Trump Attorney Quashes Rumors Of Impending Mueller Firing

An Attorney for President Trump has vehemently denied rumors that special counsel Robert Mueller will be fired over revelations of politically motivated malfeasance by the FBI towards Hillary Clinton and against Donald Trump, including disturbing text messages which were sent between top FBI investigators implying the Trump-Russia investigation may have been launched as an "insurance" policy in the event Trump won the 2016 election. Furthermore, GOP lawmakers have asserted that FBI top brass relied on a salacious and unverified "dossier" to launch the Trump-Russia investigation. Also noted by critics is the fact that Robert Mueller"s "right hand man," Aaron Zebley represented Clinton IT staffer Justin Cooper - a Bill Clinton aide who "jerry-rigged" Hillary Clinton"s "private, illegal" server in her Chappaqua home. 

Peter Strzok, Robert Mueller, Ty Cobb

Despite all of that, Trump attorney Ty Cobb told Politico, "As the White House has repeatedly and emphatically said for months, there is no consideration at the White House of terminating the special counsel.” 

Earlier in the day we reported that Trump transition team attorney Kory Langhofer sent a seven-page complaint to House and Senate oversight committees investigating the 2016 election to lodge a complaint that the special counsel improperly obtained "many tens of thousands" of emails from the Trump transition team from the General Services Administration - the government agency responsible for setting up and administering the transition email system which uses a "ptt.gov" address. Kanghofer says these emails were obtained through "unlawful conduct," and that the Trump team had been segregating emails with "Executive Privilege" in anticipation of giving the rest to Mueller"s team. 

On Friday, Rep. Jackie Speier (D-CA), a member of the House Intelligence Committee, said there was a rumor floating around DC that President Trump will fire Mueller before Christmas, but after congress leaves for winter recess. 

“The rumor on the Hill when I left yesterday was that the president was going to make a significant speech at the end of next week. And on Dec. 22, when we are out of D.C., he was going to fire Robert Mueller," Speier told California"s KQED News.

"We can read between the lines I think," Speier told KQED, adding "I believe this president wants all of this shut down. He wants to shut down these investigations, and he wants to fire special counsel Mueller."

Speier joined Rep. Adam Schiff (D-CA) over concerns that the House Intelligence Committee"s Russia investigation would be shut down by the end of the year. 

Reps Jackie Speier (D-CA) and Adam Schiff (D-CA)

Schiff shot off a series of nine tweets explaining why he"s "increasingly worried Republicans will shut down the House Intelligence Committee investigation," pointing to the fact that "Republicans have scheduled no witnesses after next Friday and none in 2017. We have dozens of outstanding witnesses on key aspects of our investigation that they refuse to contact and many document requests they continue to sit on." 

Read the rest by clicking on Schiff"s tweet and scrolling down. 

I’m increasingly worried Republicans will shut down the House Intelligence Committee investigation at the end of the month.

Here’s why:

— Adam Schiff (@RepAdamSchiff) December 15, 2017

White House press secretary Sarah Sanders denied rumors that President Trump was considering firing Mueller in October, stating "There is no intention or plan to make any changes in regards to the special counsel," adding "I think we should let the process play through before we start looking at that."

Perhaps GOP lawmakers would be more comfortable with Mueller"s special counsel if Attorney General Jeff Sessions would appoint a second special counsel to investigate the FBI? Alas, it looks like that may be nothing more than wishful thinking for the time being. 

Quants Dominate The Market; Unexpectedly They Are Also Badly Underperforming It

Two days ago, JPM"s head quant made a striking observation: "Passive and Quantitative investors now account for ~60% of equity assets (vs. less than 30% a decade ago). We estimate that only ~10% of trading volumes originates from fundamental discretionary traders." In short, markets are now "a quant"s world", with carbon-based traders looking like a slow anachronism from a bygone era.

Bloomberg confirmed as much today, when looking at another divergence between quant funds and traditional, discretionary managers: "systematic strategies have barely budged from near-record participation in U.S. stocks. Meanwhile, fundamental equity long-short managers can’t afford to be anything but picky, considering the market’s narrow leadership. The result: the largest gap on record between humans’ and computers’ gross exposure to U.S. equities, data compiled by Credit Suisse Group AG show."

As the chart below shows, and confirms what JPM already revealed, "for now, systematic traders are the dominating force in markets."

What is just as curious,is that according to Credit Suisse "quants hit the highest gross exposure to equities on record around May 12. It’s since come down slightly, but still remains elevated."

