Monthly Archives: January 2018


No, not the poorly done Bruce Willis vehicle from 2009. Today, the dog barks about the defining down of discourse through the use of "surrogates."

My personal experience with surrogate doping came from my days on CNBC. Since the fairness doctrine had been revoked (#GIK), either a second panelist or a follow up question was the accepted standard op when I appeared. I was generously compensated to give my views and the anchor always indicated my status as such. I can honestly say I never promoted a POV I did not fully endorse. I can also assure you that was not true of others in a like position as me.

Here's how: a phone call or email: Could you appear on- Insert Show Here- and say you don't like - pick Oil, S&P, Yen, 10 year Notes -here?? If you know me, I would rarely answer no to the latter, but certainly not if I was long/constructive. Many other guests in my position would accept the time slot and surrogate the predetermined viewpoint, take the cash and move on.

Today, the major networks (this post in response to a poor decision on CNN's part with a recent "contributor.") now regularly, nightly, always compensate a small gaggle of un-moored heads to spew a POV into the bandwidth under the cloak of diverse opinion. They often have weird pedigree's like "Former Communications Director of Such and Such" or "Former Adviser on Rush Hour Traffic To..." (If they're an expert on the subject why are they all former?) A confrontational delivery, goofy bow-tie or goatee, or southern drawl gets bonus points.

The truth is they are being compensated to spew their message as if clarifying the random ramblings of the POTUS. That is not journalism and no deeper understanding of an issue can be obtained by granting them a seat at the table. Their is a difference between a surrogate and a contributor that needs to be respected. These people are willing to prostitute themselves openly for the check. Both sides of the aisle are guilty of the surrogate vomit.

Here's a qualifying level for future Presidential candidates : if you need someone else to clarify your view through exaggeration, you're out.

The Universe Self Corrects


Kurt Andersen - Sept 2017

How America Lost Its Mind

The nation’s current post-truth moment is the ultimate expression of mind-sets that have made America exceptional throughout its history.

He is, first and last, a creature of the fantasy-industrial complex. “He is P. T. Barnum,” his sister, a federal judge, told his biographer Timothy O’Brien in 2005. Although the fantasy-industrial complex had been annexing presidential politics for more than half a century, from JFK through Reagan and beyond, Trump’s campaign and presidency are its ultimate expression. From 1967 through 2011, California was governed by former movie actors more than a third of the time, and one of them became president. But Trump’s need for any and all public attention always seemed to me more ravenous and insatiable than any other public figure’s, akin to an addict’s for drugs. Unlike Reagan, Trump was always an impresario as well as a performer. Before the emergence of Fantasyland, Trump’s various enterprises would have seemed a ludicrous, embarrassing, incoherent jumble for a businessman, let alone a serious candidate for president. What connects an Islamic-mausoleum-themed casino to a short-lived, shoddy professional football league to an autobiography he didn’t write to buildings he didn’t build to a mail-order meat business to beauty pageants to an airline that lasted three years to a sham “university” to a fragrance called Success to a vodka and a board game named after himself to a reality-TV show about pretending to fire people?

And here 's how it falls apart, or back together, but basically self corrects:

Beyond the cheering and the claiming responsibility for the great market advance is the gravitational pull of QE we outlined those many years ago. You remember right ? : When CNBC anchors would ask me about "excess reserves" and ZIRP and LSAP and I would be hung out as an Obama left winger for outlining a plan. QE inverted the historically normal progression of economic activity leading market movement. The whole purpose of the policy was to attempt to drag economic activity out behind monetarily supported risk assets. Remarkably, it worked better than even I had imagined. I was one who knew from the inside how massively upside down the financial system was and it scared me, so I became a "we should try and save it" pragmatist.

