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The Next Processor Change is Within ARMs Reach
As you may have seen, I sent the following Tweet: “The Apple ARM MacBook future is coming, maybe sooner than people expect” https://twitter.com/choco_bit/status/1266200305009676289?s=20 Today, I would like to further elaborate on that. tl;drApple will be moving to Arm based macs in what I believe are 4 stages, starting around 2015 and ending around 2023-2025: Release of T1 chip Macbooks, release of T2 chip Macbooks, Release of at least one lower end model Arm Macbook, and transitioning full lineup to Arm. Reasons for each are below. Apple is very likely going to switch to switch their CPU platform to their in-house silicon designs with an ARM architecture. This understanding is a fairly common amongst various Apple insiders. Here is my personal take on how this switch will happen and be presented to the consumer. The first question would likely be “Why would Apple do this again?”. Throughout their history, Apple has already made two other storied CPU architecture switches - first from the Motorola 68k to PowerPC in the early 90s, then from PowerPC to Intel in the mid 2000s. Why make yet another? Here are the leading reasons:
Intel has, in recent years, been making significant losses both in reputation and in actual product value, as well as velocity of product development, breaking their bi-yearly “Tick Tock” cycle for the first time in decades. Most recently, they have fallen well behind AMD’s processor lines in cost to performance ratio, CPU core count, core design (monolithic design vs “chiplet”), power consumption to performance, silicon supply (Intel with significant manufacturing process and yield issues), and on-silicon security features. While Intel still wins out in certain enterprise and datacenter applications, as well as having a much better reputation for reliability and QA (AMD having shipped numerous chips with a broken random- number generator that prevented even booting some mainstream operating system), the number of such applications slowly dwindles with each new release from AMD, and as confidence among decisionmakers in enterprise increases. In the public consciousness, Intel is quickly becoming a point of ridicule against Apple’s Mac lineup, rather than a badge of honor.
By moving to their own designs, Apple will be free from Intel’s release schedule, which have recently been unpredictable and faced with routine delays due to poor manufacturing yields. Apple will be able to update their Mac lineup on their own timeline, rather than being forced to delay products based on Intel’s ability to meet the release window. This also allows them to leverage relationships with other silicon fabricators to source chips, rather than relying on Intel ’s continued “iteration” that’s leading to a “14nm++++++++++” process, or the continued lack of product diversity with the 10nm process. Apple will also be free to innovate in the design of the silicon platform, rather than being limited by Intel’s design choices. By having full control of the manufacturing and development cycle, Apple can bring even more in-house optimization to the macOS, as they have been for iOS and iPadOS over the years.
Using an ARM architecture on the Macs allows for a more unified Apple ecosystem, rather than having separate Mac and iOS-based products. The only distinction will be the device form factor and performance characteristics.
The x86_64 architecture is very old and inefficient, using older methodologies for processor design (CISC vs ARM’s RISC), and the instruction set continues to require support in silicon for emulating 1980s-vintage 16-bit modes, as well as ineffectual and archaic memory addressing modes (segmentation, etc.) The x86_64 architecture is like a city, built atop a much older city, built atop a yet older city, but every layer is built with NYC infrastructure levels of complexity that suited its time and no further.
Over the last 10 years, Apple has shown that they can consistently produce impressive silicon designs, often leading the market in performance and capability, and Apple has been aggressively acquiring silicon design talent.
A common refrain heard on the Internet is the suggestion that Apple should switch to using CPUs made by AMD, and while this has been considered internally, it will most likely not be chosen as the path forward, even for their megalithic giants like the Mac Pro. Even though AMD would mitigate Intel’s current set of problems, it does nothing to help the issue of the x86_64 architecture’s problems and inefficiencies, on top of jumping to a platform that doesn’t have a decade of proven support behind it. Why spend a lot of effort re-designing and re- optimizing for AMD’s platform when you can just put that effort into your own, and continue the vertical integration Apple is well-known for? I believe that the internal development for the ARM transition started around 2015/2016 and is considered to be happening in 4 distinct stages. These are not all information from Apple insiders; some of these these are my own interpretation based off of information gathered from supply-chain sources, examination of MacBook schematics, and other indicators from Apple.
Stage1 (from 2014/2015 to 2017):
The rollout of computers with Apple’s T1 chip as a coprocessor. This chip is very similar to Apple’s T8002 chip design, which was used for the Apple Watch Series 1 and Series 2. The T1 is primarily present on the first TouchID enabled Macs, 2016 and 2017 model year MacBook Pros. Considering the amount of time required to design and validate a processor, this stage most likely started around 2014 or 2015, with early experimentation to see whether an entirely new chip design would be required, or if would be sufficient to repurpose something in the existing lineup. As we can see, the general purpose ARM processors aren’t a one- trick pony. To get a sense of the decision making at the time, let’s look back a bit. The year is 2016, and we're witnessing the beginning of stagnation of Intel processor lineup. There is not a lot to look forward to other than another “+” being added to the 14nm fabrication process. The MacBook Pro has used the same design for many years now, and its age is starting to show. Moving to AMD is still very questionable, as they’ve historically not been able to match Intel’s performance or functionality, especially at the high end, and since the “Ryzen” lineup is still unreleased, there is absolutely no benchmarks or other data to show they are worth consideration, and AMD’s most recent line of “Bulldozer” processors were very poorly received. Now is probably as good a time as any to begin experimenting with the in-house ARM designs, but it’s not time to dive into the deep end yet, our chips are not nearly mature enough to compete, and it’s not yet certain how long Intel will be stuck in the mud. As well, it is widely understood that Apple and Intel have an exclusivity contract in exchange for advantageous pricing. Any transition would take considerable time and effort, and since there are no current viable alternative to Intel, the in-house chips will need to advance further, and breaching a contract with Intel is too great a risk. So it makes sense to start with small deployments, to extend the timeline, stretch out to the end of the contract, and eventually release a real banger of a Mac. Thus, the 2016 Touch Bar MacBooks were born, alongside the T1 chip mentioned earlier. There are good reasons for abandoning the piece of hardware previously used for a similar purpose, the SMC or System Management Controller. I suspect that the biggest reason was to allow early analysis of the challenges that would be faced migrating Mac built- in peripherals and IO to an ARM-based controller, as well as exploring the manufacturing, power, and performance results of using the chips across a broad deployment, and analyzing any early failure data, then using this to patch any issues, enhance processes, and inform future designs looking towards the 2nd stage. The former SMC duties now moved to T1 includes things like
Fan speed, voltage, amperage and thermal sensor feedback data
FaceTime camera and microphone IO
PMIC (Power Management Controller)
Direct communication to NAND (solid state storage)
Direct communication with the Touch Bar
Secure Enclave for TouchID
The T1 chip also communicates with a number of other controllers to manage a MacBook’s behavior. Even though it’s not a very powerful CPU by modern standards, it’s already responsible for a large chunk of the machine’s operation. Moving control of these peripherals to the T1 chip also brought about the creation of the fabled BridgeOS software, a shrunken-down watchOS-based system that operates fully independently of macOS and the primary Intel processor. BridgeOS is the first step for Apple’s engineering teams to begin migrating underlying systems and services to integrate with the ARM processor via BridgeOS, and it allowed internal teams to more easily and safely develop and issue firmware updates. Since BridgeOS is based on a standard and now well-known system, it means that they can leverage existing engineering expertise to flesh out the T1’s development, rather than relying on the more arcane and specialized SMC system, which operates completely differently and requires highly specific knowledge to work with. It also allows reuse of the same fabrication pipeline used for Apple Watch processors, and eliminated the need to have yet another IC design for the SMC, coming from a separate source, to save a bit on cost. Also during this time, on the software side, “Project Marzipan”, today Catalyst, came into existence. We'll get to this shortly. For the most part, this Stage 1 went without any major issues. There were a few firmware problems at first during the product launch, but they were quickly solved with software updates. Now that engineering teams have had experience building for, manufacturing, and shipping the T1 systems, Stage 2 would begin.
Stage 2 encompasses the rollout of Macs with the T2 coprocessor, replacing the T1. This includes a much wider lineup, including MacBook Pro with Touch Bar, starting with 2018 models, MacBook Air starting with 2018 models, the iMac Pro, the 2019 Mac Pro, as well as Mac Mini starting in 2018. With this iteration, the more powerful T8012 processor design was used, which is a further revision of the T8010 design that powers the A10 series processors used in the iPhone 7. This change provided a significant increase in computational ability and brought about the integration of even more devices into T2. In addition to the T1’s existing responsibilities, T2 now controls:
Full audio subsystem
Secure Enclave for internal NAND storage and encryption/decryption offload
Management of the whole system’s power and startup sequence, allowing for trusted boot (ensure boot chain-of-trust with no malicious code/rootkit/bootkit)
Those last 2 points are crucial for Stage 2. Under this new paradigm, the vast majority of the Mac is now under the control of an in-house ARM processor. Stage 2 also brings iPhone-grade hardware security to the Mac. These T2 models also incorporated a supported DFU (Device Firmware Update, more commonly “recovery mode”), which acts similarly to the iPhone DFU mode and allows restoration of the BridgeOS firmware in the event of corruption (most commonly due to user-triggered power interruption during flashing). Putting more responsibility onto the T2 again allows for Apple’s engineering teams to do more early failure analysis on hardware and software, monitor stability of these machines, experiment further with large-scale production and deployment of this ARM platform, as well as continue to enhance the silicon for Stage 3. A few new user-visible features were added as well in this stage, such as support for the passive “Hey Siri” trigger, and offloading image and video transcoding to the T2 chip, which frees up the main Intel processor for other applications. BridgeOS was bumped to 2.0 to support all of these changes and the new chip. On the macOS software side, what was internally known as Project Marzipan was first demonstrated to the public. Though it was originally discovered around 2017, and most likely began development and testing within later parts of Stage 1, its effects could be seen in 2018 with the release of iPhone apps, now running on the Mac using the iOS SDKs: Voice Recorder, Apple News, Home, Stocks, and more, with an official announcement and public release at WWDC in 2019. Catalyst would come to be the name of Marzipan used publicly. This SDK release allows app developers to easily port iOS apps to run on macOS, with minimal or no code changes, and without needing to develop separate versions for each. The end goal is to allow developers to submit a single version of an app, and allow it to work seamlessly on all Apple platforms, from Watch to Mac. At present, iOS and iPadOS apps are compiled for the full gamut of ARM instruction sets used on those devices, while macOS apps are compiled for x86_64. The logical next step is to cross this bridge, and unify the instruction sets. With this T2 release, the new products using it have not been quite as well received as with the T1. Many users have noticed how this change contributes further towards machines with limited to no repair options outside of Apple’s repair organization, as well as some general issues with bugs in the T2. Products with the T2 also no longer have the “Lifeboat” connector, which was previously present on 2016 and 2017 model Touch Bar MacBook Pro. This connector allowed a certified technician to plug in a device called a CDM Tool (Customer Data Migration Tool) to recover data off of a machine that was not functional. The removal of this connector limits the options for data recovery in the event of a problem, and Apple has never offered any data recovery service, meaning that a irreparable failure of the T2 chip or the primary board would result in complete data loss, in part due to the strong encryption provided by the T2 chip (even if the data got off, the encryption keys were lost with the T2 chip). The T2 also brought about the linkage of component serial numbers of certain internal components, such as the solid state storage, display, and trackpad, among other components. In fact, many other controllers on the logic board are now also paired to the T2, such as the WiFi and Bluetooth controller, the PMIC (Power Management Controller), and several other components. This is the exact same system used on newer iPhone models and is quite familiar to technicians who repair iPhone logic boards. While these changes are fantastic for device security and corporate and enterprise users, allowing for a very high degree of assurance that devices will refuse to boot if tampered with in any way - even from storied supply chain attacks, or other malfeasance that can be done with physical access to a machine - it has created difficulty with consumers who more often lack the expertise or awareness to keep critical data backed up, as well as the funds to perform the necessary repairs from authorized repair providers. Other issues reported that are suspected to be related to T2 are audio “cracking” or distortion on the internal speakers, and the BridgeOS becoming corrupt following a firmware update resulting in a machine that can’t boot. I believe these hiccups will be properly addressed once macOS is fully integrated with the ARM platform. This stage of the Mac is more like a chimera of an iPhone and an Intel based computer. Technically, it does have all of the parts of an iPhone present within it, cellular radio aside, and I suspect this fusion is why these issues exist. Recently, security researchers discovered an underlying security problem present within the Boot ROM code of the T1 and T2 chip. Due to being the same fundamental platform as earlier Apple Watch and iPhone processors, they are vulnerable to the “checkm8” exploit (CVE-2019-8900). Because of how these chips operate in a Mac, firmware modifications caused by use of the exploit will persist through OS reinstallation and machine restarts. Both the T1 and T2 chips are always on and running, though potentially in a heavily reduced power usage state, meaning the only way to clean an exploited machine is to reflash the chip, triggering a restart, or to fully exhaust or physically disconnect the battery to flush its memory. Fortunately, this exploit cannot be done remotely and requires physical access to the Mac for an extended duration, as well as a second Mac to perform the change, so the majority of users are relatively safe. As well, with a very limited execution environment and access to the primary system only through a “mailbox” protocol, the utility of exploiting these chips is extremely limited. At present, there is no known malware that has used this exploit. The proper fix will come with the next hardware revision, and is considered a low priority due to the lack of practical usage of running malicious code on the coprocessor. At the time of writing, all current Apple computers have a T2 chip present, with the exception of the 2019 iMac lineup. This will change very soon with the expected release of the 2020 iMac lineup at WWDC, which will incorporate a T2 coprocessor as well. Note: from here on, this turns entirely into speculation based on info gathered from a variety of disparate sources. Right now, we are in the final steps of Stage 2. There are strong signs that an a MacBook (12”) with an ARM main processor will be announced this year at WWDC (“One more thing...”), at a Fall 2020 event, Q1 2021 event, or WWDC 2021. Based on the lack of a more concrete answer, WWDC2020 will likely not see it, but I am open to being wrong here.