So in light of near record exposure, and a market that continues to grind higher to all time highs, one would expect the average quant to be having a banner year. One would be wrong, because as the WSJ"s Greg Zuckerman reports "this year is shaping up to be a dismal one for so-called quant funds, typically some of Wall Street’s hottest investors." Some examples:

At Two Sigma Investments LLC, the $45 billion firm’s flagship Compass fund is down 2.5% this year through May 31, fund investors say. In 2016, the fund climbed 10.33% for the year and 15% in 2015.

AHL Dimension, a $5.2 billion fund that is the biggest managed by Man Group PLC’s Man AHL unit, is up just 2.2% this year, through June 9, after dropping 1.5% last year.

And Winton Group’s $10.5 billion Winton Futures Fund rose just 1.4% through June 7. It fell 3% last year and climbed less than 1% in 2015. The firm recently cut fees charged to its investors.

Overall, according to HFR, quant funds "which use sophisticated statistical models often developed by Ph.D.s rather than trade based on human research and intuition to find attractive trades" were up a modest 1.44% YTD drastically underperforming both the S&P"s 8.7% gain for the same period and the 5.7% return for the Vanguard Balanced Index Fund, which invests 60% in stocks and 40% in bonds, "highlighting how far quant hedge funds are lagging behind more traditional investments."

“You will see some very, very bad May numbers for a lot of firms,” said Andrew Fishman, president of Schonfeld Strategic Advisors LLC, which invests about $16 billion, including borrowed money, in various quantitative strategies. Which, in light of Bloomberg"s report, is paradoxical at best.

The returns, bad as they may be, have not stunted investor interest. As we have shown on numerous occasions, there has been a titanic shift in capital away from "expensive" active/discretionary strategies and into all forms of "cheaper" passive strats including quants.

Narrowing this down, HFR calculates that through the first quarter of this year, $4.6 billion of net new money was invested in quant funds, even as over $10 billion was withdrawn from non-quant funds. At the same time, more traditional investors are turning to sophisticated computer models to guide their trading, adding to the flow of money backing quant strategies.

Worst performing have been momentum funds, largely because many of the trends that worked over the past year, such as rising oil prices and a climb in the value of the U.S. dollar, have ended. Surprising strength for Treasurys and a lack of overall market volatility are among other reasons for the losses, investors say. It also explains the substantial, and often volatile, rotations that have been taking place below the otherwise calm surface of the market.

GSA Capital Partners LLP, a $7.8 billion firm that spun out of Deutsche Bank in 2005, saw its $3.8 billion Trend fund drop 7.6% through June 8, even as the fund received $1 billion of new cash this year, said a person familiar with the matter. The flagship fund run by Leda Braga’s Systematica Investments, the $5.5 billion BlueTrend Fund Ltd., is up less than 1% this year, through June 2. The fund, which takes riskier bets on market moves than many of its peers, fell nearly 11% last year.

And two funds run by Stockholm-based Lynx Asset Management, which manages $6 billion in its trend-following strategy, are down 7.4% and 4.8% through June 7, according to data sent to investors.

It is not uniformly bad performance: the occasional quant is outperforming, such as RenTec"s $14 billion Renaissance Institutional Equities LP fund, or RIEF, which is up over 10.5% this year, through May, while the $11 billion Renaissance Institutional Diversified Alpha Int. LP fund rose about 13.5% this year, according to HSBC data.

The firm has thousands of trading signals it relies on—from economic-data points to the value of global assets in real time—and employs computer science, statistics and more.

Trying to capture this performance, some funds are changing their methods to adjust to the new environment, "which some quants say has been especially challenging amid the market swings since the U.S. election in November." As one would expect, in a market without clear direction, momentum funds are pivoting to other strategies, or at least trying to.

Florin Court Capital, a London hedge fund backed by Swedish investment firm Brummer & Partners, has largely stopped trying to make money from momentum trades in developed markets, a relatively simple strategy still used by many trend-following firms and other quants. Instead, it has shifted to more complex or esoteric trades, such as taking advantage of small differences in various maturities of a single bond.

Florin’s founder Doug Greenig, a former chief risk officer at Man Group’s AHL unit, says trend-following funds trading developed markets had been “languishing” and managers needed to look for new sources of returns.

Traditionally that is code word for leverage. Lots of leverage, like the 25x applied by the Asgard Fixed Income Fund profiled recently. It also confirms what Bloomberg reported earlier today: "as volatility in the stock market stays low, returns among quantitative strategies have been compressed, likely compelling managers to increase their leverage to juice up returns."

