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Man Urinates On Cornflakes Conveyor Belt; FDA Launches Criminal Probe

“Products that could have been potentially affected were Rice Krispies Treats, Rice Krispies Treats cereal and puffed rice cake products, all of which would be past expiration date.”

That rather disconcerting bit comes from Kellogg’s and references an incident that apparently occurred in 2014 at a plant in Memphis, Tennessee. 

In a video – originally uploaded to World Star Hip Hop on Friday – a worker appears to urinate on the assembly line. As The Daily Mail dryly notes, “At first it is not clear what he is urinating on, but as the self-shot cell phone video pans upwards, a conveyor belt leading to thousands of corn flakes can be seen.

“[We] immediately alerted law enforcement authorities and regulators”, a company spokesperson said.

The FDA is conducting a criminal investigation into the matter but you shouldn’t worry too much, because if you had any of the “potentially affected” products you apparently survived. They would all be past their expiration date at this juncture. 

Here’s the video for those who are inclined to view it:

We suppose the question here is this: how often does this happen to your food? We’d imagine most people don’t film their exploits and when they do, they don’t upload them to the internet. We’re reminded of another rather unfortunate incident that unfolded at Subway two years ago involving some bread.

Additionally, you might have heard the saying “who peed in your Corn Flakes?” 

Now we know the answer: this guy did.

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Peak Oil Price – Saxo Says Downside Risks Dominate Crude Outlook

Crude oil prices “appear to have reached their peak for now,” warns Saxo Group’s Ole Hanson as he explains there are several reasons why.

Among the chief concerns putting a damper on Brent prices is an upcoming meeting between OPEC and non-OPEC producers to discuss a potential output freeze, he says. Iran is now saying it will not curb production before it has reached 4 million barrels a day.


Another factor curbing the price of Brent is renewed forward-selling on the back of the rally, which may accelerate if Brent breaks below $39, Hansen says as he sets out the levels and downside risks traders need to watch out for.

Saxo’s Ole Hanson summarizes the state of play…

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Here’s How The Establishment Will Steal The GOP Nomination From Trump

The political establishment in America is terrified.

Donald Trump gets closer to securing the GOP nomination with each passing month and his rivals on both sides of the aisle are in disbelief.

Worse – or “better” if you enjoy entertainment – Trump has seemingly given up any attempt to be anything other than… well… than Donald Trump. He recently offered to pay the legal fees of a supporter who punched a protester, shouted almost maniacally about “Bernie guys” at a recent rally, and frankly seems to have gone punchdrunk with his newfound political clout.

That’s not necessarily a criticism. Heaven knows it’s funny and obviously there’s something highly satisfying about watching the establishment squirm.

All the same, no one – not even Trump’s staunchest supporters – really know what to expect from a Trump presidency. And virtually no Washington veterans want to find out. In fact, as we reported last week, a group of GOP and tech execs recently made stopping Trump the topic of the American Enterprise Institute’s annual World Forum, a secretive affair held on Sea Island, Georgia.

And although everyone now jokes about just how unstoppable the Trump “juggernaut” has become, the establishment isn’t called “the establishment,” for nothing. Trump may have proven remarkably adept at whipping certain sectors of the electorate into a veritable frenzy, but he himself will tell you that he’s no politician. In fact, he prides himself on being “outside the political fold,” so to speak.

He may know quite a few tricks in the boardroom, but he doesn’t know all of the tricks of the political trade, and as Bloomberg outlines below, he could still have the nomination “stolen” from him, if the party pulls out all of the stops.

Below, find excerpts from “How To Steal A Nomination From Donald Trump”.

*  *  * 


The Hunt for Double Agents

On Saturday morning, while the candidates were scattered across Ohio and Florida, Illinois and Missouri, Cruz’s campaign was back in Iowa trying to wring another victory out of the state that gave him the first win of the primary season. After Iowa Republicans caucused on Feb. 1, diehards who stuck around their precinct got the chance to elect a local delegate to the county convention. It was those 1,681 precinct delegates who attended conventions in each of Iowa’s 99 counties this weekend, where they selected from among themselves the delegates to subsequent conventions at congressional-district and state levels. Cruz’s victory awarded him eight of the state’s 30 delegates—Trump and Rubio each got seven—but his campaign saw that as a beginning rather than an end.

In many states, primaries and caucuses are just the most public face-off in a multi-step process to select the individual delegates who will choose the party’s nominee. Only a small share of the 2,472 total convention delegates are free to pick the candidate of their choice, regardless of the election’s outcome, on the first ballot, while about three-quarters of them are gradually freed to do so on subsequent votes. That means there is a small pool of so-called unbound delegates who are pure free agents, but a much larger number who can be recruited throughout the spring as double agents—delegates who arrive in Cleveland pledged to Trump, all the while working in cahoots with one of his opponents and confessing their true allegiances once it is safe to do so.