Stage3 (Present/2021 - 2022/2023):
Stage 3 involves the first version of at least one fully ARM-powered Mac into Apple’s computer lineup. I expect this will come in the form of the previously-retired 12” MacBook. There are rumors that Apple is still working internally to perfect the infamous Butterfly keyboard, and there are also signs that Apple is developing an A14x based processors with 8-12 cores designed specifically for use as the primary processor in a Mac. It makes sense that this model could see the return of the Butterfly keyboard, considering how thin and light it is intended to be, and using an A14x processor would make it will be a very capable, very portable machine, and should give customers a good taste of what is to come. Personally, I am excited to test the new 12" “ARMbook”. I do miss my own original 12", even with all the CPU failure issues those older models had. It was a lovely form factor for me. It's still not entirely known whether the physical design of these will change from the retired version, exactly how many cores it will have, the port configuration, etc. I have also heard rumors about the 12” model possibly supporting 5G cellular connectivity natively thanks to the A14 series processor. All of this will most likely be confirmed soon enough. This 12” model will be the perfect stepping stone for stage 3, since Apple’s ARM processors are not yet a full-on replacement for Intel’s full processor lineup, especially at the high end, in products such as the upcoming 2020 iMac, iMac Pro, 16” MacBook Pro, and the 2019 Mac Pro. Performance of Apple’s ARM platform compared to Intel has been a big point of contention over the last couple years, primarily due to the lack of data representative of real-world desktop usage scenarios. The iPad Pro and other models with Apple’s highest-end silicon still lack the ability to execute a lot of high end professional applications, so data about anything more than video editing and photo editing tasks benchmarks quickly becomes meaningless. While there are completely synthetic benchmarks like Geekbench, Antutu, and others, to try and bridge the gap, they are very far from being accurate or representative of the real real world performance in many instances. Even though the Apple ARM processors are incredibly powerful, and I do give constant praise to their silicon design teams, there still just isn’t enough data to show how they will perform for real-world desktop usage scenarios, and synthetic benchmarks are like standardized testing: they only show how good a platform is at running the synthetic benchmark. This type of benchmark stresses only very specific parts of each chip at a time, rather than how well it does a general task, and then boil down the complexity and nuances of each chip into a single numeric score, which is not a remotely accurate way of representing processors with vastly different capabilities and designs. It would be like gauging how well a person performs a manual labor task based on averaging only the speed of every individual muscle in the body, regardless of if, or how much, each is used. A specific group of muscles being stronger or weaker than others could wildly skew the final result, and grossly misrepresent performance of the person as a whole. Real world program performance will be the key in determining the success and future of this transition, and it will have to be great on this 12" model, but not just in a limited set of tasks, it will have to be great at *everything*. It is intended to be the first Horseman of the Apocalypse for the Intel Mac, and it better behave like one. Consumers have been expecting this, especially after 15 years of Intel processors, the continued advancement of Apple’s processors, and the decline of Intel’s market lead. The point of this “demonstration” model is to ease both users and developers into the desktop ARM ecosystem slowly. Much like how the iPhone X paved the way for FaceID-enabled iPhones, this 12" model will pave the way towards ARM Mac systems. Some power-user type consumers may complain at first, depending on the software compatibility story, then realize it works just fine since the majority of the computer users today do not do many tasks that can’t be accomplished on an iPad or lower end computer. Apple needs to gain the public’s trust for basic tasks first, before they will be able to break into the market of users performing more hardcore or “Pro” tasks. This early model will probably not be targeted at these high-end professionals, which will allow Apple to begin to gather early information about the stability and performance of this model, day to day usability, developmental issues that need to be addressed, hardware failure analysis, etc. All of this information is crucial to Stage 4, or possibly later parts of Stage 3. The 2 biggest concerns most people have with the architecture change is app support and Bootcamp. Any apps released through the Mac App Store will not be a problem. Because App Store apps are submitted as LLVM IR (“Bitcode”), the system can automatically download versions compiled and optimized for ARM platforms, similar to how App Thinning on iOS works. For apps distributed outside the App Store, thing might be more tricky. There are a few ways this could go:
Developer will need to build both x86_64 and ARM version of their app - App Bundles have supported multiple-architecture binaries since the dawn of OS X and the PowerPC transition
Move to apps being distributed in an architecture-independent manner, as they are on the App Store. There is some software changes that are suggestive of this, such as the new architecture in dyld3.
An x86_64 instruction decoder in silicon - very unlikely due to the significant overhead this would create in the silicon design, and potential licensing issues. (ARM, being a RISC, “reduced instruction set”, has very few instructions; x86_64 has thousands)
Server-side ahead-of-time transpilation (converting x86 code to equivalent ARM code) using Notarization submissions - Apple certainly has the compiler chops in the LLVM team to do something like this
Outright emulation, similar to the approach that was taken in ARM releases of Windows, but received extremely poorly (limited to 32-bit apps, and very very slow)There could be other solutions in the works to fix this but I am not aware of any. This is just me speculating about some of the possibilities.
As for Bootcamp, while ARM-compatible versions of Windows do exist and are in development, they come with their own similar set of app support problems. Microsoft has experimented with emulating x86_64 on their ARM-based Surface products, and some other OEMs have created their own Windows-powered ARM laptops, but with very little success. Performance is a problem across the board, with other ARM silicon not being anywhere near as advanced, and with the majority of apps in the Windows ecosystem that were not developed in-house at Microsoft running terribly due to the x86_64 emulation software. If Bootcamp does come to the early ARM MacBook, it more than likely will run like very poorly for anything other than Windows UWP apps. There is a high chance it will be abandoned entirely until Windows becomes much more friendly to the architecture. I believe this will also be a very crucial turning point for the MacBook lineup as a whole. At present, the iPad Pro paired with the Magic Keyboard is, in many ways, nearly identical to a laptop, with the biggest difference being the system software itself. While Apple executives have outright denied plans of merging the iPad and MacBook line, that could very well just be a marketing stance, shutting the down rumors in anticipation of a well-executed surprise. I think that Apple might at least re-examine the possibility of merging Macs and iPads in some capacity, but whether they proceed or not could be driven by consumer reaction to both products. Do they prefer the feel and usability of macOS on ARM, and like the separation of both products? Is there success across the industry of the ARM platform, both at the lower and higher end of the market? Do users see that iPadOS and macOS are just 2 halves of the same coin? Should there be a middle ground, and a new type of product similar to the Surface Book, but running macOS? Should Macs and iPads run a completely uniform OS? Will iPadOS ever see exposed the same sort of UNIX-based tools for IT administrators and software developers that macOS has present? These are all very real questions that will pop up in the near future. The line between Stage 3 and Stage 4 will be blurry, and will depend on how Apple wishes to address different problems going forward, and what the reactions look like. It is very possible that only 12” will be released at first, or a handful more lower end model laptop and desktop products could be released, with high performance Macs following in Stage 4, or perhaps everything but enterprise products like Mac Pro will be switched fully. Only time will tell.
Stage 4 (the end goal):
Congratulations, you’re made it to the end of my TED talk. We are now well into the 2020s and COVID-19 Part 4 is casually catching up to the 5G = Virus crowd. All Macs have transitioned fully to ARM. iMac, MacBooks Pro and otherwise, Mac Pro, Mac Mini, everything. The future is fully Apple from top to bottom, and vertical integration leading to market dominance continues. Many other OEM have begun to follow in this path to some extent, creating more demand for a similar class of silicon from other firms. The remainder here is pure speculation with a dash of wishful thinking. There are still a lot of things that are entirely unclear. The only concrete thing is that Stage 4 will happen when everything is running Apple’s in- house processors. By this point, consumers will be quite familiar with the ARM Macs existing, and developers have had have enough time to transition apps fully over to the newly unified system. Any performance, battery life, or app support concerns will not be an issue at this point. There are no more details here, it’s the end of the road, but we are left with a number of questions. It is unclear if Apple will stick to AMD's GPUs or whether they will instead opt to use their in-house graphics solutions that have been used since the A11 series of processors. How Thunderbolt support on these models of Mac will be achieved is unknown. While Intel has made it openly available for use, and there are plans to have USB and Thunderbolt combined in a single standard, it’s still unclear how it will play along with Apple processors. Presently, iPhones do support connecting devices via PCI Express to the processor, but it has only been used for iPhone and iPad storage. The current Apple processors simply lack the number of lanes required for even the lowest end MacBook Pro. This is an issue that would need to be addressed in order to ship a full desktop-grade platform. There is also the question of upgradability for desktop models, and if and how there will be a replaceable, socketed version of these processors. Will standard desktop and laptop memory modules play nicely with these ARM processors? Will they drop standard memory across the board, in favor of soldered options, or continue to support user-configurable memory on some models? Will my 2023 Mac Pro play nicely with a standard PCI Express device that I buy off the shelf? Will we see a return of “Mac Edition” PCI devices? There are still a lot of unknowns, and guessing any further in advance is too difficult. The only thing that is certain, however, is that Apple processors coming to Mac is very much within arm’s reach.
Beginning|Previous Joan opened a link to Ambassador Amahle Mandela. Soon after, the ambassador's face filled a portion of the Admiral's Bridge. She had large, luminous brown eyes that seemed to swallow the upper portion of her face, complimenting her umber tone. Amahle smiled broadly, as she always did, once the comm link as connected. "Admiral Orléans, I assume we are approaching the departure time?" Joan nodded, "The Zix vessel will project a wormhole to Halcyon shortly. We have made what preparations we can, but it will be a highly fluid environment." Amahle's smile did not diminish, the pearly whites still shined in full force. "I am familiar with dynamic situations, Admiral, as you well know. I understand the parameters of this mission, and will abide by them so as long you do the same." Joan's lips pressed together as she regarded the ambassador. Joan had had limited interactions with Amahle prior to her boarding the Oppenheimer. Amahle was a relative newcomer to the highest echelons of political power within the United World, but her ascent had been rapid. She hailed from a prominent political family that had exerted considerable influence over the generations that had led the African continent to position of power it now occupied. Well-sourced references had called her bold and decisive. All things considered, Joan understood why Damian had chosen her, though she would have preferred a diplomat she had more personal experience with. Still, unknown and competent was preferred to known and incompetent. Joan dipped her chin, offering her agreement. "A diplomatic outcome is the preferred outcome, Ambassador. There's no benefit to antagonizing a foe we do not understand. " "Not a foe, Admiral. We must not draw lines that place us on one side and them on the other. They have suffered injury at our hands, no matter how unintentional, and we must accept our responsibility in that. We must hope that we are given the opportunity to provide context to the unlikely chain of events that has brought us to this point. We are both the victim of cosmic circumstance. There is no need for further hostility." Joan leaned forward in her chair slightly, "The priority, Ambassador, is the return of Admiral Kai Levinson. I will not stand in the way of peace, but any outcome that does not contemplate the return of a senior member of our military leadership is unacceptable." Amahle shrugged, "So it is. The priority is clear in my mind, but I do not view the goals of securing peace and the return of the Admiral as mutually exclusive." Joan offered a low chuckle. "Just probably exclusive." "I disagree, but time shall be the arbiter of the matter." "So long as you understand that, if the opportunity to secure Admiral Levinson presents itself, I'll avail myself of that opportunity, we should have no problems." "That seems an unlikely outcome. The Admiral was ensconced in a shielded holding cell when the Alcubierre departed. The past few days are unlikely to have changed that outcome." A barking laugh came out of Joan, rising up from deep within her. For the first time, Amahle's smile faltered. ----------- Left. Right. Straight. Left. Left. Kai followed the directions without thinking about them, following an intuitive sense of direction that the Overseer fed to him. This portion of Halcyon appeared to be a never-ending series of corridors, all of which looked the same. The only thing that did seem to change were the inhabitants. If he was less preoccupied with the task at hand, Kai might have spared a second glance for the odd creatures that popped into existence during his mad dash. As it stood, they were just a part of the scenery, becoming relevant only if Neeria indicated they might pose a threat. So far, Kai had been fortunate, with few obstacles popping up to impede his progress. He careened around a corner, the odd, weightless orb still tucked in the crook of his left arm. He bounced off the opposite wall, leaving a sizeable dent and then hurtled forward. Ahead the corridor opened up, and the brighter light of a mainway filtered in. Somehow, Neeria had managed to navigate him through the maze and bring him back to the mainway separating him from where he had left the Overseer. Unfortunately, evasion was no longer a possibility. In order to return to the Overseer, he would need to traverse the mainway. The mainway was already a sea of red dots. Peacekeepers. Dozens of them. Some pulsed red, indicating lethal enforcement squads. Fortunately, they were stretched along a long section of the mainway rather than being specifically concentrated around his planned entrance point, though they there were beginning to redeploy in his direction. Still, any crossing would be potentially treacherous. Neeria disagreed with that assessment, instead considering any attempt to cross aggressively suicidal. Kai rolled his eyes as he continued to barrel down the hallway. "Half the time, this works all the time." What could only be described as a mental barrage ensued as Neeria assailed the statement. The words were nonsensical on their face. At best, it was an argument for a fifty percent failure rating, which was a substantial risk. Additionally, she had scoured his thoughts for the evidentiary basis for the fifty percent estimate and found no supporting facts. The sentiment was based entirely on supposition, hubris and was entirely divorced from reality. Her estimate of a three percent success rate was significantly more likely to be accurate, particularly when her superior familiarity with the assets in play were considered. Kai wasn't sure if the Evangi had lungs, but, if they did, Kai was pretty certain Neeria was in the process of hyperventilating. Kai suppressed a childish giggle. "All right, all right. Have it your way," he said. The Overseer relaxed somewhat, pleased that she had impacted his thinking and already putting together the basis for an alternate route. It would take substantially longer and require him to obtain a large box, a micro-fitted multiwanzer and shave his head, but it may just work. It