This "juiced up" leverage is why JPM"s Kolanovic calculated earlier in the week that just a modest increase in the VIX, from 10 to 15, could be sufficient to inflict "catastropic losses" for vol selling quants:

May 17th and similar events bring substantial risk for short volatility strategies. Given the low starting point of the VIX, these strategies are at risk of catastrophic losses. For some strategies, this would happen if the VIX increases from ~10 to only ~20 (not far from the historical average level for VIX). While historically such an increase never happened, we think that this time may be different and sudden increases of that magnitude are possible. One scenario would be of e.g. VIX increasing from ~10 to ~15, followed by a collapse in liquidity given the market’s knowledge that certain structures need to cover short positions.

Finally, one question remains: if virtually everyone, from quants, to hedge funds to vanilla funds are all underperforming the market, who is outperforming it?

Illinois Democrat Introduces "COVFEFE Act"

The meaning of the term Covfefe has finally been revealed, at least as interpreted by Illinois Rep. Mike Quigley who moments ago introduced the "COVFEFE" Act, also known as the Communications Over Various Feeds Electronically for Engagement. The bill introduced by the Illinois Democrat seeks to amend the Presidential Records Act to include the term "social media" as a documentary material for preservation in the National Archives, "ensuring additional preservation of presidential communication and statements while promoting government accountability and transparency."

The bill takes it its name from the "gibberish term" which Trump tweeted late one night at the end of May, which stayed on his feed for nearly 6 hours before being deleted. Most people took the tweet to be a typo, although Press Secretary Sean Spicer told the media that the term was used intentionally.

"In order to maintain public trust in government, elected officials must answer for what they do and say; this includes 140-character tweets," said Rep. Quigley. "President Trump"s frequent, unfiltered use of his personal Twitter account as a means of official communication is unprecedented. If the President is going to take to social media to make sudden public policy proclamations, we must ensure that these statements are documented and preserved for future reference. Tweets are powerful, and the President must be held accountable for every post."

Quigley continued: "President Trump"s tweets frequently make national news and are a topic of everyday conversation, including deciphering the meaning behind his tweet using the previously unheard of term, "covfefe." While his personal account has become the de facto account for government business, it is unclear as to whether or not it would be archived in the same manner as the official @POTUS account under the Presidential Records Act. Another concern relates to President Trump"s frequent deletion of tweets. Including social media in the Presidential Records Act ensures that deleted tweets are documented for archival purposes, and makes deleting tweets a violation of the Presidential Records Act, subject to disciplinary action."

As the Hill adds, in January National Archives spokesperson Miriam Kleiman told the AP that Social Media posts would qualify as presidential records, but that statement is not explicitly spelled out in the law.

The White House, Trump surrogates and GOP congressmen have issued differing opinions on how seriously the president"s tweets should be taken. But the White House recently clarified that social media should be taken as official communication from the president

Last week, Spicer confirmed they should be taken as official presidential statements. 

"The president is president of the United States so they are considered official statements by the president of the United States,” he said

Incidentally, Quigley has a thing for acronyms: previously he introduced "The Making Access Records Available to Lead American Government Openness" aka MAR-A-LAGO Act, which would force the president to make his records public. At least we now know how House representatives spend their time when not doing anything... like the past 8 years for example.

Finally, here is a suggestion for Rep. Quigley: come up with a witty acronym for a Bill that authorizes the upcoming bailout of his home state, which in less than three weeks is about to be downgraded to junk by the rating agencies, a first in US history.

Full Quigley press release below:

Quigley Introduces the COVFEFE Act

Legislation Expands Presidential Records Act Preservation to Include Social Media

WASHINGTON — Today, U.S. Representative Mike Quigley (IL-05), co-founder and co-chair of the Congressional Transparency Caucus, introduced the Communications Over Various Feeds Electronically for Engagement or "COVFEFE" Act. This bill codifies vital guidance from the National Archives by amending the Presidential Records Act to include the term "social media" as a documentary material, ensuring additional preservation of presidential communication and statements while promoting government accountability and transparency.

"In order to maintain public trust in government, elected officials must answer for what they do and say; this includes 140-character tweets," said Rep. Quigley. "President Trump"s frequent, unfiltered use of his personal Twitter account as a means of official communication is unprecedented. If the President is going to take to social media to make sudden public policy proclamations, we must ensure that these statements are documented and preserved for future reference. Tweets are powerful, and the President must be held accountable for every post."

In 2014, the National Archives released guidance stating its belief that social media merits historical recording. President Trump"s unprecedented use of Twitter calls particular attention to this concern. When referencing the use of social media, White House Press Secretary Sean Spicer has said, "The president is president of the United States so they are considered official statements by the president of the United States."

