability side. This deposit becomes money because it now meets the definition of money (see above). This is also exactly what the Fed does when it monetizes Federal debt. It buys Treasuries (loans to the government) from a bank or other approved institution, which become Fed assets, and credits the purchase price to the seller’s Fed account. Which, by definition, is money.
If the loan is not fully repaid, eventually the loan is “written off”. In this case, the unpaid amount – loss – is charged to the bank’s equity capital.
Edit: Note that bank reserves are not included in M1, which is not affected by the Fed’s Treasury purchases from banks. Bank reserves are included in the broad money supply, the monetary base (MB).
If you are tired of mealy-mouthed, politically correct politicians, you need to listen to Italy’s new prime minister, Giorgia Meloni.She speaks with passion and conviction, and so clearly that with only a little Italian you don’t need the subtitles. This is a leader. Remember that there are only two capitals in Europe that have ruled the world. Rome is one.
Shortage of labor + higher wages and benefits = Flippy 2
PASADENA, Calif., Oct 4 (Reuters) – Fast-food French fries and onion rings are going high-tech, thanks to a company in Southern California. Miso Robotics Inc in Pasadena has started rolling out its Flippy 2 robot, which automates the process of deep frying potatoes, onions and other foods. A big robotic arm like those in auto plants – directed by cameras and artificial intelligence – takes frozen French fries and other foods out of a freezer, dips them into hot oil, then deposits the ready-to-serve product into a tray. Flippy 2 can cook several meals with different recipes simultaneously, reducing the need for catering staff and, says Miso, speed up order delivery at drive-through windows. “When an order comes in through the restaurant system, it automatically spits out the instructions to Flippy,” Miso Chief Executive Mike Bell said in an interview.” … It does it faster or more accurately, more reliably and happier than most humans do it,” Bell added.
Of course this is in addition to the original Flippy, which does burgers, etc.
Can the fully automated fast-food restaurant be far off? Ordering is handled by kiosks, cooking by Flippy. What’s next?
Financial Reality 
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