tv Keiser Report RT October 20, 2017 12:00am-12:30am EDT
that. was. the headlines this hour i'm glad to mir putin says russia will take metallic tree measures against the u.s. if washington continues to crack down on russian media in america. and in the u.k. birdsall in the london underground strong reactions from public figures with labor party officials demanding an investigation hillary clinton has weighed in as well. and spain prepares to revote catalonians autonomy after the troubled regions leader with that independence is still on the cards. you can find the full stories over
the back with your world news update in about an hour right now max shines a light on crime and corruption in the financial world thoughts and the cause of. i don't know i'm max ties or this is the ca's report their own lake michigan and chicago will. station. again remember we are in the windy city which apparently was just propaganda it had something to do with the the world was that world's fair sort of thing and the new york observer called this the politicians and the promoters of chicago full of hot air so they called the windy they were a windy city but this ironical when ironically knowing this wind in my face it's
just all hot as you know white caps on lake michigan blowing of twenty knots yeah we had to insert a cut of the white caps out there is a phrase that has moved all. sheep then look at the sheep the white caps on the tone it's very clever we you know it also happens here in chicago people just are was. no no no no there's a lot of trading that happens here commodities trading and the volatility index is traded here in chicago and despite the volatility in the weather. it is very clear that the volatility index and this is i know something that you as a former options trader know a lot about but i'm going to read the headline first and this is from mish chad lock normally here in chicago but he's not here in chicago today so he's not with us on kaiser report but here's the headline volatility nowhere in sight vix posts
record low quarter the c b o e volatility index or vix just finished its calmest quarter in his. averaging just ten point nine four over the past three months the gauge has fallen for three consecutive quarters its longest streak of declines since two thousand and eleven according to the journal's market data group the vix uses options prices on the s. and p. five hundred index to produce a measure of expected stock swings over the next month it tends to fall when stocks are rising and vice versa so max a lot of that if you tune in to any cable news if you turn into even the mainstream news what you see is chaos it's as if america is going through the most chaotic creasy scary time and yet the volatility index is saying this is the the calmest time in u.s.
stock market history but it's priced propaganda so it's using prices to give people a false sense of security the volatility is low because corporations are buying back their own stock with free money from the central government essentially plan central planning of the federal reserve bank and as such there is no penalty for making any mistakes of any corporation out there if they make a mistake they get bailed out instantly if they want to manufacture earnings that are higher this quarter of the last quarterly buy back their own stock using free money given to them from the central government so another way to look at this is two ways one would be that the only time we've seen volatility this slow in any major economy would be the soviet union there was very little volatility in the soviet union prices were stable. and then they collapsed. and another time when you see this type of low volatility is in the more. dead people there's very little
volatility going on very little activity happening in the market because people are dead the u.s. economy is dead because competition is dead because free markets are dead because free money is being given to the lords and oligarchs and there is no small to medium enterprise thriving in america to create the jobs and real wages and g.d.p. growth that would pay down the debt and or increase success and failure of a thriving economy and we see that in the volatility index it's like if you want the hospital and the e.k.g. machine was flat and the nurse said is there great the patient is showing no pulse . fantastic and you know that leaves are dead right the maid no no not this hospital because for every dead person we kill we get a bill from the government we're just buying back shares in our own hospital and it doesn't matter if everyone is dead we're still making tons of money that's the american economy by the way there's also like
a public toilet right here kind of stinks but you might hear some cottaging happening in the background of toilet harvesting well just like skip aside out of having just skip over that we're going to go on to with the next bit of this and all the good. so the volatility index vix index is trading at all time lows. however is the volume of bets on it has hit it's hitting all time highs there is a hedge fund billionaire at least people suspected guns lock but they he is investing he's buying. he's betting big that volatility is going to increase but the absence of volatility hasn't tapered volatility trading itself even as the gauge capped off its quietest quarter ever last week one trader pushed through one of the biggest vix bets in history and drove the total number of vix options treated to a new daily high of over two point six million contracts so these contracts all
expire by december if the volatility index is not increased to about twenty then this person loses big time on these bets right ok as you pointed out i was a professional optimist trainer for many years. oppenheimer paine webber alex brown and i'll tell you a few things first of all the bet that's being made there on the long side volatility will increase expires in december if the payoff is not forthcoming from . the trader can roll that option forward to a forward months and effectively they would cost them money it's going to cost money to keep rolling this is what now seem to leave would talk about this all the time the black swan the suit i seem to only basically his whole. you know great strategy is to play volatility he has straddles and that would profit under