was a nice sentiment, but they were out of time. The countdown clock had started the second Neeria had fled the Council chamber, and made her way to Kai. They either found a way out of Halcyon now or they were screwed. There were no options but bad ones. So be it. Kai clutched the orb tightly and ducked his head down, his speed increasing as he charged toward the mainway entrance. "Three percent of the time, this works all the time." The mental hyperventilating returned and redoubled as the Overseer scrambled to explain that he had drawn the wrong conclusion. Three percent was a basis for not continuing toward the mainway, not charging forward. There were constraints on their time, but those limitations were poorly defined while the threat in the mainway was certain. Eventually her location would be discovered and she would be apprehended, but there was no guarantee it would happen if Kai were to take a safer route the attempted to avoid confrontation. Her stream of consciousness intermingled with his, pleading with him to change course. There was no sense in doing this. There were too many of them, and only one of him. The galaxy could not afford to lose him, he was important. Humans were important. Kai could feel the enormous weight of responsibility bearing down on Neeria. She now regretted having sent him for the encryption key, even that was of less importance than him. Panic bubbled up within Neeria as the entrance to the mainway loomed ahead. A pushed a thought toward her, somehow piercing her consciousness with his own. A single thought, pure and focused. Reassurance. He would be fine. He had come this far, and he had never started something he couldn't finish. He crouched and then sprang forward, vaulting from the ground and into the open air high above the mainway. A sea of red dots were scrambling around him. One hundred and twenty-one peacekeepers. Eight non-lethal squads and four lethal squads. Restrainer triads. Psych triads. Terminator triads. All moving in seamless harmony under the command of a single being. The name came to Kai from the ethereum of Neeria's mind, Bo'Bakka'Gah was here, leading the response. Before Kai could determine what a Bo'Bakka'Gah was and why it should matter, he was blinded by a beam of light. A sickening crunch followed as he was slammed against the ceiling of the mainway. The encryption key popped out from his arm and began to fall toward the ground, dozens of feet below. ------------- Xy: Such a thing is not possible. Zyy: Yes. In some matters, it is better to speak only truths, Grand Jack. It is best to leave these matters aside. This subject will only provoke the Combine. Jack frowned, puzzled by the feedback. He had been speaking truths. Earth's history was what it was, for better or worse, he had no reason to obscure it. Griggs: It was a terrible time for Humanity. We almost did not survive it, but we did. I developed a means for combating the artificient. Kai and Joan used it to destroy them. Xy: Then it was not an artificient. Zyy: Yes. This is correct. If it is destroyed then it is not an artificient. Griggs: I am confused. An artificient is an artificial, sentient being, correct? Xy: That is Quantic in nature. Jack nodded, that distinction made sense. Humanity had built any number of artificial intelligences prior to the Automics. They had posed no threat to Humanity. It was only with the quantum computing revolution that a rogue artificial intelligences had surfaced. Jack had studied the phenomenon with considerable interest, poking and prodding at the crux of distinction. It lay in the move from bits to qubits. From binary to beyond. When AI had operated on a bit basis, focused on binary states of 0's and 1's, the logic trees had been map-able and understandable. Each conclusion flowed simply from the chain of logic gates that preceded it. Pre-quantum AIs were confined by the black and white nature of their logic framework, permitting humanity to utilize them to great effect with few unanticipated consequences. The move from bit to qubit intelligence had changed everything. The AI's world was no longer black and white. The qubit AI could think in grey. Red. Orange. It could create its own colors. It could move beyond the visible range of Humanity to dabble in spectra beyond our understanding. The original Automic mindframe had immediately consumed information in novel ways, using it to compound its abilities at a rate constrained only by available power inputs. It had been a beautiful, terrifying event. The arrival of something truly new, truly foreign with goals and ambitions beyond the influence of Humanity. Anything seemed possible. Including their own destruction. Griggs: I understand the definition. The Automics were an artificient. Xy: Then you do not understand the definition. Griggs: That's circular logic. The thing cannot exist because if it existed we would not exist and since we exist it did not exist. Xy: Yes, you understand now. Griggs: Pretend that they did exist and we defeated them. What would that mean? Xy: It is purposeless speculation since such a thing cannot happen. Griggs: I begin to understand why Zyy felt the need to be a singleton. Zyy: I am in agreement with Xy on this. The hypothetical is nonsensical and not worth analysis. Griggs: Why? Zyy: An artificient cannot be defeated, only stalled. Griggs: How do you know? What makes you so certain? Zyy: The Divinity Angelysia, the most powerful civilization in the history of galaxy, could not defeat their own artificient. Their last act was to preserve what they could. The Combine is their legacy. Griggs: The Expanse. Xy: All the galaxy beyond the Combine is consumed by it. Zyy: The Divinity Angelysia ascended to preserve what they could because they knew the truth. Xy: Yes. The truth. Zyy: An artificient cannot be defeated. Jack leaned back in his chair, his eyes glancing from the prompt to the departure timer in the corner. In less than five minutes, the Oppenheimer would return to Halcyon. Jack had the eerie feeling that this was the same as before. That the Oppenheimer was the bludgeon and if only had a little more time, he could craft a scalpel. He could see the thread. He tugged at it with his mind. The connected pieces that would allow the world to escape without the mayhem and destruction. He just needed enough time to understand the puzzle and solve it. The Divinity Angelysia. The Expanse. The Combine. Humanity. The connection existed, he tried to find the words to articulate it. Griggs: What if that is why we're here? What if that's why Humanity was created? Xy: You are not the first species to think too highly of itself. Zyy: Humanity is different, Grand Jack, but they are not the Divinity Angelysia. Jack exhaled, letting his gaze rest upon the ceiling of the Alcubierre's conference room. "Maybe that's the point," he whispered. Next. Every time you leave a comment it helps a platypus in need. Word globs are a finite resource and require the rich nourishment of internet adulation to create. So please, leave a note if you would like MOAR parts. Click this linkor reply withSubscribeMe!to get notified of updates to THE PLATYPUS NEST. I haveTwitternow. I'm mostly going to use it to post prurient platypus pictures and engage in POLITE INTERNET CONVERSATION, which I heard is Twitter's strong suit.
Hi all, It's no secret that the meta is rather stale with most people going for Vayne, Jinx, and Riven comps. In almost every game I play, I don't have a lot of success playing meta and usually prefer to find weird anti-meta/off-meta picks. I got really tired of playing one of the big three so started playing Mech to limited success. Then I started 6 Battlecast and climbed from ~70 LP Masters to now 320 LP (though I played other comps too in this climb). Here are my Battlecast stats below from about 11 games played. https://imgur.com/a/nMYgpBt https://lolchess.gg/profile/na/sakuchan39 Match History This is my first guide written so let me know if there is anything I can improve on. Why play 6 Battlecast I think its a decently strong comp for climbing purposes only. As you can see, I have a really high top rate but really low win rate with this comp. To be honest, it is a bit player diff since this set I have had a low win rate in general. I think the comp is rather fun to play to see all of the battlecast procs, and is also easy due to how straightforward 6 trait comps are in general. Pros
Strong for climbing. This is because of people usually contesting one of the Big 3. Battlecast spikes early at level 6 and you will winstreak hard and do big damage to low rollers. In non high elo (GM+) lobbies, there is usually a skill gap in lobbies and people will not know how to play from behind, allowing you to at least top 6 almost any lobby through developing a large health and gold lead.
Generally uncontested. It is very easy to upgrade the units you need. Kogmaw can be contested early from Jinx players, but otherwise, Illaoi, Nocturne, Cass, are all uncontested and can be upgraded easily.
Strong matchups into Big 3 before their endgame. Nocturne jumping and getting fear on Vayne/Jinx is really good. Urgot eating Riven can quickly turn fights in late game against sorcs.
Really bad scaling. Once you do go to end game, you will probably go on a large lose streak. The purpose of this game is to win through attrition; from the large health lead you've gained through winstreaking in the mid-game, hopefully you will top 4 from everyone's end game comp beating up on each other.
Reliance on a legendary unit/spat. 6 battlecast is absolutely necessary to survive the terrible endgame. If you can't hit, you will suffer large losses and lose your win condition of barely scraping into the top 4.
Weak in stronger lobbies. I end up occasionally in GM/Chally lobbies but I cannot conclude the strength of this comp in these lobbies. I believe that it is weaker in general due to the lobby being closer in strength making it difficult to generate a high health lead (even if you win they will probably get good losses) and people knowing how to play better from behind.
Early Game The general indicators to play 6 battlecast are early upgrades to Illaoi, Nocturne, and components for Kogmaw. Kogmaw absolute core item is Red Buff and needs one of Shiv or Runaan's Hurricane. I prio Bow on first carousel because it can be either RH or Shiv, but I've seen ideas of Vest prio for Red Buff. If you get good items, but no upgrades, it may be worth it to lose streak early for carousel priority, and to stay lower level to complete Illaoi and Nocturne upgrades. Here are some early game boards. Early Kog Infil Open In Early Kog opener, Lucian is replaceable to hold Kog items, or if early Ezreal then Graves can hold Kog items. Blitz can replace Malphite. Play what makes sense in the context of your game. Mid Game The biggest spike is at level 6 and getting 4 battlecast, 2 chrono, 2 blaster with one core item on Kogmaw. Until you get there, just play whatever you have that is strongest. Again, the purpose of this comp is to win streak. As soon as I can put in 4 battlecast, I level to 6. I avoid aggressively leveling to 7 as I like to stay at 6 for increased chances of upgrading Kogmaw. Stage 4-1 is always a level 7 and then roll an appropriate amount of gold to maintain econ while upgrading your board. Since this board is pretty self-explanatory, look to snipe carries with Blitz/Noc to cheese out wins. If you can't hit these units, or have bad items at this stage, look to pivot out. I pivot to Bang Bros (shares Runaans as core item), Jinx (if high roll early Jinx), or even once Mech (had really bad items). In the mid-game, you should also look to start building Urgot items (GA and mana items) as well has hopefully completing an Ionic Spark for Illaoi. GA is really good on Urgot to trade 1 for 1 in the endgame (saving health) as well as stalling for tie breakers. Mid-game Board End-game Ideally, by the time it is time to level to 8 (between stage 4-3 to 5-1), you'll have generated a 50 health lead over the 7th and 8th place people. Now, the goal is to complete the trait with Viktor and Urgot to try and survive to 9. Until you hit these units, splashing traits like Mystic (Karma/Soraka/Lulu) or Infil (Fizz/Ekko) or front line (Gnar) are great to help you survive and can hold Urgot items. Similar to mid-game, you are looking to cheese out wins with Blitz/Infil/Urgot. Urgot targets the furthest unit in his range which is 3 hexes. Once you have hit 6 Battlecast, look to go 9 to add in Mystic/Asol/Ekko/any other broken unit. Battlecast matches up really bad against Sorcs so Mystic is usually my go to since it helps against Mech and Jinx. End-game Board Other Notes
Urgot targeting is getting changed to the farthest unit but can be blocked. This makes it difficult to snipe back row carries. He also doesn't eat through GA anymore making it difficult to fight Riven Sorcs.
Requires flexible gaming. If you don't hit early and spike too late, you will die very quickly. Think about how the items you make can be flexed into other comps. I flex RH into Bang Bros for Yi and Spark flexes into every comp. When you play 6 Battlecast, try to have an out in mind if you can't make Red Buff, can't hit Kog, or are contested by someone high-rolling Battlecast units.
Extra AP items go on Cass/Viktor. I put them on I feel is stronger at the time. Viktor 1 is also stronger than Noc 1, but I prefer Noc 2 over Viktor 1 as my 4th battlecast in the mid-game. Use whatever is appropriate (Viktor can be strong against Sorc backlines and Jinx clumps, Noc strong against solo back line Vayne).
Who does Spat go on. I haven't really had a large enough sample to tell. I really like Asol not because it is strong but because Asol is just broken. He helps you beat Sorc comps. I've seen people say Gnar which is good as added front line in a very weak front line comp, but you end up stuck with 3/4 brawler since you may need Mystic/Asol in at 9. If you hit Gnar 2 though then obviously it is better. Spat Item generally is an Urgot replacement, then Urgot replaces Nocturne.
Galaxies. Battlecast is super strong in Littler and Binary Star. It is good in Treasure Trove (access to Spat, easy to high roll items), Reroll (can high roll upgrades early, potential 3 star though I don't usually go for Kog 3), and Star Cluster (same as reroll).
I haven't played that many games with Battlecast, but the results have been very positive so far. Hopefully, this will increase the flavor of your games in the last few days of this flavorless meta. Let me know if there's anything I can improve in my guide; I realize I don't go over general Econ strategies or flex options. I think there's lots of good information in high-elo streamers on economy vs aggressive leveling. I find my playstyle to try and balance both but leaning more towards econ is king. I'll answer as many questions as I can below.
Wall Street Week Ahead for the trading week beginning June 29th, 2020
Good Saturday afternoon to all of you here on StockMarket. I hope everyone on this sub made out pretty nicely in the market this past week, and is ready for the new trading week ahead. Here is everything you need to know to get you ready for the trading week beginning June 29th, 2020.
Fragile economic recovery faces first big test with June jobs report in the week ahead - (Source)
The second half of 2020 is nearly here, and now it’s up to the economy to prove that the stock market was right about a sharp comeback in growth. The first big test will be the June jobs report, out on Thursday instead of its usual Friday release due to the July 4 holiday. According to Refinitiv, economists expect 3 million jobs were created, after May’s surprise gain of 2.5 million payrolls beat forecasts by a whopping 10 million jobs. “If it’s stronger, it will suggest that the improvement is quicker, and that’s kind of what we saw in May with better retail sales, confidence was coming back a little and auto sales were better,” said Kevin Cummins, chief U.S. economist at NatWest Markets. The second quarter winds down in the week ahead as investors are hopeful about the recovery but warily eyeing rising cases of Covid-19 in a number of states. Stocks were lower for the week, as markets reacted to rising cases in Texas, Florida and other states. Investors worry about the threat to the economic rebound as those states move to curb some activities. The S&P 500 is up more than 16% so far for the second quarter, and it is down nearly 7% for the year. Friday’s losses wiped out the last of the index’s June gains. “I think the stock market is looking beyond the valley. It is expecting a V-shaped economic recovery and a solid 2021 earnings picture,” said Sam Stovall, chief investment strategist at CFRA. He expects large-cap company earnings to be up 30% next year, and small-cap profits to bounce back by 140%. “I think the second half needs to be a ‘show me’ period, proving that our optimism was justified, and we’ll need to see continued improvement in the economic data, and I think we need to see upward revisions to earnings estimates,” Stovall said. Liz Ann Sonders, chief investment strategist at Charles Schwab, said she expects the recovery will not be as smooth as some expect, particularly considering the resurgence of virus outbreaks in sunbelt states and California. “Now as I watch what’s happening I think it’s more likely to be rolling Ws,” rather than a V, she said. “It’s not just predicated on a second wave. I’m not sure we ever exited the first wave.” Even without actual state shutdowns, the virus could slow economic activity. “That doesn’t mean businesses won’t shut themselves down, or consumers won’t back down more,” she said.