Reports of the Party Boss’s Death Have Been Greatly Exaggerated

It has become fashionable to renounce the term “brokered convention” with the argument that, as strategist Stuart Stevens has said, “there aren’t any brokers.” There may no longer be the handful of national leaders able, as their early 20th Century predecessors did, to settle multi-ballot convention battles in smoke-filled hotel suites.

But delegate selection is still an internal party matter, and in state capitals the Republican establishment holds unusual sway. In those states with a Republican governor, the state party is typically a fiefdom of the executive controlled through a chosen chair.

During the nominating season, this often means a governor can freely stack an at-large slate with cronies, expecting a rubber-stamp from a subservient party committee. In Iowa, where Governor Terry Branstad in 2014 helped to reclaim the state party after an unexpected takeover from supporters of Ron Paul, Republican officials actively discourage their rank-and-file from even understanding how the state’s 18 at-large delegates will be selected.

Party bosses stand ready to gut some of Trump’s greatest primary-season successes. He won every one of South Carolina’s 50 delegates, by finishing first statewide and in each congressional district, but Trump is powerless to fill that slate with his own people.  “Whoever is chosen for national delegate will have allegiance to the party establishment, and the party establishment is never going to be fond of Donald Trump,” says a South Carolina Republican insider.


The Art of the Deal

There is nothing in the RNC’s rules that prohibits delegates from cutting a deal for their votes, and lawyers say it is unlikely that federal anti-corruption laws would apply to convention horse-trading. (It is not clear that even explicitly selling one’s vote for cash would be illegal.)

Every delegate and alternate is already paying for individual travel costs to get to Cleveland. Most state parties tell delegates to expect to spend $3,000 out of pocket on airfare, hotel and meals, and for some it could prove an unexpected hardship. (Delegates are assigned hotels by state; some could end up paying for the La Quinta Inn, others stuck with a bill from the Ritz-Carlton.) As blogger Chris Ladd has noted, Trump’s slate in Illinois contains “a food service manager from a juvenile detention center, a daycare worker from a Christian School, an unemployed paralegal, a grocery store warehouse manager, one brave advocate for urban chicken farming, a dog breeder, and a guy who runs a bait shop.” Could some of them be tempted to flip their votes if a generous campaign, super-PAC, or individual donor picked up the costs of their week in Cleveland?


The Disqualifying Round

If the primary calendar ends without any candidate emerging as its presumptive nominee, all those responsibilities will remain with RNC Chairman Reince Priebus. Thus far, Priebus has been docile toward Trump, who early on made being treated equitably by the national party a precondition for promising not to run as an independent in the general election. But if Trump doesn’t finish with a clear majority of delegates, Priebus will face immense pressure from party officials and donors to undermine him.

*  *  *

And there’s much, more in the full article at Bloomberg including how the party could take the nomination at the convention in a series of procedural maneuvers.

But perhaps Ted Cruz put it best when he said the following in Maine: “If the Washington deal-makers try to steal the nomination from the people, I think it would be a disaster. It would cause a revolt.

It sure would. And make no mistake, Trump would be more than happy to lead it.

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Putin Orders “Main Part” Of Russian Army Out Of Syria As Peace-Talks Resume

Having collapsed just over a month ago, peace talks to end the Syrian strife resumed today amid the “fragile” truce brokered by US and Russia. So that makes the following even more intriguing:


So having stated proof of Turkish troops in Syria this morning, and after the resignation of the Russian navy commander, Putin tells the foreign ministry to intensify their role in the peace process.

First this…

Commander-in-Chief of the Russian Navy Admiral Viktor Chirkov has resigned and will be succeeded by Northern Fleet Commander Admiral Vladimir Korolev, a source in the Russian Defense Ministry told TASS on Monday.


“Chirkov handed in resignation for health reasons due to which he cannot perform the commander’s duties around two weeks ago. Admiral Vladimir Korolev who is now acting commander-in-chief is expected to be appointed Navy’s new commander-in-chief,” the source said.

Then this…

Russia has evidence that Turkish troops are on Syrian territory, Russian Foreign Minister Sergei Lavrov said in an interview broadcast on Sunday, accusing Turkey of a “creeping expansion” on its border with Syria.


The comments by Lavrov are the latest confrontation between Moscow and Ankara, after Turkish jets shot down a Russian warplane near the Turkish-Syrian border in November.


“Turkey has started to declare it has a sovereign right to create some safety zones on Syrian territory,” Lavrov told Russian television channel Ren-TV. “According to our data, they have already ‘dug themselves in’ several hundred meters from the border in Syria. … It’s a sort of creeping expansion.”