volatility situations those straddles you're playing both long and short they cost money you have to keep rolling them in till you have a volatility event and then you get a big payoff the hope is you don't run out of money before there's a huge volatility event so there's traders often there will be a huge volatility about the markets will be volatile soon if they're not going to have to keep ponying up more money another way to look at this which is what i want to get to here the martin gail strategy of investing martindale strategy at the roulette wheel if you keep playing read into all you read pops you know as a winner you just have to make sure you don't run out of money before you lose before red pops up on wall street this is acceptable because they have an unlimited amount of money at their disposal from the federal reserve bank at zero percent interest rate that's why goldman sachs can report thirty sixty ninety one hundred
days of straight profits because they never take risk because aig or always have unlimited free money and they can always put on the same strategy again and again and again and again so this trader they know that even if they're underwater come december they have access to unlimited funds i mean they think that at some point there will be a volatility event but my my problem with all this is that this is not available to the average joe you know this is a guy's going to make a billions of dollars on the straight eventually this should be available for everybody i should be able to go to my local bank and say put put to straddle on the vix index indefinitely and finance it for free i should be able to do that too right welcome all the excellent i can do that i can molly the central bank as enabling the central guys to do that you know there's two tier economy in america. right obviously well while this trader they mention is betting that volatility winning will increase but not too much just up to twenty but others don't. see the calm ending volatility has fallen so low this year that the chicago board up sions
exchange the c b o e has had to introduce a new lower strike prices or the level at which contracts can be executed and investors can now wager that the vix could sink as low as nine so again volatility declining down down down all is calm at least on the surface so i want to turn to another headline because this is a not a very it's a parabolic line this is looking bad and that is the number of opioid deaths in america because believe it or not twenty sixteen looks like the official numbers are not out yet but the new york times has looked at the data and it looks like heroin and opioid and drug overdoses even cocaine overdoses are up about fifteen percent some states like ohio are up as high as twenty five percent.
and this is the headline drug deaths in america are rising faster than ever drug overdose deaths in twenty sixteen most likely exceeded fifty nine thousand the largest annual jump ever recorded in the united states according to preliminary data compiled by the new york times the death count is the latest consequence of an escalating public health crisis opioid addiction now made more deadly by an influx of illicitly manufactured fenton oh and similar drugs drug overdoses are now the leading cause of death among americans under fifty so i think this ties in well what you were saying earlier about the soviet union was the soviet union collapsed once the economic system in which people lived disappeared overnight i think stephen f. cohen professor of russian history at n.y.u. in princeton said just. when it just disappears the state disappears the economic
system disappears. we saw a massive increase in mortality rates due to alcoholism here we see a similar situation the similar sort of spike and if you look at the chart that hopefully is up on screen you see that's a huge mortality incident well francis fukuyama said when the berlin wall came down this is the end of history and what he didn't count on was massive alcohol poisoning in russia and the soviet union almost like that entire generation in america it's the wall that was the glass steagall that was separating the spec of activity from the banking activities on a wall street that was torn down by bill clinton and as a result entered into the era financialization which is now creating a soviet union type playing opiate addiction and a die off a mass die off in america yeah i mean that chart you see is you know it's flat two thousand it's
a number you know from night late ninety's to. two thousand and two thousand and one then the financial collapse happened and this whole plunder started then the plunder happened in the post soviet era as well during the yeltsin era barq's yeltsin era you saw the plunder and and people were just left to their own devices but had to figure out how to operate in this new system of plunder here in america we have a system of plunder that has happened since the commodity futures modernization act since the glass steagall came down it's been a free for all plunder but people have been just like startled into like waiting for regulators to do something to help them what how do we operate in this new system and they've just been plundered and i think that could be this sort of what you're seeing i don't know i'm not a sociologist but it seems quite remarkable that there seems to be some sort of correlation there between these events practice bamma is like the boris yeltsin equivalent of somebody who oversaw the rise of the oligarchs on wall street and
across the corporate america and the whole generation getting strung out on opiates in a massive die off and then leading into trouble trump could possibly be you know . somebody has somebody has to end it you know because this is intolerable but i think we have to go to the second half yeah it's like barack obama is the boris yeltsin equivalent anyway they go around the rank don't go away so they're out there. saying sloppy explicitly thank you head on but here you my pappy i would. say. are keyboard if you downsize getting you know four pairs of them enough cause we're good lawyers would come to. you.