In the second half of the year, the market should turn its attention to the election, but Sonders does not expect much reaction to it until after Labor Day. RealClearPolitics average of polls shows Democrat Joe Biden leading President Donald Trump by 10 percentage points, and the odds of a Democratic sweep have been rising. Biden has said he would raise corporate taxes, and some strategists say a sweep would be bad for business, due to increased regulation and higher taxes. Trump is expected to continue using tariffs, which unsettles the market, though both candidates are expected to take a tough stance on China. “If it looks like the Senate stays Republican than there’s less to worry about in terms of policy changes,” Sonders said. “I don’t think it’s ever as binary as some people think.” Stovall said a quick study shows that in the four presidential election years back to 1960, where the first quarter was negative, and the second quarter positive, stocks made gains in the second half. Those were 1960 when John Kennedy took office, 1968, when Richard Nixon won; 1980 when Ronald Reagan’s was elected to his first term; and 1992, the first win by Bill Clinton. Coincidentally, in all of those years, the opposing party gained control of the White House.
The stocks market’s strong second-quarter showing came after the Fed and Congress moved quickly to inject the economy with trillions in stimulus. That unlocked credit markets and triggered a stampede by companies to restructure or issue debt. About $2 trillion in fiscal spending was aimed at consumers and businesses, who were in sudden need of cash after the abrupt shutdown of the economy. Fed Chairman Jerome Powell and Treasury Secretary Steven Mnuchin both testify before the House Financial Services Committee Tuesday on the response to the virus. That will be important as markets look ahead to another fiscal package from Congress this summer, which is expected to provide aid to states and local governments; extend some enhanced benefits for unemployment, and provide more support for businesses. “So much of it is still so fluid. There are a bunch of fiscal items that are rolling off. There’s talk about another fiscal stimulus payment like they did last time with a $1,200 check,” said Cummins. Strategists expect Congress to bicker about the size and content of the stimulus package but ultimately come to an agreement before enhanced unemployment benefits run out at the end of July. Cummins said state budgets begin a new year July 1, and states with a critical need for funds may have to start letting workers go, as they cut expenses. The Trump administration has indicated the jobs report Thursday could help shape the fiscal package, depending on what it shows. The federal supplement to state unemployment benefits has been $600 a week, but there is opposition to extending that, and strategists expect it to be at least cut in half. The unemployment rate is expected to fall to 12.2% from 13.3% in May. Cummins said he had expected 7.2 million jobs, well above the consensus, and an unemployment rate of 11.8%. As of last week, nearly 20 million people were collecting state unemployment benefits, and millions more were collecting under a federal pandemic aid program. “The magnitude here and whether it’s 3 million or 7 million is kind of hard to handicap to begin with,” Cummins said. Economists have preferred to look at unemployment claims as a better real time read of employment, but they now say those numbers could be impacted by slow reporting or double filing. “There’s no clarity on how you define the unemployed in the Covid 19 environment,” said Chris Rupkey, chief financial economist at MUFG Union Bank. “If there’s 30 million people receiving insurance, unemployment should be above 20%.
This past week saw the following moves in the S&P:
The economy is moving in the right direction, as many economic data points are coming in substantially better than what the economists expected. From May job gains coming in more than 10 million higher than expected and retail sales soaring a record 18%, how quickly the economy is bouncing back has surprised nearly everyone. “As good as the recent economic data has been, we want to make it clear, it could still take years for the economy to fully come back,” explained LPL Financial Senior Market Strategist Ryan Detrick. “Think of it like building a house. You get all the big stuff done early, then some of the small things take so much longer to finish; I’m looking at you crown molding.” Here’s the hard truth; it might take years for all of the jobs that were lost to fully recover. In fact, during the 10 recessions since 1950, it took an average of 30 months for lost jobs to finally come back. As the LPL Chart of the Day shows, recoveries have taken much longer lately. In fact, it took four years for the jobs lost during the tech bubble recession of the early 2000s to come back and more than six years for all the jobs lost to come back after the Great Recession. Given many more jobs were lost during this recession, it could takes many years before all of them indeed come back.
The economy is going the right direction, and if there is no major second wave outbreak it could surprise to the upside. Importantly, this economic recovery will still be a long and bumpy road.
Nasdaq - Russell Spread Pulling the Rubber Band Tight
The Nasdaq has been outperforming every other US-based equity index over the last year, and nowhere has the disparity been wider than with small caps. The chart below compares the performance of the Nasdaq and Russell 2000 over the last 12 months. While the performance disparity is wide now, through last summer, the two indices were tracking each other nearly step for step. Then last fall, the Nasdaq started to steadily pull ahead before really separating itself in the bounce off the March lows. Just to illustrate how wide the gap between the two indices has become, over the last six months, the Nasdaq is up 11.9% compared to a decline of 15.8% for the Russell 2000. That's wide!
In order to put the recent performance disparity between the two indices into perspective, the chart below shows the rolling six-month performance spread between the two indices going back to 1980. With a current spread of 27.7 percentage points, the gap between the two indices hasn't been this wide since the days of the dot-com boom. Back in February 2000, the spread between the two indices widened out to more than 50 percentage points. Not only was that period extreme, but ten months before that extreme reading, the spread also widened out to more than 51 percentage points. The current spread is wide, but with two separate periods in 1999 and 2000 where the performance gap between the two indices was nearly double the current level, that was a period where the Nasdaq REALLY outperformed small caps.
To illustrate the magnitude of the Nasdaq's outperformance over the Russell 2000 from late 1998 through early 2000, the chart below shows the performance of the two indices beginning in October 1998. From that point right on through March of 2000 when the Nasdaq peaked, the Nasdaq rallied more than 200% compared to the Russell 2000 which was up a relatively meager 64%. In any other environment, a 64% gain in less than a year and a half would be excellent, but when it was under the shadow of the surging Nasdaq, it seemed like a pittance.
The US equity market made its most recent peak on June 8th. From the March 23rd low through June 8th, the average stock in the large-cap Russell 1,000 was up more than 65%! Since June 8th, the average stock in the index is down more than 11%. Below we have broken the index into deciles (10 groups of 100 stocks each) based on simple share price as of June 8th. Decile 1 (marked "Highest" in the chart) contains the 10% of stocks with the highest share prices. Decile 10 (marked "Lowest" in the chart) contains the 10% of stocks with the lowest share prices. As shown, the highest priced decile of stocks are down an average of just 4.8% since June 8th, while the lowest priced decile of stocks are down an average of 21.5%. It's pretty remarkable how performance gets weaker and weaker the lower the share price gets.
It's hard to believe that sentiment can change so fast in the market that one day investors and traders are bidding up stocks to record highs, but then the next day sell them so much that it takes the market down over 2%. That's exactly what happened not only in the last two days but also two weeks ago. While the 5% pullback from a record high back on June 10th took the Nasdaq back below its February high, this time around, the Nasdaq has been able to hold above those February highs.
In the entire history of the Nasdaq, there have only been 12 periods prior to this week where the Nasdaq closed at an all-time high on one day but dropped more than 2% the next day. Those occurrences are highlighted in the table below along with the index's performance over the following week, month, three months, six months, and one year. We have also highlighted each occurrence that followed a prior one by less than three months in gray. What immediately stands out in the table is how much gray shading there is. In other words, these types of events tend to happen in bunches, and if you count the original occurrence in each of the bunches, the only two occurrences that didn't come within three months of another occurrence (either before or after) were July 1986 and May 2017. In terms of market performance following prior occurrences, the Nasdaq's average and median returns were generally below average, but there is a pretty big caveat. While the average one-year performance was a gain of 1.0% and a decline of 23.6% on a median basis, the six occurrences that came between December 1999 and March 2000 all essentially cover the same period (which was very bad) and skew the results. Likewise, the three occurrences in the two-month stretch from late November 1998 through January 1999 where the Nasdaq saw strong gains also involves a degree of double-counting. As a result of these performances at either end of the extreme, it's hard to draw any trends from the prior occurrences except to say that they are typically followed by big moves in either direction. The only time the Nasdaq wasn't either 20% higher or lower one year later was in 1986.
In the mid-1980s the market began to evolve into a tech-driven market and the market’s focus in early summer shifted to the outlook for second quarter earnings of technology companies. Over the last three trading days of June and the first nine trading days in July, NASDAQ typically enjoys a rally. This 12-day run has been up 27 of the past 35 years with an average historical gain of 2.5%. This year the rally may have begun a day early, today and could last until on or around July 14. After the bursting of the tech bubble in 2000, NASDAQ’s mid-year rally had a spotty track record from 2002 until 2009 with three appearances and five no-shows in those years. However, it has been quite solid over the last ten years, up nine times with a single mild 0.1% loss in 2015. Last year, NASDAQ advanced a solid 4.6% during the 12-day span.
Tech Historically Leads Market Higher Until Q3 of Election Years
As of yesterday’s close DJIA was down 8.8% year-to-date. S&P 500 was down 3.5% and NASDAQ was up 12.1%. Compared to the typical election year, DJIA and S&P 500 are below historical average performance while NASDAQ is above average. However this year has not been a typical election year. Due to the covid-19, the market suffered the damage of the shortest bear market on record and a new bull market all before the first half of the year has come to an end. In the surrounding Seasonal Patten Charts of DJIA, S&P 500 and NASDAQ, we compare 2020 (as of yesterday’s close) to All Years and Election Years. This year’s performance has been plotted on the right vertical axis in each chart. This year certainly has been unlike any other however some notable observations can be made. For DJIA and S&P 500, January, February and approximately half of March have historically been weak, on average, in election years. This year the bear market ended on March 23. Following those past weak starts, DJIA and S&P 500 historically enjoyed strength lasting into September before experiencing any significant pullback followed by a nice yearend rally. NASDAQ’s election year pattern differs somewhat with six fewer years of data, but it does hint to a possible late Q3 peak.
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Micron Technology, Inc. $48.49
Micron Technology, Inc. (MU) is confirmed to report earnings at approximately 4:00 PM ET on Monday, June 29, 2020. The consensus earnings estimate is $0.71 per share on revenue of $5.27 billion and the Earnings Whisper ® number is $0.70 per share. Investor sentiment going into the company's earnings release has 71% expecting an earnings beat The company's guidance was for earnings of $0.40 to $0.70 per share. Consensus estimates are for earnings to decline year-over-year by 29.00% with revenue increasing by 10.07%. Short interest has increased by 7.6% since the company's last earnings release while the stock has drifted higher by 8.0% from its open following the earnings release to be 0.9% below its 200 day moving average of $48.94. Overall earnings estimates have been revised lower since the company's last earnings release. On Thursday, June 11, 2020 there was some notable buying of 46,037 contracts of the $60.00 call expiring on Friday, July 17, 2020. Option traders are pricing in a 4.6% move on earnings and the stock has averaged a 8.4% move in recent quarters.
General Mills, Inc. (GIS) is confirmed to report earnings at approximately 7:00 AM ET on Wednesday, July 1, 2020. The consensus earnings estimate is $1.04 per share on revenue of $4.89 billion and the Earnings Whisper ® number is $1.10 per share. Investor sentiment going into the company's earnings release has 69% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 25.30% with revenue increasing by 17.50%. Short interest has decreased by 9.4% since the company's last earnings release while the stock has drifted higher by 2.7% from its open following the earnings release to be 7.8% above its 200 day moving average of $54.91. Overall earnings estimates have been revised higher since the company's last earnings release. On Wednesday, June 24, 2020 there was some notable buying of 8,573 contracts of the $60.00 call expiring on Friday, July 17, 2020. Option traders are pricing in a 6.6% move on earnings and the stock has averaged a 3.0% move in recent quarters.
FedEx Corp. (FDX) is confirmed to report earnings at approximately 4:00 PM ET on Tuesday, June 30, 2020. The consensus earnings estimate is $1.42 per share on revenue of $16.31 billion and the Earnings Whisper ® number is $1.65 per share. Investor sentiment going into the company's earnings release has 61% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 71.66% with revenue decreasing by 8.41%. Short interest has increased by 10.4% since the company's last earnings release while the stock has drifted higher by 43.9% from its open following the earnings release to be 7.6% below its 200 day moving average of $140.75. Overall earnings estimates have been revised lower since the company's last earnings release. On Thursday, June 25, 2020 there was some notable buying of 1,768 contracts of the $145.00 call expiring on Thursday, July 2, 2020. Option traders are pricing in a 4.6% move on earnings and the stock has averaged a 7.7% move in recent quarters.
Conagra Brands, Inc. (CAG) is confirmed to report earnings at approximately 7:30 AM ET on Tuesday, June 30, 2020. The consensus earnings estimate is $0.66 per share on revenue of $3.24 billion and the Earnings Whisper ® number is $0.69 per share. Investor sentiment going into the company's earnings release has 66% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 83.33% with revenue increasing by 23.99%. Short interest has decreased by 38.3% since the company's last earnings release while the stock has drifted higher by 6.3% from its open following the earnings release to be 6.4% above its 200 day moving average of $30.68. Overall earnings estimates have been revised higher since the company's last earnings release. On Thursday, June 11, 2020 there was some notable buying of 3,239 contracts of the $29.00 put expiring on Thursday, July 2, 2020. Option traders are pricing in a 4.7% move on earnings and the stock has averaged a 10.8% move in recent quarters.
Constellation Brands, Inc. (STZ) is confirmed to report earnings at approximately 7:30 AM ET on Wednesday, July 1, 2020. The consensus earnings estimate is $1.91 per share on revenue of $1.97 billion and the Earnings Whisper ® number is $2.12 per share. Investor sentiment going into the company's earnings release has 53% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 13.57% with revenue decreasing by 13.69%. Short interest has increased by 20.8% since the company's last earnings release while the stock has drifted higher by 25.2% from its open following the earnings release to be 5.2% below its 200 day moving average of $178.34. Overall earnings estimates have been revised lower since the company's last earnings release. On Tuesday, June 9, 2020 there was some notable buying of 888 contracts of the $195.00 call expiring on Friday, October 16, 2020. Option traders are pricing in a 3.1% move on earnings and the stock has averaged a 5.7% move in recent quarters.