So, as the euphemistic terms of  "normalize" and "unwind" replace the harsh reality of tilting back toward stringency (or tolerate higher inflation) the markets will/are bring a fresh clarity to the fantasy land. Nothing tests character like a bleeding P/L. Interest rate markets are quietly moving into areas that are secretly keeping FI instrument holders from a peaceful  night's rest. A feeling many have never experienced before. The Trump Presidency is the acme of America losing its mind but that does not mean we won't 'find" it again. Sometimes, all it takes is a good hard slap in the face from Mr. Market.

Enjoy the entire article if you haven't read it on


Merc Stories Ch 3

The Dean Witter Govie Desk

I started as a house pit clerk in 1984 in the T-Bill pit signaling spread markets back to the Dean Witter Government Bond desk in the WTC. The team was an awesome melange of personalities and disciplines, some of whom I remain friends with to this day. The legendary Jon Eckstein, inventer of the year bill contract !, was our head. We were legit "playas" on the Street and threw cash and futures around in sizable quantities. 200 and 500 lot hits ( small now but ground breaking at the time), several basis points through the prevailing were common. We got early pings from the Fed on bill passes, matches and TTandL calls (GIK) [I remember a TT&L call that sent the market down about 15 bps in a heart beat, hilarious !] and Jon would ring down the line with calm orders into a 15 bid like, "12 trades, ok?" Meaning sell everything down to 12.

So, through the middle of 1987, the dollar was taking a beat down of serious degree. The dollar index had dropped from 124 to 96 by the Crash. As August 1987 rolled into September, the desk accumulated a steady stream of cash bonds and notes and with me, a heavy supply of this rapidly growing contract called Eurodollars. Now, keep in mind, most of these traders had NEVER owned "stuff" - we SOLD stuff - so taking huge hits and heat on long positions was not only gut wrenching but quite probably career ending. But, down went the buck and FI instruments right along.

By October, we were in lock down mode. A few big traders would come in early and ring me before the MD's could see them on the line and say things like, "K, buy 500 more Urins after the open, but don't ring back with the fill, we don't want them to see us on the line !" Order tickets were rumored to being stuffed in desk drawers. Several closed door meetings and position justifications took place. Several traders prepped me for a coming house cleaning but promised to get jobs elsewhere and come back to me. This was not well aligned with a "Stocks and Socks" vision. And then....

CRASH ! T-Bills went limit up on Friday afternoon and serious FTQ grabbing was everywhere. TEDs exploded only to collapse on Monday when Eurodollars opened on an indication of up 300 at up 400. A friend got on the line with me and bunched up all the desk's sell orders. I recall my partner on the floor and me selling huge amounts from 350 to 300 higher. Within an hour or so the market was only 10 basis points wide and we were still tearing down the majority of the position that only 36 hours earlier was hemorrhaging like the Exxon Valdez. The year was made and bonus', out of the question before, were back on the table.

In January, Witter management decided that perhaps the risks (there's that tricky word again) we were taking were not in line with the corporate structure. The operation shuttered not because we lost money, thanks to the crash, we had made a ton, because the volatility scared the bejeezus out of everyone.

The Skittles Incident

My long time partner on the TF was a living legend everyone knew as Stumpy. In a strange "small world" connection, Stumpy and I knew each other prior to working together. My college buddies and I were annual rabble rousers on the infield of the Kentucky Derby and had built a reputation and following as the guys from Cleveland who were able to get 20 to 30 gallons of Popov-laden orange juice into the infield every year. If you've ever seen the mountain of confiscated contraband at the tunnel entrance, you would understand what an achievement this was. So, it came  to pass that Stumpy  had visited our camp, randomly, in the early 80's.

Now, on the floor, we never left the desk for lunch breaks like other more mature operations. Stumpy and I would load up the security guards at Xmas and they would kind of, shall we say, look the other way- it was Chicago - while large quantities of food were smuggled to our desk. We had proudly pulled off a red/white checked table cloth Italian pasta lunch, 150 White Castle double cheese (the runner had to cab it to 2100 S Wabash), and several bean pies and Defenders from the Dan Ryan exit ramp to mention a few classics. On a daily basis, our runners looked like Tom Hulce at the Food King in Animal House, stuffed with McDonald's and pounds of candy and Hostess products. New candidates had their choices evaluated on "not held" orders and quality of fills on Hostess Strips (1 of everything). They say you better be able to defend your decisions in a Bridgewater confrontation, the same, or worse was inflicted on our teammates. An inadvertent Zero bar or passing up a Choc-o-dile could lead to weeks of torment.

