Monday, August 31, 2015

Restricting Speech

All my instincts, they return
And the grand fa├žade, so soon will burn
Without a noise, without my pride
I reach out from the inside
--Peter Gabriel

Review of recent objections, primarily by liberal columnists and academics, to legal rulings protecting freedom of speech. Religious signs, ballot selfies, Citizens United, occupational licensing, regulating drug company info sharing.

These examples suggest that whenever free speech impedes other agendas, then many liberal commentators believe that the First Amendment should give way, lest it serves as a "straitjacket for our institutions of democracy."

Imposing limits on government is precisely why the Constitution and Bill of Rights were written.

Sunday, August 30, 2015

Claims on Labor

Confusion never stops
Closing walls and ticking clocks

Individuals who claim that they have 'rights' to cheap or free healthcare (or food, or shelter, or transportation, etc) are saying that they have a claim on labor of others. In order for an individual have be provided free healthcare, someone else must labor to provide those resources.

If that labor is done voluntarily, then it is charity.

If that labor is done by force, then it is slavery.

Euphemisms that seek to deflect, legitimize, rationalize, et al do not alter this fact.

Saturday, August 29, 2015

Perpetual QE

"You hear that Mr Anderson? That is the sound of inevitability."
--Agent Smith (The Matrix)

Chatter is increasing that another round of QE is pending. Can there be any doubt that more QE awaits? Central banks have pegged short term rates at zero. This policy is not moving the economic needle. There is nowhere left to go with this policy except negative rates, which of course cannot be ruled out.

Thru past and extant QE programs, central banks have loaded $trillions onto their balance sheets--also with little economic effect.

As we have seen in the past, scant evidence that their programs are working does not deter central bankers. They will certainly reach for more QE to show people that they know what to do--even when what they do has been shown to be ineffective.

Rinse and repeat. Welcome to the world of perpetual QE and financial repression.

Friday, August 28, 2015

Risk Allocation

"There's billions to be made betting against this bubble. I wish a had a million."
--Gordon Gekko (Wall Street: Money Never Sleeps)

Current asset allocation across all accounts as a fraction of total risk (non-cash) securities:

equity 14%
fixed income 3%
precious metals 63%
short 20%

Looking to increase metal and short exposure incrementally as opportunities arise.

Thursday, August 27, 2015

"We Were Wronged"

I hear her heart beating
Loud as thunder
Saw their stars crashing
--David Bowie

China's massive attempts to prop up its failing financial markets comes with an amusing new twist: blaming the Fed's presumed Sept rate hike for Chinese market turmoil.

A Chinese central bank official claims global stock market volatility "was mainly due to the upcoming US Federal Reserve monetary policy move. We were wronged."

Let's assume that China has officially joined the growing list of entities begging the Fed not to raise rates.

Wednesday, August 26, 2015

Buckle Up

"Sometimes in an acute situation such as this, what is 'right' can take on multiple interpretations."
--Jared Cohen (Margin Call)

Today's gap higher drifted lower such that by midday indexes were down to about +0.5% gains. The downside action felt 'pressed' to me, leading me to close my recently opened put position in JPM.

Timing was fortunate as market turned around for 4% gains (Dow up 600). Better lucky than smart.

Volatility is back and likely here to stay for a while. If we are indeed entering a prolonged bear move, then be prepared for vicious counter-trend rallies like today. Such volatility is why, by the time bear markets end, there are few players left standing as both bulls and bears get carted out on stretchers.

Buckle up!

position in SPX

Elections and Markets

There's a place where the light won't find you
Holding hands while the walls come tumbling down
When they do
I'll be right behind you
--Tears for Fears

The last two changes in party control of the presidency coincided with major market declines. 2000. 2008. Electorates are likely to place blame on sitting administrations for big market declines.

And blame is justified. Administrations have enacted or condoned monetary and fiscal policies sure to drive booms followed by inevitable busts. Recently it has taken about the length of a two term presidency for these cycles to play out.

We can be confident that it will be similar this time. The sitting administration will seek to move heaven and earth to prop markets up thru November of 2016 so that it increases the chance that a representative from its party remains in the Big Chair.