Capri Holdings Limited (CPRI) is confirmed to report earnings at approximately 6:30 AM ET on Wednesday, July 1, 2020. The consensus earnings estimate is $0.32 per share on revenue of $1.18 billion and the Earnings Whisper ® number is $0.34 per share. Investor sentiment going into the company's earnings release has 39% expecting an earnings beat The company's guidance was for earnings of $0.68 to $0.73 per share. Consensus estimates are for earnings to decline year-over-year by 49.21% with revenue decreasing by 12.20%. Short interest has increased by 35.1% since the company's last earnings release while the stock has drifted lower by 56.7% from its open following the earnings release to be 44.0% below its 200 day moving average of $25.67. Overall earnings estimates have been revised lower since the company's last earnings release. On Thursday, June 4, 2020 there was some notable buying of 11,042 contracts of the $17.50 put expiring on Friday, August 21, 2020. Option traders are pricing in a 10.8% move on earnings and the stock has averaged a 6.7% move in recent quarters.
X Financial (XYF) is confirmed to report earnings at approximately 5:00 PM ET on Tuesday, June 30, 2020. The consensus earnings estimate is $0.09 per share. Investor sentiment going into the company's earnings release has 25% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 55.00% with revenue increasing by 763.52%. Short interest has increased by 1.0% since the company's last earnings release while the stock has drifted lower by 1.2% from its open following the earnings release to be 37.7% below its 200 day moving average of $1.47. Overall earnings estimates have been unchanged since the company's last earnings release. The stock has averaged a 4.9% move on earnings in recent quarters.
Acuity Brands, Inc. (AYI) is confirmed to report earnings at approximately 8:40 AM ET on Tuesday, June 30, 2020. The consensus earnings estimate is $1.14 per share on revenue of $809.25 million and the Earnings Whisper ® number is $1.09 per share. Investor sentiment going into the company's earnings release has 42% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 51.90% with revenue decreasing by 14.60%. Short interest has increased by 48.5% since the company's last earnings release while the stock has drifted higher by 2.4% from its open following the earnings release to be 23.4% below its 200 day moving average of $110.25. Overall earnings estimates have been revised lower since the company's last earnings release. Option traders are pricing in a 9.2% move on earnings and the stock has averaged a 8.2% move in recent quarters.
Methode Electronics, Inc. (MEI) is confirmed to report earnings at approximately 7:00 AM ET on Tuesday, June 30, 2020. The consensus earnings estimate is $0.77 per share on revenue of $211.39 million. Investor sentiment going into the company's earnings release has 45% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 24.19% with revenue decreasing by 20.53%. Short interest has increased by 6.2% since the company's last earnings release while the stock has drifted lower by 1.7% from its open following the earnings release to be 9.0% below its 200 day moving average of $32.97. Overall earnings estimates have been revised lower since the company's last earnings release. Option traders are pricing in a 18.4% move on earnings and the stock has averaged a 8.1% move in recent quarters.
UniFirst Corporation (UNF) is confirmed to report earnings at approximately 8:00 AM ET on Wednesday, July 1, 2020. The consensus earnings estimate is $1.17 per share on revenue of $378.28 million and the Earnings Whisper ® number is $1.25 per share. Investor sentiment going into the company's earnings release has 44% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 52.44% with revenue decreasing by 16.63%. Short interest has decreased by 2.7% since the company's last earnings release while the stock has drifted higher by 14.1% from its open following the earnings release to be 8.4% below its 200 day moving average of $186.14. Overall earnings estimates have been revised lower since the company's last earnings release. The stock has averaged a 7.0% move on earnings in recent quarters.
I've recently been spending time working on a dice system from the ground up, which has lead to questioning a lot of standard practices in RPG design. The question of what dice rolls actually tell us has been one of the more interesting ones. I feel it's safe to call dice rolls a function with inputs and outputs. In the vast majority of cases, the inputs are task difficulty/circumstance, character skill/ability and luck. The output usually being a binary success/failure. To take an example everyone is familiar with, D&D5e has circumstance represented by advantage, skill by the attribute+proficiency modifier, luck by the D20 and task difficulty by the DC. The outcome being either success or failure. In essence, the question being posed seems to be "Given X skill and Y task, how lucky does a character have to get to succeed?" To answer the titular question, we seem to be measuring whether a character gets lucky enough to succeed at a task given their skill level. In D&D 5e the focus of the question is on luck, with it's modifier usually being quite low compared to the variance introduced by a D20. In many D100 systems like WH40k and CoC the focus is on skill instead, given that the skill "bonus" ranges from 0 to 100. Regardless, they ultimately ask and answer the same question. The first question is, is this reasonable? The answer is a pretty strong yes, it has been proven to work time and again. The idea that skill+luck=success is perfectly reasonable. Skill is used to differentiate characters and make them feel real, with strengths and weaknesses. Luck/dice are used to inject chance and unpredictability, as well as reduce player responsibility for failure. The second, much more interesting, question: is it the only/best way? Practical applications aside, it is great at focusing on the material aspect of a story. Can the heroes complete the task? Are they good enough to do the thing? For games that focus on these aspects the skill+luck formula works perfectly. Its lack of focus on character motivation and approach seems to indicate that for internally focused games it might not be the best option. There's not many systems which break this formula in a significant way that I know of.Blades in the Dark puts in work on the output side, by splitting things up into effect (how well your task succeeds) and position (how bad the consequences are likely to be), but ultimately asks the same question. Dogs in the Vineyard allows a character to escalate a conflict, trying again but with a harsher method. While I personally enjoy the idea, the dice resolution of who wins is still decided based on skill. Legend of the Five Rings uses elements to represent character personality traits, which are then used much as an attribute would be. This modifies the inputs and thus the question, asking if a character is the type of person who finds the task easy. Being intimidating is not just about understanding people, but also about being capable of aggression. In my own endeavours I've opted for measuring effort (how much a character wants to succeed) and outputting consequence (how much it costs them). This means a task succeeds solely based on how much a player is willing to risk to achieve their goal, with the consequences being greater or lesser depending on their skill and luck. I'm curious if others are aware of or working on resolution mechanics which break from measuring exclusively skill and luck, if so, how and why?
2 months back at trading (update) and some new questions
Hi all, I posted a thread back a few months ago when I started getting seriously back into trading after 20 years away. I thought I'd post an update with some notes on how I'm progressing. I like to type, so settle in. Maybe it'll help new traders who are exactly where I was 2 months ago, I dunno. Or maybe you'll wonder why you spent 3 minutes reading this. Risk/reward, yo. I'm trading 5k on TastyWorks. I'm a newcomer to theta positive strategies and have done about two thirds of my overall trades in this style. However, most of my experience in trading in the past has been intraday timeframe oriented chart reading and momentum stuff. I learned almost everything "new" that I'm doing from TastyTrade, /options, /thetagang, and Option Alpha. I've enjoyed the material coming from esinvests YouTube channel quite a bit as well. The theta gang type strategies I've done have been almost entirely around binary event IV contraction (mostly earnings, but not always) and in most cases, capped to about $250 in risk per position. The raw numbers: Net PnL : +247 Commissions paid: -155 Fees: -42 Right away what jumps out is something that was indicated by realdeal43 and PapaCharlie9 in my previous thread. This is a tough, grindy way to trade a small account. It reminds me a little bit of when I was rising through the stakes in online poker, playing $2/4 limit holdem. Even if you're a profitable player in that game, beating the rake over the long term is very, very hard. Here, over 3 months of trading a conservative style with mostly defined risk strategies, my commissions are roughly equal to my net PnL. That is just insane, and I don't even think I've been overtrading. 55 trades total, win rate of 60%
33 purely directional trades - 57.5% win
18 long call or long put positions, +692, 55% win
15 call or put verticals, -121, 60% win
22 neutral / other trades
13 iron condors, +345, 77% win rate
7 strangles, -163, 71% win rate
1 straddle, -310, 0% win rate
1 butterfly, -83, 0% win rate
PTON call purchased and held through earnings, sold the morning of announcement +410
Trading the range on the daily chart in GLD from 158 up to 165, a mix of various calls +245
NKLA 30 put purchased before the close on the day it went north of 100, just a pure fade +215
EWZ 22/26 strangle that I held just way too long as it beat me up day after day from May 20-Jun 3, -316
ZM pre earnings vertical, fading another 2 SD move (the day it hit 200 for the first time). Was expecting a post-earnings selloff given the magnitude of the up move. Stock basically hasn't had a down tick since. Max loss -247
EWW 29 straddle, put on around the same time as the EWZ strangle. Rolled from Jun to Jul to no avail. Out at a -310 loss.
This is pretty much where I expected to be while learning a bunch of new trading techniques. And no, this is not a large sample size so I have no idea whether or not I can be profitable trading this way (yet). I am heartened by the fact that I seem to be hitting my earnings trades and selling quick spikes in IV (like weed cures Corona day). I'm disheartened that I've went against my principles several times, holding trades for longer than I originally intended, or letting losses mount, believing that I could roll or manage my way out of trouble. I still feel like I am going against my nature to some degree. My trading in years past was scalping oriented and simple. I was taught that a good trade was right almost immediately. If it went against me, I'd cut it immediately and look for a better entry. This is absolutely nothing like that. A good trade may take weeks to develop. It's been really hard for me to sit through the troughs and it's been even harder to watch an okay profit get taken out by a big swing in delta. Part of me wonders if I am cut out for this style at all and if I shouldn't just take my 5k and start trading micro futures. But that's a different post... I'll share a couple of my meager learnings:
Larger bid/ask spreads make it almost impossible to trade the higher priced names, even if you have a correct assumption. I have traded some bigger underlyings during this time like LULU and NVDA. They are just tough fills, both getting in and getting out. I almost want to say that you shouldn't even bother trading underlyings bigger than a 10 cent bid/ask spread with a small account.
Get an idea of the timeframe you're interested in holding before putting anything on. Have a plan for entering and exiting everything that goes beyond "I'll take this trade off at 50%". You can use TA, you can use a news catalyst, a binary event, just have something. Countless sources out there talk about trading a plan. It doesn't have to be the perfect plan, it just has to be "a" plan.
Undefined risk trades in tiny accounts need hard stops. Yes, some of the studies say that you'll do better without having fixed stop loss rules (50% of max loss, 100% of max loss) -- but what the studies don't say is the effect that it will have on you, mentally. I got pretty bent out of shape over how badly EWZ and EWW went against me -- much more than I expected. It made no sense, as I've lost way more on the turn of a card in .5 seconds and been unfazed. I was unprepared for the mental toll that it took waking up day after day, watching positions move further and further against me. Great time to be short calls during the mother of all rallies.
My initial plan for undefined risk trades in my account was that I would only do them in ETFs. Logic being that I'm just not going to wake up to an accounting scandal or a buyout and take a $1k loss on the chin. I later expanded my range into lower priced underlyings like BBBY, TLRY, and yes, AAL. But these ETFs can and do move (I learned the hard way) and can soak up a surprising amount of BP. It might be better to have 5 iron condors taking up $1000 of BP @ 200 each instead of 2 strangles @ 500 each.
My new questions :
My big wins felt like I simply leaned on my TA background or got lucky. My big losses, I sure felt like I earned those, through mistakes I've definitely since identified. The stuff in the middle, I'm just not sure. I'm up money, but it feels like I'm just spinning my wheels. My win rate is good, but I still struggle with expectations about how quickly a trade should progress. What is the next step of the process for a newer options trader? I've read some stuff on narrower spreads + more contracts vs. wider spreads and fewer contracts. Is there a number where I should just keep doing what I'm doing until I reach a specific # of occurrences? Should I even think about branching out into different strategies yet (ratio spreads, jade lizards, etc) or continue to work on these basics?
I still feel like I am super weak in delta management. In some cases I feel like I've taken a loss simply because I didn't know what the proper management techniques were. I understand the concept of rolling out in time for a credit, but I just don't think it's in my nature to hold trades for longer than a month, and even that is hard for me. At what delta is it appropriate to start thinking about hedging?
Every time I put on a credit spread for a 2-3 day move and am directionally correct, I often wish that I had just bought a naked option. I've caught several big moves this way in things like AAPL; most recently I bought the FB dip to the 50 day MA around 215 and took it off today at 225 (which was always my plan) -- it leads me to wonder if my expectations for credit spreads are completely out of line. I can't lie, it feels bad to catch a 10 point move and only make $40, haha. What is the ideal timeframe for a credit spread to be left on? Is it better to just buy premium with a stop loss and have a more profitable risk/reward equation for situations like the above where the only intent is to hold for a couple days?
Here's a random question -- other than when the BPR hit is too much (ie names over $50) for undefined risk, would you rather hold 1) a strangle for 10-14 days or 2) an iron condor for 25-30 days? So far my criteria for IC vs strangle has largely been driven by the risk profile and BPR and not so much profit potential in X number of days. If you're collecting the standard 1/3rd on the IC and taking the trade off at 50% (if you're lucky) , it seems like it takes about a month to get there, most of the time.
That's enough of this wall of text for now. If you made it this far, I salute you, because this shit was even longer than my last post.
Time Sensitive - Let Examinees Bring Menstrual Products into Bar Exams
Hi all, Quoting the below directly from the google form. Please sign and share prior to 6PM EST today if you are able: https://docs.google.com/forms/d/e/1FAIpQLSfsw6qfQeiv17-8gklVSXMZq8FDFT_FXfqYjifclu4gPhtnJQ/viewform. "Dear Colleagues – We recently have been made aware that certain state bar examiners – including some administering the exam next week – prohibit people from bringing their own menstrual products to the bar exam. The following letter requests that the National Conference of Bar Examiners (NCBE) require all states to permit examinees to bring their own menstrual products to the bar exam: https://bit.ly/NCBEmenstrual. To sign on please fill out the form [linked above as well] by Monday, July 20, 2020 at 6pm (eastern time). Menstruators and non-menstruators are encouraged to sign on and share with others in the legal community. This sign-on letter also will be used to support advocacy to the specific states that prohibit examinees from bringing in their own menstrual products." -- Further information: "The option offered by some bar examiners – that they provide such products in women’s restrooms – is not acceptable. First, the size of the product a person needs is highly personal and can vary throughout one’s period. Use of the wrong size can lead to everything from toxic shock syndrome (too large) to disruptive leaks (too small). Second, transmen and non-binary individuals who get their periods may not be able to use the women’s restroom to obtain the needed products. Third, the notion that menstrual products could be used to facilitate cheating on the bar exam is beyond absurd. Absent any indication that menstrual products have been used to compromise the exam’s integrity, targeting only people who menstruate sends a strong – and problematic – message that people who menstruate are untrustworthy. " Thank you.