And as WaPo reports, the peace talks resumed today with “No Plan B”

After swiftly collapsing just over a month ago, negotiations to end the civil war in Syria resumed Monday amid a partial cease-fire that has reduced violence but still leaves room for Syrian forces and their allies to wage targeted offensives.


The U.N. envoy to Syria, Staffan de Mistura, praised what he described as greater international support for bringing an end to the conflict, including the “fragile” truce brokered by the United States and Russia that has largely held since taking effect more than two weeks ago.


“These talks are wanted by the international stakeholders,” he told journalists at the U.N. headquarters in Geneva.


But he warned of even greater violence should the talks fail, saying that “the only plan B available is the return to war, and to an even worse war than we had so far.”

And finally (as Bloomberg reports),

President Vladimir Putin ordered the “main part” of Russia’s military force to begin to withdraw from Syria, saying it’s completed its main objectives.


The pullout should begin Tuesday, Putin said Monday in Moscow at a meeting with Russia’s defense and foreign ministers. A Russian air base and a naval base will continue to function, Putin said. He instructed Foreign Minister Sergei Lavrov to boost the nation’s role in the peace process.


Syrian leader Bashar Al-Assad has been informed of Russia’s decision, said Putin’s spokesman, Dmitry Peskov.


Russia’s intervention in Syria swung the war in favor of Assad’s forces, which made major advances in strategically important regions since September. The conflict, which has killed a quarter-million people since 2011, has sparked a refugee exodus that’s roiling European nations and allowed Islamic State militants a bastion from which to expand their regional influence and plot terrorist attacks.

Which seems like a tough proposition since it’s tough to “pull out” when you have an airbase and naval base…


As TASS reports, Putin said on Monday at a meeting with Defense Minister Sergey Shoigu and Foreign Minister Sergey Lavrov.

“I think that the tasks set to the defense ministry are generally fulfilled. That is why I order to begin withdrawal of most of our military group from Syria starting from tomorrow,”

In Putin’s words, during their operation in Syria, Russian military have demonstrated professionalism and teamwork, having performed all the set tasks.

“Besides, our military, soldiers and officers demonstrated professionalism, teamwork and ability to organize combat work far away from their territory, having no common borders with the theater of war,” he said.

It would appear that Putin is a) confident that the rebels are as good as wiped out (having been surrounded and on the verge of being routed), b) is confident that Assad is secured, and c) would prefer the narrative to be “success” on his terms as he plays “peacemaker” and withdraws leaving US “aggressors” behind.

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Options Signal Short-Term Complacency, Medium-Term Terror

With one central bank meeting down, but two to go, VIX and VSTOXX (Europe’s VIX equivalent) have plunged to 2016 lows discounting any ‘events’ upsetting the complacency anytime soon. However, as Goldman’s options strategists note, the medium-term skew (3M to 1Y) are at or near record highs as traders prepare for turbulence amid ‘Brexit’, US elections, and of course the inevitable ‘Fold or No Fold’ Fed decisions later in the year.


Last week, the ECB delivered a predominantly constructive policy package. Over the next three days, the BoJ and the Fed will convene too. We expect the Fed to keep the rate unchanged, but also to signal that second rate hike is likely before too long.

VIX: From “Red Zone” to “Dead Zone”

Despite some post-ECB market jitters, risky assets enjoyed a healthy rally and volatility fell sharply on both sides of the Atlantic. The VIX is at ytd lows, suggesting that the equity market is expecting no imminent rate hikes, and is pricing in the recent uptick in U.S. economic data.


S&P 500 Options remain very complacent ahead of The Fed…

The S&P 500 one-week straddle is currently pricing in a +/- 1.5% S&P move for FOMC week; corresponding to S&P 500 breakevens of 1992-2052. The SPX was below the lower breakeven of 1992 last week and last saw the higher end of the breakeven range (2052) on December 30, 2015. The 1.5% straddle price is well below the 11-year average of 1.9% back to January 2005 and a 48th percentile ranking relative to the last year.

We can use S&P 500 digital option pricing to estimate the option markets probability of a given percentage decline over the next month. S&P 500 options were recently pricing in a 3% chance for a -10% market move over the next month; that is one-third of its level on February 11 when the SPX hit its ytd low and is slightly below its median level back to 2005.

But SPX 3m-1y skew levels on the rise

While 1m SPX skew suggests lower uncertainty over the short run, 3m-1y skew has been on the rise.

 Exhibit 6 shows that 3m-1y SPX skew levels are all trading near their highs relative to both 1y and 10y histories.

Longer-term hedging demand may continue to increase, as investors move away from the short-term trading mentality that obsessed the market earlier in 2016, with investors now more willing to spend for optionality which covers future rate hikes, potential “Brexit” risks (suggested by a faint bump in the VSTOXX volatility term structure around June), and US election uncertainty.

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