Whether it will be successful at doing so is a different issue entirely. History suggests that it will prove difficult.

position in SPX

Tuesday, August 25, 2015


"Man looks in the abyss. There's nothing looking back at him. At that moment, man finds his character. And that is what keeps him out of the abyss."
--Lou Mannheim (Wall Street)

Ominous action today as a 400+ pt morning move higher in the Dow didn't stick, and domestic equity markets finished instead in the red, down about 1% and closing on the low tick.

The SPX closed today on yesterday's intraday lows, suggesting that the index is peering into a near term abyss.

Longer term perspective reveals that this selloff has brought us down to the uptrend line formed from the March 2009 lows. As such, a significant break lower from here that sticks would technically 'end' the uptrend.

In early afternoon I did decide to get involved with the banking complex, with JPM as my vehicle of choice.

position in SPX, JPM

Gift of Higher Prices

"You're walking around blind without a cane, pal. A fool and his money are lucky to get together in the first place."
--Gordon Gekko (Wall Street)

Today's hefty bounce driven by China's overnight rate cutting antics seems a gift to longs who regretted their exposure yesterday and to bears who wished for higher prices to get short.

May not be right here right now but I'll be scanning for downside opportunities. The banking complex is one place where I'll look hard.

position in SPX

Monday, August 24, 2015

In the Hole

Strange voices are saying
Ah, what did they say?
Things I can't understand
It's too close for comfort
This heat has got right out of hand

Dow opens about 1000 pts in the hole after some big down markets overseas last nite (e.g., China -8%). Yes, stochastics are looking near term oversold and a trading aphorism is that bulls want to see them open deep in the red in order to stage a rally.

And it surely could happen. The fact that many are talking about it provides a bit of a nose scrunch. Moreover, talk of QE4 is already getting loud in classic moral hazard fashion.

Personally, I will view any significant lift as a potential shorting opportunity.

position in SH

Sunday, August 23, 2015

Credentialed Fools

"Back where I come from, we have universities, seats of great learning, where men go to become great thinkers. And when they come out, they think deep thoughts, and with no more brains than you have. But they have one thing you haven't got: a diploma."
--Wizard of Oz (The Wizard of Oz)

It is usually best to leave fools, even credentialed fools like Paul Krugman, to their folly. Why waste valuable time on mindless blather?

Every now and then, however, it does seem worthwhile to bookmark the blather, such as Krugman's recent NYT op-ed "Debt is Good," as examples of just how far off the rails viewpoints followed by many can get. Dave Stockman does a nice job hammering it into the ground, but it some ways it seems like overkill on such drivel.

Some fear that people like Krugman are a threat to freedom and prosperity. Only to weak minds wishing to remain weak by outsourcing their brains to fools with credentials.

Saturday, August 22, 2015


I'm sick and tired of you setting me up
Setting me up to knock, knock-a, knock-a me down
--Bruce Springsteen

We now know that dip buyers didn't materialize yesterday afternoon and markets tanked lower. US equity markets closed on their lows. Dow was down 531 on big volume. The SPX sank 65 pts to 1970. COMP off 171 (-3.5%).

We also got our first significant Dow Theory sell signal with both the industrials and trannies marking significant fresh lows.

Hard not to conjure visions of a serious dislocation ahead if bulls begin to eye the exit door and a stampede ensues.

position in SPX

Friday, August 21, 2015

And Here We Are

"Here. Now."
--Dagonet (King Arthur)

Yesterday we noted the near term technical significance of the SPX 1990-2000 level. Well, there has morphed into here.

An intuitive place for at least a try from Snapper.

On the other hand, because traders are so used to stick saves at previous junctures like this, if Snapper doesn't appear, then it could turn ugly on this Fri afternoon.

position in SPX

Thursday, August 20, 2015

Red Heat

The shadow's high
On the darker side
Behind those doors
It's a wilder ride
--Glenn Frey

Ugly day with markets closing on their lows. SPX down 2% with COMP down 2.5%. Most indexes now red on the year.

With 200 day moving avg now in the rear view mirror, some are wondering whether the trading robots might turn their hats around and chase weakness rather than strength. Meanwhile, nearby technical levels suggest that if current 2030ish doesn't hold, then next support rests below at 1990ish.