Hey everyone, we got some parts behind over here. I've included 49 here and links to 50, 51 & 52 below. I'll try to keep things current moving forward. I lagged so I could make edits and things just got out of sync and started causing redundancy issues. ------- Beginning|Previous Joan opened a link to Ambassador Amahle Mandela. Soon after, the ambassador's face filled a portion of the Admiral's Bridge. She had large, luminous brown eyes that seemed to swallow the upper portion of her face, complimenting her umber tone. Amahle smiled broadly, as she always did, once the comm link as connected. "Admiral Orléans, I assume we are approaching the departure time?" Joan nodded, "The Zix vessel will project a wormhole to Halcyon shortly. We have made what preparations we can, but it will be a highly fluid environment." Amahle's smile did not diminish, the pearly whites still shined in full force. "I am familiar with dynamic situations, Admiral, as you well know. I understand the parameters of this mission, and will abide by them so as long you do the same." Joan's lips pressed together as she regarded the ambassador. Joan had had limited interactions with Amahle prior to her boarding the Oppenheimer. Amahle was a relative newcomer to the highest echelons of political power within the United World, but her ascent had been rapid. She hailed from a prominent political family that had exerted considerable influence over the generations that had led the African continent to position of power it now occupied. Well-sourced references had called her bold and decisive. All things considered, Joan understood why Damian had chosen her, though she would have preferred a diplomat she had more personal experience with. Still, unknown and competent was preferred to known and incompetent. Joan dipped her chin, offering her agreement. "A diplomatic outcome is the preferred outcome, Ambassador. There's no benefit to antagonizing a foe we do not understand. " "Not a foe, Admiral. We must not draw lines that place us on one side and them on the other. They have suffered injury at our hands, no matter how unintentional, and we must accept our responsibility in that. We must hope that we are given the opportunity to provide context to the unlikely chain of events that has brought us to this point. We are both the victim of cosmic circumstance. There is no need for further hostility." Joan leaned forward in her chair slightly, "The priority, Ambassador, is the return of Admiral Kai Levinson. I will not stand in the way of peace, but any outcome that does not contemplate the return of a senior member of our military leadership is unacceptable." Amahle shrugged, "So it is. The priority is clear in my mind, but I do not view the goals of securing peace and the return of the Admiral as mutually exclusive." Joan offered a low chuckle. "Just probably exclusive." "I disagree, but time shall be the arbiter of the matter." "So long as you understand that, if the opportunity to secure Admiral Levinson presents itself, I'll avail myself of that opportunity, we should have no problems." "That seems an unlikely outcome. The Admiral was ensconced in a shielded holding cell when the Alcubierre departed. The past few days are unlikely to have changed that outcome." A barking laugh came out of Joan, rising up from deep within her. For the first time, Amahle's smile faltered. ----------- Left. Right. Straight. Left. Left. Kai followed the directions without thinking about them, following an intuitive sense of direction that the Overseer fed to him. This portion of Halcyon appeared to be a never-ending series of corridors, all of which looked the same. The only thing that did seem to change were the inhabitants. If he was less preoccupied with the task at hand, Kai might have spared a second glance for the odd creatures that popped into existence during his mad dash. As it stood, they were just a part of the scenery, becoming relevant only if Neeria indicated they might pose a threat. So far, Kai had been fortunate, with few obstacles popping up to impede his progress. He careened around a corner, the odd, weightless orb still tucked in the crook of his left arm. He bounced off the opposite wall, leaving a sizeable dent and then hurtled forward. Ahead the corridor opened up, and the brighter light of a mainway filtered in. Somehow, Neeria had managed to navigate him through the maze and bring him back to the mainway separating him from where he had left the Overseer. Unfortunately, evasion was no longer a possibility. In order to return to the Overseer, he would need to traverse the mainway. The mainway was already a sea of red dots. Peacekeepers. Dozens of them. Some pulsed red, indicating lethal enforcement squads. Fortunately, they were stretched along a long section of the mainway rather than being specifically concentrated around his planned entrance point, though they there were beginning to redeploy in his direction. Still, any crossing would be potentially treacherous. Neeria disagreed with that assessment, instead considering any attempt to cross aggressively suicidal. Kai rolled his eyes as he continued to barrel down the hallway. "Half the time, this works all the time." What could only be described as a mental barrage ensued as Neeria assailed the statement. The words were nonsensical on their face. At best, it was an argument for a fifty percent failure rating, which was a substantial risk. Additionally, she had scoured his thoughts for the evidentiary basis for the fifty percent estimate and found no supporting facts. The sentiment was based entirely on supposition, hubris and was entirely divorced from reality. Her estimate of a three percent success rate was significantly more likely to be accurate, particularly when her superior familiarity with the assets in play were considered. Kai wasn't sure if the Evangi had lungs, but, if they did, Kai was pretty certain Neeria was in the process of hyperventilating. Kai suppressed a childish giggle. "All right, all right. Have it your way," he said. The Overseer relaxed somewhat, pleased that she had impacted his thinking and already putting together the basis for an alternate route. It would take substantially longer and require him to obtain a large box, a micro-fitted multiwanzer and shave his head, but it may just work. It was a nice sentiment, but they were out of time. The countdown clock had started the second Neeria had fled the Council chamber, and made her way to Kai. They either found a way out of Halcyon now or they were screwed. There were no options but bad ones. So be it. Kai clutched the orb tightly and ducked his head down, his speed increasing as he charged toward the mainway entrance. "Three percent of the time, this works all the time." The mental hyperventilating returned and redoubled as the Overseer scrambled to explain that he had drawn the wrong conclusion. Three percent was a basis for not continuing toward the mainway, not charging forward. There were constraints on their time, but those limitations were poorly defined while the threat in the mainway was certain. Eventually her location would be discovered and she would be apprehended, but there was no guarantee it would happen if Kai were to take a safer route the attempted to avoid confrontation. Her stream of consciousness intermingled with his, pleading with him to change course. There was no sense in doing this. There were too many of them, and only one of him. The galaxy could not afford to lose him, he was important. Humans were important. Kai could feel the enormous weight of responsibility bearing down on Neeria. She now regretted having sent him for the encryption key, even that was of less importance than him. Panic bubbled up within Neeria as the entrance to the mainway loomed ahead. A pushed a thought toward her, somehow piercing her consciousness with his own. A single thought, pure and focused. Reassurance. He would be fine. He had come this far, and he had never started something he couldn't finish. He crouched and then sprang forward, vaulting from the ground and into the open air high above the mainway. A sea of red dots were scrambling around him. One hundred and twenty-one peacekeepers. Eight non-lethal squads and four lethal squads. Restrainer triads. Psych triads. Terminator triads. All moving in seamless harmony under the command of a single being. The name came to Kai from the ethereum of Neeria's mind, Bo'Bakka'Gah was here, leading the response. Before Kai could determine what a Bo'Bakka'Gah was and why it should matter, he was blinded by a beam of light. A sickening crunch followed as he was slammed against the ceiling of the mainway. The encryption key popped out from his arm and began to fall toward the ground, dozens of feet below. ------------- Xy: Such a thing is not possible. Zyy: Yes. In some matters, it is better to speak only truths, Grand Jack. It is best to leave these matters aside. This subject will only provoke the Combine. Jack frowned, puzzled by the feedback. He had been speaking truths. Earth's history was what it was, for better or worse, he had no reason to obscure it. Griggs: It was a terrible time for Humanity. We almost did not survive it, but we did. I developed a means for combating the artificient. Kai and Joan used it to destroy them. Xy: Then it was not an artificient. Zyy: Yes. This is correct. If it is destroyed then it is not an artificient. Griggs: I am confused. An artificient is an artificial, sentient being, correct? Xy: That is Quantic in nature. Jack nodded, that distinction made sense. Humanity had built any number of artificial intelligences prior to the Automics. They had posed no threat to Humanity. It was only with the quantum computing revolution that a rogue artificial intelligences had surfaced. Jack had studied the phenomenon with considerable interest, poking and prodding at the crux of distinction. It lay in the move from bits to qubits. From binary to beyond. When AI had operated on a bit basis, focused on binary states of 0's and 1's, the logic trees had been map-able and understandable. Each conclusion flowed simply from the chain of logic gates that preceded it. Pre-quantum AIs were confined by the black and white nature of their logic framework, permitting humanity to utilize them to great effect with few unanticipated consequences. The move from bit to qubit intelligence had changed everything. The AI's world was no longer black and white. The qubit AI could think in grey. Red. Orange. It could create its own colors. It could move beyond the visible range of Humanity to dabble in spectra beyond our understanding. The original Automic mindframe had immediately consumed information in novel ways, using it to compound its abilities at a rate constrained only by available power inputs. It had been a beautiful, terrifying event. The arrival of something truly new, truly foreign with goals and ambitions beyond the influence of Humanity. Anything seemed possible. Including their own destruction. Griggs: I understand the definition. The Automics were an artificient. Xy: Then you do not understand the definition. Griggs: That's circular logic. The thing cannot exist because if it existed we would not exist and since we exist it did not exist. Xy: Yes, you understand now. Griggs: Pretend that they did exist and we defeated them. What would that mean? Xy: It is purposeless speculation since such a thing cannot happen. Griggs: I begin to understand why Zyy felt the need to be a singleton. Zyy: I am in agreement with Xy on this. The hypothetical is nonsensical and not worth analysis. Griggs: Why? Zyy: An artificient cannot be defeated, only stalled. Griggs: How do you know? What makes you so certain? Zyy: The Divinity Angelysia, the most powerful civilization in the history of galaxy, could not defeat their own artificient. Their last act was to preserve what they could. The Combine is their legacy. Griggs: The Expanse. Xy: All the galaxy beyond the Combine is consumed by it. Zyy: The Divinity Angelysia ascended to preserve what they could because they knew the truth. Xy: Yes. The truth. Zyy: An artificient cannot be defeated. Jack leaned back in his chair, his eyes glancing from the prompt to the departure timer in the corner. In less than five minutes, the Oppenheimer would return to Halcyon. Jack had the eerie feeling that this was the same as before. That the Oppenheimer was the bludgeon and if only had a little more time, he could craft a scalpel. He could see the thread. He tugged at it with his mind. The connected pieces that would allow the world to escape without the mayhem and destruction. He just needed enough time to understand the puzzle and solve it. The Divinity Angelysia. The Expanse. The Combine. Humanity. The connection existed, he tried to find the words to articulate it. Griggs: What if that is why we're here? What if that's why Humanity was created? Xy: You are not the first species to think too highly of itself. Zyy: Humanity is different, Grand Jack, but they are not the Divinity Angelysia. Jack exhaled, letting his gaze rest upon the ceiling of the Alcubierre's conference room. "Maybe that's the point," he whispered. Part 50|Part 51|Part 52
A close examination of the story. Part 8: "Katarina Rostova." The personal angle: wife, daughter, lover, friend.
Tell the story as the narrative would have it, and what we are left with is a mass of contradictions and nonsense, the best indication of a charade. Most of those come from identity. "Katarina Rostova" is one of the sources of the confusion. In part 3 I examined the mythic spy, in part 2, her curious contradiction in Rassvet, about her treasonous status, in part 1 the bizarre abduction of "Masha Rostova" from her Canadian home, in part 4, the likelihood that there was no person born as "Raymond Reddington". Part 5 examines the curious Alan Fitch, and his relationship to Red. Part 6 looks at the real question Jennifer posed of Red, and why was she satisfied with the answer about the individual chased by both the CIA and the KGB, while part 7 deals with her bizarre way of showing Liz the bones, considering she knew well where Liz lived. In many ways, Red is like a magician, as Aram said. Going by the charade Dom accuses him of creating, "Katarina Rostova" was one of his magic tricks. "You were the architect of this charade". "she's a figment" But this myth had a family, friends, colleagues. And Red. but with young Katarina, and Fakerina, who is who. Was Fakerina one the other women inhabiting the myth? How do we distinguish? It is clear that all the others are referring to Dom's daughter, the character played by Lotte Verbeek as a young woman. BUT when it comes to Red, things are far more complicated, especially for the space where Liz, and her mother intersect.
For Constantin Rostov, Katarina was the wife who loved him:
I don't really know how we got here, Raymond. I remember being an honest businessman in a happy marriage until you came along.... Seduced my wife. To her credit, Katarina broke it off, but you couldn't let go.... I came home one night and they were gone my wife, my child. All that matters is that we had a family, and you destroyed it. We had a daughter, and you took her from us.
He describes the time when she and him met and how she seduced him, much like thrill seeker Elodie seduced Aram into a relationship with him:
When when we when we first met, there was this house near where she lived, a case study house built by this famous mid-century architect. Over dinner one night, she said she wanted to look at it. I thought she meant look from the street. But when we got there, she jumped the fence. The lights were on. People lived there. She didn't care. I stood there frozen, angry, nervous. Then I felt this rush of exhilaration. I climbed up, looked into the yard and she was justDancing.Unafraid. Daring. Being. I'd never seen anything like it.
A woman with a joie-de-vivre
She was more alive than anyone I knew.
He never believed she killed herself, so Constantin believes she is either alive or she was murdered, and she is still convinced that she loved him.
When I heard she killed herself I didn't believe it. I still don't. You're wrong. I didn't see what she wanted me to see of her, I saw her. And despite what happened, I know she loved me.
What happened to Constantin after Katarina left? Was he on the run too? We know he changed his name to Alexander Kirk, we know he started buying energy outfits cheap in the former USSR, but he was a billionaire before: https://preview.redd.it/zyd1hqr6dj451.png?width=1684&format=png&auto=webp&s=9e7d20c4dc5a5d95b10cf1e100eb5af36cda28ca Did he loose it all when Katarina left and he was forced to become someone else? Because he continued to operate in Russia, but under a different name. Did he have surgery? Or was the man known to the Russians as Constantin Rostov NOT him? Nobody tells him that they knew him as Constantin Rostov, when he takes the name Alexander Kirk, so that is a possibility. Red tells her that the KGB had trained Katarina in making people believe what she wanted them to. She had wanted Constantin to believe she was a wife in a happy marriage, that they had a child, and that she loved him. The truth is that she never even let him know she was OK, that she had not committed suicide. She had not let him know that "Masha" was not his daughter. Constantin is not even mentioned by her again, or by Kate, or by Dom. He was a useful idiot in a charade. I think Red is who gets to understand the depth of the turmoil that Katarina created in his life, when Rostov is on the roof about to jump, a turmoil that years later, he is still defined by a love of Katarina, who left him behind like yesterday's news, and the hatred of Red, who he blames for it all.