but if that he come will get us from. the can come a little difficult and often it is a case of will they. need to get out of the. committee of what might have been. a life i don't believe what's going to come back i want to go as well but the books are left out when nobody. comes out of a. lot of people to kill and it's a comedy to the divine if you can a conservative.
welcome back to the kaiser report i'm nice guys are going to continue our conversation with marc bolan marc welcome back thank you good to be here it really carved out an excellent space for yourself in the financial journalism been following you ever since the m.f. global kind of transition from a to a post rules based economy is what we have in america unfortunately today and just to reiterate an important point that a recent investigative piece in the nation magazine found that j.p. morgan had a four billion in fines for mortgage fraud was more mortgage fraud that's how they paid their fine it offered financial relief on mortgages they didn't actually hold . so to pay the fine for the fraud to commit more fraud that's what i've been saying now for five six seven years. and nobody i've been saying this many many times. but nobody seems to really want to take this on board they don't really want
to admit that jamie dimon commits fraud and to pay the fines for the fraud he commits more fraud that's a serial fraudster and he's undermining america and he's on par with the opiate overdose addiction problem and deaths but nobody why does he get a pass like this i mean if the devil showed up is it because he is the devil and people are mesmerized by the devil. i can't speak to that but i can say that you know in a world where the board of directors takes very little action is very slow to act i mean wells fargo how long does it take them to look at a situation and referee even reprimand the executives were in an environment where wall street wants profits they want continued stock price appreciation you know that better than anyone else jamie dimon has delivered on a relative basis there's analysis that says you could carve up j.p. morgan and it's worth more in parts than it is as a whole but j.p. morgan. dispute that so on the one hand you know investors think jamie dimon has
delivered the promise land of the other hand people who are looking at the criminality the documented criminality and wondering where the board of directors but even paul tudor jones who's got to be one of the red meat eating carnivores in the hedge fund space capitalism through and through capitalist kind of transformed the hedge fund industry back of the early eighty's one of my personal favorites in the space of walter jones is as a legend he is even commented that the wealth disparity in america caused by we're sort of this. serial criminality by the likes of jamie diamond is destroying the country why why is jamie dimon not care that he's killing his country well i think you're raising a great point here and it's really insightful because there are. our a lot of hedge fund managers who look at income inequality who look at the criminality that's
taken hold on wall street i've had recorded conversations with senior bank executives who helped me out considerably during our global who are horrid by the criminality so i think the level of dissatisfaction with the criminality that is tolerated throughout the financial system is not just among radicals it is now in my opinion i've seen the establishment elite sort of make their case that criminality has gone a little too far so at what point is a count on ability going to come in on wall street i don't know but i've seen a lot of people ask for this is it like the harvey weinstein situation or area abbott alleged serial rapist who's abusing women because he's a gatekeeper to the hollywood industry nobody will tell on him they won't report is alleged raping is it so in the financial industry because jamie dimon such a big player in the industry he's like the harvey weinstein of finance the hedge funds are getting kind of abused in
a lot of ways but they don't report on him because he's a gatekeeper so mark. you could draw definitely draw parallels and i think that there is. there is a concern that if you speak out in the financial industry you will not get employed your employment prospects diminish greatly if you tell the truth well that's going to whistle blowers get penalized now absalom to go to jail now look at the j.p. morgan whistle blower who blew the whistle on the c.d.o. she couldn't get a job on wall street she have an ivy league education not like harvey lie same allegedly raping everybody and it wasn't reported so there are two components to this when i look at the wall street i look at blocked investigations block prosecutions but the power is so significant they can also block public discussion of criminality you know when you can block. discussion and public debates of an important issue and then block the justice system from working why
isn't this being addressed well it's true that they block the public domain from discussing these issues by censoring some going on may stream media and openly discussing these topics we talk about them on our team and our see is giving journalistic truthful analysis of these issues and so we're aided. it's really a shame because the way a democracy is designed to work the media has to bring the truth into the general public that's a lot of ways how policy leaders learn about policy leaders learn about corruption in a lot of cases through the media you can document points where the media has spoken out and then positive reactions have occurred in washington d.c. then of global their media superstars and very little known journalists both of whom really contributed greatly and when m.f. global customers got their money back you know i think they can thank programs like