Oscillators are still midrange, suggesting some 'potential energy' behind the downside.

position in SPX

Wednesday, August 19, 2015

Monetary Roundabout

I'll be the roundabout
The words will make you out and out

One of the greatest tricks that monetary bureaucrats have pulled over the past 100 years is shifting the definition of inflation from the cause (expansion of quantity of money and credit) to a potential outcome (increase in prices).

Policymakers have also convinced people that the only meaningful inflationary price increases are those that effect some goods and services. Increases in the prices of housing, food, and energy are not part of 'core inflation,' we are told.

We are also told that increases in price of financial securities (stocks, bonds, etc) are not inflationary.

Monetary deception is a primary reason why the chasm between poor and rich is unnaturally widening. More money and credit destroys purchasing power and increases debt burdens on those at the bottom of the economic pyramid. Those at the pinnacle get richer as they get first dibs on the newly minted cash.

It also drives the boom/bust roundabout.

Tuesday, August 18, 2015


"Hope tastes good - like a cigarette should."
--Dr Yen Lo (The Manchurian Candidate)

The 21st century has been hailed as belonging to China. Social and economic reforms coupled with a huge population have vaulted China into the number two spot in GDP (~$10 trillion). As the human mind is prone to do, it is easy to extrapolate recent performance into the future and predict a dominant position for China in upcoming decades.

However, people tend to forget that, despite some positive market reforms, China remains a centrally planned economy. And central planners tend to make big mistakes when allocating capital--mistakes that impair standards of living for prolonged periods.

A classic example of this is becoming evident in Chinese infrastructure and real estate. Chinese consumption of building materials has been eye popping. For example, in three years China is estimated to have used more cement than the US used in the entire 20th century.

China's 'ghost cities' as profiled on 60 Minutes and elsewhere suggest that central planners have employed these building materials in the construction of massive infrastructure and real estate projects that are vastly underutilized. An eye-popper for me are these two pics showing Shanghai's financial district in 1987 (top) and 2013 (bottom).

One consequence of this overbuilding is that China's economic statistics look better than they actually are. For instance, massive construction spending has surely goosed China's GDP numbers--even if the fact of the matter is that many of those building projects have little economic utility.

Huge misallocation of capital by its central planners positions China (and the world) for the inevitable bust that follows the bureaucrat's misguided boom.

Monday, August 17, 2015

Faith in the Fed

And if I should falter
Would you open your arms out to me?

ZeroHedge suggests that today's opening gyrations reflect declining faith in the Fed. No evidence is presented as to precisely why that would be the case. On the surface, just another morning's worth of movement.

However, if/when faith in the Fed actually does fall, then this game is over. Confidence in central banks is what's holding this market together. If it vaporizes, then so will $trillions in market cap.

position in SPX

Sunday, August 16, 2015

Junk Spreads

You got a fast car
Is it fast enough that you can fly away?
You gotta make a decision
Leave tonight or live and die this way
--Tracy Chapman

Junk spreads have been blowing out. Yields on riskiest paper have doubled in the past year and increased more than 200 bips the end of last week.

Widening credit spreads have been harbingers of past equity market declines, as it seems that bondholders catch on to problems quicker than stockholders.

Couple this with other indicators such as deteriorating internals and you have a setting pregnant with high drama.

position in SPX

Saturday, August 15, 2015

Druck's Gold

"Hello, Izzy? Yeahr, it's me, it's me. Listen, get me a quotation for gold on the Paris market."
--Crapgame (Kelly's Heroes)

Although legendary fund manager Stanley Druckenmiller closed Duquesne Capital a few years ago, he still manages enough personal money (billion$) to formally disclose his holdings on a quarterly basis. His most recent filing revealed a $300+ million position in the Gold Trust SPDR (GLD). At about 20% of total holdings reported, it represents his largest disclosed position.

Druckenmiller also added nearly 1.3 million shares of Newmont Mining (NEM).

The filing does not reveal his entire portfolio as it is not required to show non-US securities, holdings that aren't publicly traded, or cash. Because the value of his holdings reported in the recent 13F amount to about $1.5B, that leaves a sizeable fraction of Druckenmiller's estimated $4.4B fortune unaccounted for.