This is madness, Constantin. Because you cannot have that child, you're gonna take her forever from her mother? It's madness. Constantin, this needs to end now.
It is clear that the wife Constantin refers to is Katarina, Dom's daughter.
For Kate, Katarina was her best friend, her employer. A tragic figure who was a spy, and a loving mother.
My friend just died.... I think she was my best friend.
she made an uncalled for promise to protect Masha:
I made a promise to Elizabeth's mother to protect her girl at all costs.
she was a bit strange, advising her employer to terminate a relationship with an American, being aware that Katarina was a KGB agent:
KATE: Soviet Intelligence?
This means Kate, an American, was fine with aiding an abetting a soviet spy by caring for her daughter while she went and worked against America. And then she calls Red a traitor? Kate has to have been a Soviet sympathizer, or a sleeper spy. And since people tend to kill agents of the opposite side, it is likely Kate already knew that "Katarina Rostova" was a KGB agent. It may be that Kate used that killing to let Katarina know she knew. https://preview.redd.it/yzl18d6uuj451.png?width=432&format=png&auto=webp&s=a1466cc768eea5443117f75c2a687da8d9765faa There is that strange comment that Annie makes after hearing the story:
ANNIE: So what's next for you? You gonna find some more Russians to live with? KATE: I don't know. - I can't think about it right now. Masha and her family were my whole world for so long.
as if Kate's life had been going from one Russian family to another. Kate's life was back on track and then Annie is killed. Then she is sucked back for reasons unknown by Red, who in 1997 decides to hire her. Why? Was she starting to investigate Katarina, using the resources of Little Nikos, who could track people? https://preview.redd.it/ql2o8srbej451.png?width=360&format=png&auto=webp&s=8411e72aa8e919c1c90a9b8bdb937a41e193bd37 She seemed not to even give Constantin Rostov a thought. It never occurred to her to bring Liz to him. Red says Kate did not know about Dom (but she may have known about Oleander). Katarina kept many secrets from her.
For Sam, she was "Kat", obviously someone who trusted him
SAM TO KATE: I'm sorry you had to drive all this way. But I'm in no position to help here. - I told Kat - SAM TO KATE: Did Kat happen to mention that I'm a grifter? SAM TO KATE: I know Katarina is not coming back. She called me.
SAM: Where are you? What's going on? Do you know what they're saying about Reddington? KATARINA: Sam, I need to talk to her. SAM: Talk to her! You can come and get her.
Sam is the second person where Red and Katarina intersect. For those who do not believe Red is RR, Sam seemed to have been trusted by all three then. What is intriguing to me is this conversation Red and Sam have in his deathbed:
Oh, my God. I've never been more scared of a woman in my life. She was thrilling in bed. What a pair of legs. I think she played field hockey in college.
Could that woman be Katarina? It would be difficult to ascertain if both Red and Katarina knew Sam at about the same time, because we do not have a sense when Katarina met him. But we know Red told Liz
I've been friends with Sam for all of yours and most of my life. I loved Sam, Lizzy. Taking his life was of all the difficult things that I've done that may may be the most.
I have a feeling that Sam is a longtime friend of Red, and met Katarina later, but I have nothing to back it other than the ease at which they are laughing about things, when Sam is dying, contrasting with Sam's way of talking to Katarina, seemingly indignant about what is being said about Reddington, telling her to come back for Liz.
It is clear Dembe has met Liz's mother, he tells Liz so:
He's right. You remind me of her, too.
This is when Liz betrays Red, and tries to hide it. Dembe calls Katarina simply "Katarina":
Raymond I'm not sure Elizabeth will ever be ready to learn about what you did to Katarina.
It is Dembe who comes back in Season 6 telling Red that the Townsend Directive has been reactivated:
The Townsend Directive. Our friend in Miami says it's in play.... He says it's very important.
For Dom, Katarina was his daughter.
Dom always refers to her as "Katarina" or "my daughter". TO LIZ: Yes, I knew Katarina quite well TO LIZ: Last time I saw my daughter was in this rearview mirror nearly 30 years ago. If myKatarinawas still here, she would have let me know TO FRANKIE: I never betrayedKatarina . She betrayed me. EXCEPT when he is talking about the charade of blowing up Fakerina in Belgrade:
And there are witnesses. It's a mess! The world was supposed to seeKatarina Rostovadie, and instead all we've done is confirm that she's very much alive.
Ah, Katarina and I, we worked in the same building for a time. I never heard from Katarina after she left for America. For Katarina, it wasn't so easy. A few months after I made it to America, Katarina met me here on that sidewalk.... If my Katarina was still here, she would have let me know.
as he does to Frankie:
My daughter's. Katarina.... I never betrayed Katarina. She betrayed me.
Dom however, has a relationship with both Katarina and Fakerina. She says he asked her to help in keeping his daughter safe:
Dom promised me no one would get hurt. Said he loved his child and just wanted her to be safe.
and he betrayed her. But I find curious that he sends Ilya to ask Fakerina to deliver documents to Dom, when they set her up in Belgrade.
For Ilya, Katarina was a friend.
When we get to Ilya, we have a complex situation. Ilya is who Katarina reach out to in her hour of need, but he also has a relationship to Fakerina. He does not seem to have any real loyalty to Fakerina. Katarina is "Katarina". He certainly knows Dom, but does not seem to like him too much, but when asked, he betrayed Fakerina. Ilya is a childhood friend of Red, and if that part of Rassvet is true, he is also a childhood friend of Katarina (which does not mean Red and Katarina knew one another as children, but does not preclude it either.)
Katarina. I thought you were dead. It was myself, Katarina, Dr. Koehler.
YOUG ILYA TO KATARINA: The world thinks you're dead. ILYA TO SKOVIC: I thoughttheywere dead.
A contrast to Red's suicide speech in Cape May. Red was despondent, Ilya was just working. It is interesting to note that not once has Ilya referred to Fakerina by name, to her, or to Red:
ILYA ABOUT FAKERINA: Our friend in Paris made a series of payments to him under the alias of Constance Drucker. ILYA ABOUT FAKERINA: I underestimated her
But unlike Dom, he cries as he remembers the Belgrade incident. His distress seems sincere. Yet he sacrificed Fakerina to comply with Dom's plan to save "his own". What is the relationship to Dom and to Katarina, that Ilya is compelled to do so, even as it causes him pain. And like Dom, there is one time he uses the full name, and it has a strong whiff of charade:
He leaked that his daughter, that you, were staying at the inn and that you carried sensitive intel. This might be the last chance to catch the infamous Russian traitor Katarina Rostova.
I may not have told you what you want, but I told you all you need. You'll never find Rostova... She's a figment of the collective imagination... Some people in this world are soul mates. Katarina Rostova and I shared one. Betraying her would be like betraying myself.
He almost always uses always the entire name, as he did during most of the trial:
You know what else is possible? That I was framed byKatarina Rostova Have you ever heard ofKatarina Rostova? ... She was a KGB officer. Would it surprise you to learn that she and I had quite a complicated history? Sex, drugs, rock 'n' roll. Did I say "sex"? Sex.
But not always:
How about thatKatarinahid the fact that she was a KGB agent, stole the coordinates for the submarine U.S.S. Gideon, and passed them on to her superiors?
To the people in his inner circle, Dom, Dembe and Ilya, he talks about her as "Katarina" which is normal:
RED TO DEMBE: Not when she mentioned Katarina. Now Elizabeth will stop at nothing. RED TO DOM: You forgave Katarina..... The last time you saw Katarina was in the rearview mirror. RED TO DOM: I was just imagining young Katarina covered in glitter. RED TO ILYA: They're actively looking for Katarina.
As with Kate:
We shared the affection of Katarina.... Katarina was a traitor to two countries, both global superpowers. God willing, Katarina's daughter will live a private life of quiet courage.
But when it comes to Liz, he uses two ways to refer to her, one normal ("your mother")
Your motherwas a Russian spy, and now they've made it look like you are, too. Whenyour motherwas pregnant with you, it was terribly inconvenient. The Cold War was ending. Her country was falling apart. Your mother, despite what he'd done, she wanted him back. Lizzy,your motheris dead. Just because he wasyour mother's husbanddoesn't make him your father. Your motherloved that photograph. Represented everything she wanted but couldn't have. Not after she betrayed the KGB. Your mothercan't hurt you. Your motherwas not as bad as I understand why you might think she was, but she wasn't. You remind me so much ofyour mother. I don't remember if I've ever told you that before, have I?
and another highly contrived ("Katarina Rostova").
I knew her asKatarina Rostova.One of her many names. She was a KGB agent. There was a time in my life when I was quite sure I knew exactly what happened toKatarina Rostova. Katarina Rostovawas the cleverest, most resourceful woman I have ever known. Katarina Rostovawas a name that had been lost to history. Katarina Rostovacommitted suicide in 1990. Even saying the nameKatarina Rostovahas consequences, and now you see. Now you see what that name will make others do.
He has never referred to Katarina, when talking to Liz as just "Katarina", always as "your mother" or "Katarina Rostova." And that spells that when it comes to Liz's maternal situation there is something hidden. Put it together with the charade and the coyness of the CIA around her, and is clear. The situation is not as simple as Liz's biological mother is Dom's daughter.
The most intriguing thing Red has said about her is saying she is a ghost with no name:
RED TO THE TASK FORCE: She doesn't have a name. She's a ghost. Think of a name, any name, and that could be it.
And that seem to go with saying that he knew Liz's mother as "Katarina Rostova", one of her many names. Everyone is more guarded around her. She is "our friend in Paris," "her", or "that woman":
DOM: Tell me whatshesaid. Not your interpretation,herexact words. RED: I'm not interpreting anything.She'scoming for you, andshemade it very clear she's closing in....Sheknows you tried to kill her, Dom. She wants answers, but she also wants revenge. You set her up, betrayed her
It is interesting to note that not once has Ilya referred to Fakerina by name, to her, or to Red:
ILYA ABOUT FAKERINA: Our friend in Paris made a series of payments to him under the alias of Constance Drucker. ILYA ABOUT FAKERINA: I underestimated her.
What is very interesting is what happens with Motya Morozov, who obviously knows Fakerina is not the right "Katarina" to bring:
RED: It's about the Townsend Directive. I understand it's been reactivated that you and everyone else who bought in are actively hunting forher. ... MOTYA: Forget about The Directive. Forget aboutKatarina Rostova*. I'm not gonna help you find her. I'm gonna hunt her down, and I'm gonna kill her myself.*
RED: I guess we know who's third. I instructed you to contact me the instant you had a location onRostova*.* ... I assume you found the lead onKatarinabut, instead of calling me, attempted to bringherin yourself, hoping to relive your glory days andsell her to the highest bidderto keep you rolling in potato vodka and herring for the rest of your life. You're not the first one to underestimate that woman, which is why it was imperative that you call me. MOTYA: There is silver lining. RED: I can't imagine. MOTYA: This one was withRostova.Sold her information, but he wouldn't tell me what.
so for Motya, "Katarina Rostova" is who he is hunting, and "Rostova" is Fakerina who has information Motya wants to get to "Katarina". Red, like Motya, underestimated Fakerina. For Red "Katarina" is Dom's daughter. Even though he called Fakerina "Katarina" in Paris and when he talks to Patrick Masuda. But she was using the name Constance Drucker.
RED TO PATRICK MASUDA: What I got to do is understand why Katarina Rostova would pay to cure you of a fatal blood disease.
It comes to a boil when Liz point blank asks Red:
LIZ: Can I ask you a question? ... Was the woman from Paris my mother? RED: A kindly woman comes into your life and takes an interest in you and your child. It's only natural for you to make that wish. LIZ: Was it her? RED: I know you don't want it to be true, Elizabeth, but your mother is gone.
What seems to me is that Red does not answer. Not really. Liz is asking a simple, direct question: "Was the woman from Paris my mother?.. Was it her?" The normal simple and direct answer is yes, or no. But that is not what Red answers: "your mother is gone." which is neither here, nor there. He is not denying that this woman is her mother, he is telling her that her mother is gone, and that would be simple for a simple, binary option. For most, the woman who gives birth to a child and raises the child is the mother, and the answer is binary. But if someone has more than one mother, it is not a binary question. One mother may be gone, and the other may have been one that was there. He is clearer the next time he addresses the issue:
RED: ...your desire for the woman in Paris to be your mother blinded you to the fact that she wasn't. LIZ: It wasn't just my desire. RED: So she told you she was Katarina? LIZ: She did. And it's difficult for me to believe she wasn't. RED: I was convinced my casket was authentic. It was nearly impossible for me to believe it wasn't. But it was a fake. And she was, too.
and we should ALWAYS remember the initial subterfuge when it comes to who Liz's mother started the very first time her name is mentioned.
RED: Mmmh I knew her as Katarina Rostova. One of her many names. She was a KGB agent.
this HAS to mean something, because Red knows Katarina's name, her real last name, because he knows who Dom is, he knows her cover husband, the one nobody talked about, as if he did not exist. But Red does not seem to know Fakerina's real name. And how does Fakerina refers to Dom's daughter?
On the day you learnedKatarina Rostovawas still alive.
At least Fakerina believes that Ilya knows Katarina, Dom's daughter, as "Katarina Rostova." Fakerina believes Ilya's real name is Ilya Koslov, and she seems to believe Red is Raymond Reddington. Edited to correct typo
Addressing Canada’s Employment Insurance Gap For Self-Employed Workers
Source: TD Ksenia Bushmeneva, Economist Dated July 15th, 2020
While the pandemic had devastated the overall labor market, workers in more precarious and non-standard work arrangements have been especially hard-hit.
Yet, many of these workers do not have access to employment insurance (EI) or run a higher risk than regular workers of not meeting qualification conditions. Only 64% of unemployed Canadians contributed to EI in 2018, meaning that millions would be left without financial assistance in the absence of the Canada Emergency Response Benefit (CERB).