our capital accounts there are also some major journalist you know a huge list william cohen was talking to the obama administration he ruled in some things the chicago journalist here who's done some things that no one knows about there are a lot of people in the world of journalism who came to the aid of m.f. global customers and no one knows that that happened but i said for years that j.p. morgan is paying the fines for committing fraud by committing more fraud and now that it's been put in the public record and it's been publicly exactly accepted i get nothing but. i'm i'm i don't feel what i do a lot of us the troops see after you see commodity futures trading commission those just reversed course on obama era regulations regarding high frequency trading tell us about it. well i can tell you that the market macon systems are completely different you know you've been inside the market so you know. the high frequency
traders right now there are there is a different standard in order to play that game you have to pay technology fees that are just astronomical so they have created a game a used to be a system where market makers people like you and i who had knowledge in the financial system we could we could go down to the exchanges we could make markets the exchanges used to be income equalizers their people from the south side of chicago who never would have made six figures go on in the exchange make six figures terry duffy is a great example of a guy who the exchanges have made millionaires so you can't do that anymore it's all very elite game of high frequency trading pay millions and millions of dollars in order to play in that in that way i love the phrase income equalizer you know when i started last in one thousand eighties it was very much the income equalisation was very much a part of the mix so you had guys coming in to shine boys you know guys from
backgrounds working class backgrounds who were shining guys is who got a license that became multimillionaires but it's just not there anymore for this high tech driven high frequency trading to happen in high frequency trading must be different than sticking it's front running but on an extremely rapid pace so it's no different than me sticking a hose of my neighbors car gas tank in siphoning off money siphoning off gas that's a high frequency trading does business siphoning cash you're not adding not making a market you're stealing liquidity you're not adding market making that's a misnomer that's false i hope people don't think that they're adding some attribute to markets they're stealing and they're stealing in a high frequency way this rapid stealing they've they've made stealing on steroids yes or no. that's a sweeping statement and. i've got to say i mean there are a lot of issues with high frequency trading but all batted around the big issue us
i always say that because in two thousand and eight during the crisis where was the liquidity where were the high frequency traders there was complete credit freeze and they had to go to the fed and get twenty trillion dollars if they were doing an honest man's work and honest business they would have stepped in and provided the liquidity and the market making to keep markets functioning but where were they they were in the back telling their money and hoping the fed james cramer on c n b c. the ball did get make money with that free money from the fed. because they're not because it's not honest it's not a sweeping statement as you have characterized it it's for again honest analysis all those crooks mark. well i'll tell you what i've been involved in the markets i don't want to be on the other side of a market crash a lot of people put their hands in pockets i've seen that happen during market crashes so these are independents firms that are involved in market making and high frequency trading used to be able to set the machines to poll orders when there was
potential for a crash to occur in electronic eyes that's what happened during the two thousand and ten flash crash and then they figured out how to manipulate. you know and that's that's where you get your spoofing and i know from personal experience and my all the specialists that number one five zero one seven six is the technology to increase or decrease the amount of balance required to create an uptick or downtick using algorithms now i invented that and i can tell you that j.p. morgan and goldman sachs abuse that pakistan along by cantor fitzgerald to manipulate prices i know that for a fact they manipulate markets because they use my technology and the minute they use my technology and i talk to somebody from c. and b. c. fast money about this recently to confirm that cantor fitzgerald and others abuse the technology to manipulate my. it's those are the facts that words affected regulators on that mark. and that answer for the regulators out of
a mention another scenario is short selling the banks and the way they are minute there's a huge lawsuit it's got no coverage whatsoever there's a trillion dollar lawsuit pension funds are suing the banks for how they borrow stock and then allow it for short sales so there are a number of issues and hopefully they get straight now to hope the courts straighten him out and i hope that we as a society can start to look at blocked investigations can look at manipulating prosecutions and in these practices because they're destructive crack was told by short sales there is be a rule book called the top to the the top secret the the rule that you can't short sell you can only short sale on a on an uptick right take rule and they got rid of that so that opens up abuse and short selling and again the the the repeal glass steagall the high tech top to the high tech rule uptick rule elimination the commodity futures
modernization act which. point in history born in my appears brooksley born futures modernization act and just goes downhill from there got to go thanks marc for being on the kaiser report my pleasure max that's going to do it for this edition of the kaiser before. i would like to thank our guest mark mullins going to catch us on twitter as a record castro on you tube and max keiser t.v. until next time.
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