So, it was Retail Sales day - the real trading day prior to the elevation of Unenjoyment Day to top volatility day.  Stumpy decides to do a candy line up (this is years before Seinfeld btw,)   of Skittles and tropical Fruit Skittles (1989 release) on the high desk between him and me. I'm not a big fan - from 7:10am right through the opening range- the 2 of us are critiquing the flavors. A few seconds before the data release, I tire of the product and FLICK a Skittle off into the distance. Some 30 feet away on the Pit is our clerk from Wisconsin, his badge was CHZ, and 7:29: 55, 56, BAM..Skittle right in the eye and out pops his contact lens. Down goes CHZ, down goes CHZ.  And boom  a huge Retail Sales report ! So, he's holding his eye and searching the floor and none of us can get an order in. Everyone is trying to sell and he can't see a thing.  I mean this is like big upward revisions, the Fed's doing early matches (GIK) and probably hiking at the next meeting type stuff. The guy is hauled up to the desk and berated by our bosses all the while trying to explain that something hit him in the eye, but they would have none of it.

Needless to say, Stumpy and I just did our best to not bust out laughing. That was the most expensive Skittle ever, and until now, only 2 of us knew.

Merc Stories

Inspired by Comedians Riding in Cars Getting Coffee, the following posts are old yarns from the glory days.

Episode 1 - The World Bank Debacle

We did a fair amount of business for the World Bank in that they were a LIBOR minus borrower and could ramp up some simple rolls in Eurodollar futures. My boss, a notorious mad man, that made Jordan Balfort look like a piker, had been "missing" from the floor on a multi-week bender, calling in every few days only to sign off with, "You haven't heard from me."

During his absence, the pit configuration "rolled." To explain, as the near by contract got close to expiry, the volume in the second option would over take it and the contracts would change places in the pit. Upon returning to the floor, the right fine gentleman took his spot next to me on the desk and quickly hit the direct to the WB to jaw bone up his attendance. The MD obliged by telling BSS (I will use 2001 Space Odyssey encryption of his acronym out of respect) to sell 650 some odd spreads. Now, in Eurodollars, when you sell a spread you always sell the more forward contract and buy the deferred, regardless of price. Without missing a beat BSS began blasting 100 lots in the front of the pit and grabbing 2nd option - not realizing that while he was over-indulging for 3 weeks the stations had shifted.

I was busy with my usual cumbersome Swaps non-sense but a few "hundy" into the barrage, looked down at his order and banged my hand on the desk and pointed the correct position of the months. From there, all hell broke loose. Rather than just go to the spread market and square up the proper position, he stormed down to the pit and grabbed our filling broker - fortunately a good friend - by the neck and started shouting "Get me out, get me out" in a fashion only Mortimer Duke could appreciate.

Returning to the desk, under the shocked and trying not to laugh faces of all around, he then demanded that the rest of us, "Help him trade our way out of this !" And proceeded to throw every nearby desk object at our heads. Now let's be clear, there was a few thousand dollars down the tube here but a scratch not a flesh wound by execution standards, not for long. A flurry of stupid 50 lots later we were scratching and half-ticking a giant mess. What should have been $2500.00 in damage quickly spiraled to roughly $15,000.0!!

Once the position was flat and the dust had settled, he bolted across the street to our office with a very Trumpian explanation to the Head Honcho of what went down. That is, it was a big mistake by the World Bank trader and us, not him. Another long absent bender followed, eventually leading to his removal from the firm. Good Times.

Tomorrow- The Infamous Skittle Incident