Druck's initiation of a sizable stake in gold-related securities is eye-catching nonetheless.

position in gold

Friday, August 14, 2015

Cake by Force

Midnight, the bus is going
Try to sleep
Was it ever so cold
Or ever so clear
This blanket's for you
--The Apartments

Recent poll finds Americans split on requiring business owners to serve same sex couples. The poll coincides with an appellate court ruling against a Colorado bakery owner who refused to sell a wedding cake.

The baker argued that serving gay couples violated his religious beliefs, and that his right to operate according to his religious beliefs is protected by the First Amendment.

The court ruled that because the baker's doors were open to the public he is not permitted to discriminate between who he serves and who he doesn't serve--an argument presumably grounded in the Civil Rights Act of 1964.

The baker is right. Both this ruling and the Civil Rights Act of 1964 (specifically Titles 2 and 7) clearly violate the First Amendment. They force business owners to do things that they might not want to do on religious grounds. Whether those grounds are legitimate in the eyes of others makes no difference. The First Amendment's verbiage is clear on this point.

More broadly, this ruling challenges each individual's natural right to peacefully discriminate as they fit. In a free society, people are free to associate with whom they want--whether those associations be for commercial or leisurely purposes. If a law forces business owners to accomodate people that they do not want to associate with, then those business owners are being forced to surrender property and associated decision rights to others.

This amounts to unequal treatment under the law, as government is forcibly limiting the pursuits of some for the benefit of others.

Thursday, August 13, 2015

Patents and the Federal Circuit

All you need is your own imagination
So use it, that's what it's for
Go inside for your finest inspiration
Your dreams will open the door

Article suggests that the establishment of the Federal Circuit Court of Appeals has been a primary factor in the issuance of patents, particularly low quality ones, over the past few decades.

In 1982 Congress consolidated all patent appeals into a single appeals court--the Federal Circuit. This has provided a forum for holders of low quality patents to 'troll' innovations being brought to market and sue those producers for infringement. The Federal Circuit has even undermined Supreme Court rulings to favor patent interests. Studies suggest that patent holders are 3x more likely to win on appeal after district court rulings of invalidity since 1982.

The patentee friendly Federal Circuit forum has motivated an explosion of low quality patents and patent-related litigation.

While constitutional patent-granting authority was meant to spawn innovation, it is hard to argue that the current system promotes rather than hurts creativity and productivity improvement. Entrepreneurs are more reluctant to bring new products to market and must spend considerable resources researching and battling the thicket of low quality patent claims.

Of course, because patents and other intellectual property rights grant holders legal monopolies over production, it should have been expected that original laws and intent would be twisted to favor the status quo rather than competitively driven productivity improvement.

Wednesday, August 12, 2015

Weakening the Yuan

Everyday there's a new thing comin'
The ways of an Oriental view
--Doobie Brothers

Over the past two days, the last large country holdout to the currency weakening strategy, China, has commenced to weakening the yuan. Why now? China's economy is declining quickly and its policymakers, like all bureaucrats, seek export advantage by lowering the number of foreign currency units required to buy a Chinese good.

The problem, of course, it that all nations are pursuing the same beggar-thy-neighbor policy, blanketing the world in a virtual paper blizzard of currencies as one nation tries to drive the value of their currency lower than the others.

Gold is higher on the news. Stocks and other risk assets are lower, as many carry trades counting on a stable yuan come apart.

position in gold, SPX

Tuesday, August 11, 2015

Hindenburg Omen

Ninety nine red balloons
Floating in the summer sky
Panic bells, it's red alert
There's something here from somewhere else

The Hindenburg Omen is a technical market condition created when the number of 52 week highs and lows in individual securities both exceed 2.5% of the total number of issues traded on the NYSE. It is meant to be a bearish signal typically coincident with an uptrend that is ripe for harsh reversal. The "Hindenburg" label reflects the notion that the signal often corresponds with ugly declines.

The intuition is that markets being supported by fewer and fewer 'winners' (new highs) while many securities are being sold (new lows) reflects declining appetite for risk. Markets near their highs with such deteriorating 'internals' are vulnerable to failure as market participants become risk averse.