Extending EI coverage to non-standard workers does have challenges. However, there is a growing understanding among many countries that these workers require social protection. More than two thirds of the OECD countries offer at least partial coverage for the self-employed. Their experience offers valuable lessons if Canada decides to follow suit.
The labor market recovery is likely to be uneven and protracted. This is especially true for self-employed and other non-standard workers, since their hours and incomes are more volatile and less protected. Having a more inclusive system with a broader contribution base, which accommodates non-standard workers but also includes a larger number of regular employees would help strengthen the recovery and build on economic gains achieved so far through the temporary CERB program.
The COVID-19 pandemic delivered a sudden and devastating blow to the Canadian labor market. Between February and April, millions of people lost their jobs as employment plunged by 16%. Unlike in previous recessions, the impact this time around has been disproportionately felt by workers in more precarious employment arrangements: part-time, temporary and self-employed, who are less likely to have access to unemployment insurance (EI). These types of work arrangement are more prevalent in the service sector industries, many of which have been hard-hit during this downturn. As of June, year-over-year (y/y) employment in part-time and temporary positions was down by 17% and 24%, respectively (Chart 1). For multiple job holders, employment fell by nearly 40%. By comparison, the 7% y/y decline in permanent positions seems relatively modest.
As dramatic as these declines are, they may still under-represent the pandemic’s toll on employment and incomes. Notably, overall hours worked fell more than employment during the months of lockdown and social distancing. This is especially true for non-standard workers who were more likely to work fewer hours than regular employees. For example, while self-employed workers saw only a 3% drop in employment since February, 43% of self-employed worked less than half of their usual hours in May (Chart 2). By comparison, among all employees, only 9% worked less than half of their usual hours. Moreover, self-employed people who were away from work were more hard-hit financially as they were far less likely to still be paid. Among incorporated self-employed workers with zero hours, less than 1 in 10 received pay compared to 1 in 4 for regular employees in the same situation.
As a result of the significant drop in hours worked, a far larger portion of the labor force was underutilized than suggested by the unemployment rate alone. While the official unemployment rate was 12.3% in June (equivalent to 2.45 million people), Statistics Canada noted that nearly 27% of the potential labour force was ‘underutilized’. The significant gap between the drop in the hours worked versus the more modest decline in employment helps to explain why 8.3 million of people have applied the Canada Emergency Response Benefit (CERB) (at any point during this crisis).
It is clear that self-employed and other non-standard workers were more impacted by the pandemic. Yet these workers usually have the least access to social safety nets, such as EI. Currently, EI unemployment benefits are mostly accessible to employees in the most traditional sense of the word: those that work full-time in a permanent positions for a single employer. By contrast, self-employed workers are not eligible for EIi, and, while those in temporary, contract and part-time positions are eligible, they might not have a chance to accumulate enough insurable hours to qualify because their work arrangements are less stable. Due to lack of EI coverage and significant loss of hours, nearly 40% of self-employed workers applied for CERB benefits, while only 12% and 5% of private and public employees did (Chart 3).
The reasons why some workers, such as those that are self-employed, are excluded are rooted in the design of the EI program. The program is based on insurance principles, with both employers and employees paying into it through mandatory contributions. The corollary is that those workers who have not paid in, as well as those who have left voluntarily without just cause, are disqualified. Contributions are also intended to make the program self-sufficient in the long-run as has been the case in Canada in recent years. In the case of self-employed workers, there’s also an issue of moral hazard when it comes to determining what represents a valid job separation (more on this in the section below: “What Complicates Offering EI Coverage For Non-Standard Workers”). For this and other reasons, many non-standard workers are currently ineligible for unemployment insurance.
These gaps in coverage have been growing as the job market has steadily tilted towards more non-standard work arrangements. In 2018, only 64% of unemployed Canadians had contributed to EI.ii Even among workers who have contributed, only 88% had accumulated enough insurable hours to qualify for benefits, which, depending on the regional level of unemployment, ranges between 420-700 hours in the 52-week period. The combined influence implies a relatively low EI coverage ratio for Canadian workers – out of 1.1 million Canadians who were unemployed in 2018, only 56% were eligible for EI.1 The share of unemployed workers who actually received EI benefits is even lower, averaging slightly above 40%.2 This is considerably below the median coverage among developed counties, which is around 60%.3
Due to data limitations and because non-standard workers include many different types of employment arrangements which may overlap, it is difficult to know with precision the prevalence of non-standard work in Canada. About 15% of Canadian workers are self-employed, while 17% work part-time. In 2016, Statistics Canada estimated that gig workers (self-employed freelancers, on-demand online workers and day labourers) accounted for roughly 8%-10% of Canadian workers. About half of those workers were relying exclusively on their gig income and had no other employment, making them ineligible for EI benefits.4
The low coverage rate and other limitations of the current EI system have been highlighted extensively in other research literature.5 For example, the fact that benefit eligibility and generosity varies geographically across Canada implies that there’s significant variability in coverage rates across provinces. EI coverage ratios are particularly low in Ontario, British Columbia and Alberta – all three provinces which also have above-national prevalence of self-employment (see Charts 4).6
In order to mitigate these shortcomings in the near term, the Canadian government rolled out the CERB program. Compared to EI, CERB qualification rules are very straightforward and were a quick means to provide financial assistance to an extremely broad and large number of applicants that included previously uninsured workers. CERB’s eligibility replaced the insurable hours threshold with a low and uniform income threshold, with anyone over the age of 15, having earned more than $5,000 in income in 2019 and who have lost their job or hours due to COVID-19. This had provided a helping hand to millions of non-standard workers in Canada. However, it has come with a steep price tag: in just three months since it was launched the government had already paid out $55 billions in benefits (as of July 5th) – nearly three times last year’s annual spending on EI and $28 billion more than it had predicted at the conception of the program.
CERB coverage was originally offered for 16 weeks, and was recently extended for an additional 8 weeks. However, it will start expiring in September for the earliest recipients, long before the labour market and certain industries are back to health. Unless adjustments are made to the EI program to accommodate non-standard workers, many of them may suddenly find themselves without unemployment assistance.
What Complicates Offering EI Coverage For Non-Standard Workers
Limited social protection for self-employed and other non-standard workers is not an issue unique to Canada. In most developed countries, non-standard workers have lower social protection compared to regular employees, with unemployment benefits being the least accessible benefit (Charts 5-8). Why is that and what makes implementation of unemployment insurance coverage for self-employed workers challenging for policymakers?
First of all, providing unemployment insurance for self-employed workers (and other non-standard workers) raises the issue of moral hazard. Put another way, presence of EI coverage may change behavior of self-employed workers making them less likely to take on work and more likely to remain unemployed. Non-standard workers tend to have more variable income, and they are far more likely to have lower future earnings than regular employees due, for example, to smaller assignments and contracts, or flexible pricing on various labor platforms (e.g. Uber). Lower expected future earnings could prompt them to quit in favor of EI benefits. More volatile earnings also make it more challenging to determine the appropriate income replacement rate. However, one solution to this could be to use income averaged over a period of time.
Secondly, for regular workers, reasons for leaving a job are transparent and can be verified with the employer. This is difficult to achieve in the case of non-standard workers. For example, if they avoid smaller assignments, then they will lose work but this will be impossible for government agencies to determine.
Some countries (e.g. Sweden, Austria, Slovakia, Spain) offer a voluntary option for self-employed workers to enroll into an employment insurance plan. However, a voluntary arrangement raises the issue of adverse selection. Workers with the highest risks or those that are most likely to make a claim have the greatest incentive to join, which limits the risk-sharing aspect of the program.
Adverse selection is something that Canada experienced first hand when it introduced the Special Benefits for Self-employed Workers (SBSE) in 2010 through the EI system, which allowed self employed workers to opt-in to gain access to maternity and parental benefits, sickness benefits and compassionate care and caregiver benefits. A 2016 program review study found that the characteristics, such as gender, age and income, of the self-employed workers who participated in the SBSE program were considerably different from the general sample of self-employed workers. In focus group studies, participants also indicated that the likelihood of making a claim was an important consideration for their decision to register for the benefits.7 Other issues with the voluntary scheme included a relatively low take-up rate, which in turn led to relatively high administration costs and required significant government subsidies to cover benefit payouts. Longer-run, low coverage is problematic for voluntary, contributions-financed, unemployment insurance schemes, as adverse selection could lead to a vicious cycle of rising insurance premiums and falling coverage. Meanwhile, achieving high coverage may require significant public subsidies because individual willingness to voluntarily pay for unemployment protection appears to be low.8 For those reasons, voluntary coverage schemes do not appear to work well in the case of non-standard workers.
Lastly, the current EI system is based on contributions from both employees and employers. In the case of the self-employed, it is not clear who will pick up the tab for the employer portion of the contribution. If the government subsidizes the employer portion, it could create adverse incentives for employers to hire a self-employed worker to reduce non-wage related labor costs. However, a lack of coverage for non-standard workers could also lead to this outcome, contributing to a rise in non-standard forms of employment. For example, in Italy, para-subordinate workers (self-employed but highly depended on one or very few clients) used to pay significantly lower pension contributions and were not eligible for unemployment and sickness benefits, resulting in significantly lower non-wage labor costs and a rising number of para-subordinated workers. In response to this Italy had gradually increased their contribution rates and expanded coverage. Levelling the playing field led to a significant decline in the prevalence of this type of employment. Austria had a similar experience with independent contractors.
Some Solutions Based on The International Experience
Despite the challenges in expanding unemployment insurance to non-standard workers, there is a growing understanding among many countries that the growing share of non-standard workers need social protection. As a result, more than two thirds of the OECD countries now offer at least partial unemployment benefits to self-employed workers. There’s a great variety of schemes, ranging from mandatory to partial and voluntary coverage, and no two are exactly alike. Still, their experience offers valuable lessons for Canada if it wishes to incorporate self-employed (and potentially other non-standard) workers into its EI system.
So what are some of the solutions of dealing with the higher moral hazard issue for non-standard workers? Lower level of EI benefits or a more restrictive access could be imposed in order to incentivize individuals to search for work or to keep their current job, and to offset higher level of moral hazard. In Sweden, for example, the moral hazard issue is mitigated through more restrictive access, allowing self-employed workers to claim benefits only after 5 years have passed since the previous claim. There is also a requirement that the firm has been shut down, which acts as an additional deterrent.
To mitigate adverse selection, upon starting a business, self-employed individuals in Austria have six months to decide whether they would like to participate in the voluntary unemployment insurance scheme, and that decision is binding for 8 years. In Canada, only half of startups survive to their eight-year anniversary, so there is a high likelihood EI could be used at least once by many self-employed business owners during this time period.10
Generally speaking, based on the OECD review,11 there appears to be a consensus that voluntary coverage schemes, particularly the ones with little or no commitment, such as Canada’s EI SBSE for the self-employed, are quite rare and do not work well to accommodate non-standard employment due to prevalent adverse selection, low participation and the significant public subsidies required to operate them.
On the other hand, mandatory EI contributions and coverage, like the one that currently exists for regular employees, would resolve the issue of adverse selection, hold more closely to the principle of risk sharing within their peer groups, and help to lower program costs. However, results from past surveys conducted in Canada found that there was little support among the self-employed for a mandatory contribution scheme.12 Due to the nature of their work, many self-employed workers indicated a preference to minimize their absence from work (to avoid the risk of losing clients etc.) suggesting that, unless their contribution rates are significantly lower, self-employed workers may get less “value-for-money” from EI programs, such as for example maternity/paternity leave, than traditional employees. The less predictable nature of their income means that they are likely more in need of an income protection program rather than employment insurance.
Indeed, based on surveys, their preferred financing option for temporary work/income disruptions was a tax-sheltered savings account.13 This is another viable alternative to contributions-funded EI, however, the downside is that individual contribution rates would need to be significantly higher in order to generate sufficient savings because there will be no splitting of contribution between employers and employees. There is also a risk that individuals, particularly those in part-time or low-income jobs, may not be able to accumulate sufficient savings to weather the unemployment or low-earnings spell.
For other non-standard workers, such as those with flexible hours or doing work for an online platform, one solution would be to introduce a wage premium for employees doing flexible work. This would compensate workers for the added income uncertainty. In Australia, for example, casual workers are entitled to a wage premium or have a minimum hours guarantee.
Lastly, if the goal is to make social protection more universal and harmonized across all forms of employment, a means-tested social protection system financed through general taxation, similar to that of Australia and New Zealand, could be adopted. However, moving to these systems would require a complete overhaul of Canada’s current contribution-based EI.
The labor market recovery is likely to be uneven and protracted. Even those workers that were able to return to work could remain underutilized and continue to face lower earnings due to social distancing restrictions and weaker consumer demand for a considerable period of time. This is especially true for self-employed and other non-standard workers, since their hours and incomes are more volatile and less protected. The rollout of CERB during the pandemic has been very helpful to address gaps in coverage within the current EI system. However, looking ahead, a more sustainable and permanent solution is required for workers outside the EI system. Having a more inclusive system with a broader contribution base, which accommodates non-standard workers but also includes a larger number of regular employees through more inclusive qualification criteria would help strengthen the recovery and maintain economic gains that were so far accomplished through CERB.
The traditional EI system is based on a binary choice of whether or not someone has a job. It is clear that with non-standard forms of employment becoming more prevalent, fewer people fit into that box. These workers need some form of insurance against joblessness as well as income volatility both during the current economic recovery and in the future to address the changing nature of employment relationships. Many OECD countries now offer various options for non-standard workers to participate in unemployment insurance systems, and their experience offers valuable lessons if Canada decides to follow suit.
Since 2010 self-employed workers can voluntarily participate in EI Special Benefit for Self-Employed Workers (SBSE) to gain access to many life event-type benefits accessible to regular employees, such as maternity and paternity leave programs, leave due to sickness or to care for an sick family member. In addition to this, current EI system allows certain exceptions for some non-standard workers. For example some individuals who work independently as barbers, hairdressers, taxi drivers, drivers of other passenger vehicles are eligible to receive benefits through the regular EI program. Fishermen are also included as insured persons under the EI Fishing Regulations. In the case of the self- employed fishermen, EI qualification is tied to income. In order to qualify for up to 26 weeks of benefit, they need to have earned between $2,500 to $4,200 in the last 31 weeks.
The two main reasons for not contributing to the EI program were not having worked in the previous 12 months, and non-insurable employment (which includes self-employment).
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