President Trump"s tweets frequently make national news and are a topic of everyday conversation, including deciphering the meaning behind his tweet using the previously unheard of term, "covfefe." While his personal account has become the de facto account for government business, it is unclear as to whether or not it would be archived in the same manner as the official @POTUS account under the Presidential Records Act. Another concern relates to President Trump"s frequent deletion of tweets. Including social media in the Presidential Records Act ensures that deleted tweets are documented for archival purposes, and makes deleting tweets a violation of the Presidential Records Act, subject to disciplinary action.

In Congress, Rep. Quigley is working to combat the Trump Administration"s recent efforts to roll back transparency. In March, he introduced the Making Access Records Available to Lead American Government Openness (MAR-A-LAGO) Act, a bill that requires the publication of visitor logs to the White House or any other location where President Trump regularly conducts official business, including various Trump Organization properties frequented by the president. Last month, he questioned the Acting Administrator for the General Services Administration (GSA) about the Trump International Hotel lease and possible conflicts of interest.

Cork Wine Bar Owners Explain "Why We Are Suing President Trump"

Authored by Diane Gross and Khalid Pitts via The Hill,

When we opened Cork Wine Bar in 2008, there were very few restaurants on 14th Street in Northwest Washington. Since then, the area has exploded, becoming a dining destination with more than 25 restaurants just within a few square blocks of us. Despite the tremendous number of options open to Washington diners, Cork has done exceedingly well. We have consistently won awards and praise for our wines, food and our hospitality for the hosting of events. Our patrons include elected officials, White House and congressional staffers, lobbyists, nonprofits, foreign officials, and Embassy staff.

We’re no strangers to competition. But there’s one business in DC that is not playing fairly: the Trump International Hotel and its dining establishments. Last week, we filed a lawsuit arguing that President Trump’s ownership of the hotel and restaurants, mere blocks from the White House, is unfair competition for us and other Washington-area restaurants. Here’s why we’re asking the courts to make things right.

Washington is a company town. Many, if not most, people in DC rely on business that is somehow related to the federal government, whether they’re an elected official, a lobbyist, a government contractor, or with a foreign entity. You have a choice of where to dine, host an event, or stay for the night. Why wouldn’t you choose the venue that would most please the president of the United States? Why wouldn’t you choose his restaurants, which he is known to frequent, and maybe have the opportunity to talk with him directly? Why wouldn’t you take advantage of the opportunity to curry favor in this way, especially when we get daily reminders that this president is known to demand and reward loyalty, while punishing those who have crossed or not supported him?

Of course, every time a new restaurant opens in town, it has the potential of taking business away from us and other existing establishments. That was true when we opened, and it is equally true today in DC’s thriving and diverse dining scene. That’s part of the free enterprise system which we wholeheartedly embrace. But competition from the Trump hotel is something different. The president’s name, well-known ownership and presence give the Trump International Hotel a big leg up in winning the competition of attracting diners and tourists, and hosting lucrative events where many people gather to drink and dine or even more intimate political dinners.

How do we know the Trump hotel competition is something different? The lease that Donald Trump signed with the federal government for the hotel clearly spells it out. The lease specifically forbids any elected official, including the president, from having an ownership interest in the hotel where he or she receives benefits while in elective office. Because Trump has been president since Jan. 20, and since he owns 100 percent of the beneficial interest in the hotel, he is in violation of the lease.

When this issue was first raised, people assumed, as we did, that the provision was there to prevent the president from interfering with the General Services Administration (GSA), whose head he can fire at will, and favoring the hotel instead of the United States. Our lawyers then told us that this ban applies not just to the president and members of Congress, but also to any elected official of the District of Columbia and even our non-voting delegate, Eleanor Holmes Norton.

Because none of them has any power over GSA, the provision of the lease has a much broader purpose: prohibiting an elected official from exploiting public office for private gain at the expense of competitors like us who are not backed by elected officials. In other words, the lease prevents elected officials from unfairly funneling business to the hotel and its restaurants, while taking business away from competitors like us.

We’re not asking for any money. We’re simply asking the court to stop this unfair competition, as the Trump Hotel’s own lease requires. We leave it to the court and the defendants to decide the best means of leveling the playing field, whether that be selling or closing the hotel until the end of Donald Trump’s presidency. If they do, all of Washington will benefit — not just the current occupant of the White House.

*  *  *

Diane Gross and Khalid Pitts are the owners of Cork Wine Bar and Cork Market & Tasting Room in Washington, DC.