John Hussman notes that, as a forecasting signal of upcoming declines, Hindenburg Omens are not of much value because many false signals are generated. However, if the Omen criteria are modified to include additional measures of internal health related to leadership, breadth, and participation, and all become uniformly negative, then this filters occurences to just a handful of signals over the past two decades that have corresponded to major tops:

To the extent that the modified measure is meant to reflect significant internal dispersion and shifts toward greater risk aversion, the Hindenburg Omen suggests that we're in the vicinity of major top once again.

position in SPX

Monday, August 10, 2015

Still Troublesome

In a big country dreams stay with you
Like a lover's voice fires the mountainside
Stay alive
--Big Country

I still have trouble processing it. Once again making my late summer's pilgrimage to central Wisconsin where I used to live, I remain bothered by how a thriving 100 yr old company could vanish in such a short period of time.

Quite literally in some respects, as operating division's worth of assets have been demolished and removed.

Other assets have merely changed hands once again.

As observed on previous visits, the current state of affairs cannot be written off as merely the product of competition and industry evolution. No, the hand of forcible intervention has been at work here.

Although I am grateful that the hand of God nudged me away before the real storm began, my heart remains saddened for this Northern community that has borne the brunt of central planning gone awry.

Sunday, August 9, 2015

Golden Powder Keg

"Trust me!"
--Zeus (Die Hard With A Vengeance)

Bearish sentiment in gold has rocketed higher as prices have plummeted. Currently small specs and hedge funds are short gold futes in record amounts.

Meanwhile, commercials are less short gold (they are rarely long) than they have been in a long while.

Lop sided sentiment and record shorts by groups that typically get it wrong at the extremes suggest a powder keg has been wedged under the price of gold.

position in gold

Debt Profile

"You think you're free. You're not."
--Diamond Dog (Con Air)

Interesting Pew study that profiles increased tendencies for American households to increase debt and leverage over the past few decades. Approximately 80% of households have some type of debt. Younger Americans hold more debt while having lower incomes (higher leverage ratio).

Particularly interesting is the balance sheet snapshot, which indicates how few liquid assets Americans tend to have. Liquid assets and cash to debt ratios at all ages is alarmingly low.

Because debt reduces freedom and cash increases freedom and flexibility, it appears that most Americans have elected to sacrifice freedom in order to live larger in the near term.

Saturday, August 8, 2015

Production Diversity

Well we're living here in Allentown
And they're closing all the factories down
Out in Bethlehem they're killing time
Filling out forms, standing in line
--Billy Joel

Trade theory 101 posits that two locales benefit most if each focuses on producing a particular output and then trade with each other. Productivity should be higher because of learning effects and lower switching costs. More wealth is therefore created to spread among people in both locales.

However, this stance assumes a static world that does not appreciably change. In reality, taste preferences and innovation evolve which renders production technologies obsolete over time. Locales that limit production to a few specialties to particular production specialties expose themselves to the risk of producing output that no one wants.

The finance analogy is the investor who positions his entire portfolio in a single stock. Unanticipated problems with the underlying company's operations could send the stock lower. Because the value of the investor's portfolio is entirely correlated to the performance of a single security, it is vulnerable to uncertainty.

Just as it is prudent for investors to spread risk over multiple securities, communities will be more robust if they are populated by a variety of producers. Manufacturers, service providers, big, small. The more variety, the better.

Communities that overspecialize with respect to size (e.g., catering to large producers) or sector (e.g., service over manufacturing) increase risk of economic stagnation or worse.

Friday, August 7, 2015

A-Bomb Mindlessness

"This is your last chance. After this, there is no turning back. You take the blue pill, the story ends. You wake up in your bed and believe whatever you want to believe. You take the red pill, you stay in Wonderland, and I show you how deep the rabbit hole goes."
--Morpheus (The Matrix)

As observed here, dropping two atomic bombs on Japan 70 years ago this week was never justified. Not only did they constitute the only war-time uses of nuclear devices, but they were dropped on non-military targets (read: cities). At least 200,000 people were killed immediately--more than all US soldiers killed in the Pacific Theater during WWII.

Since that time, all US citizens have been inundated with propaganda, largely during their school years, that dropping the bomb was right.

Critical thinkers take the red pill and know differently.

Thursday, August 6, 2015

Commodity Divergence

He roller coaster 
He got early warning
He got muddy water
He one mojo filter
--The Beatles

ZeroHedge observes the divergence between commodities and stocks.

This pattern is sometimes called the 'hungry alligator.' When the alligator's jaws clamp shut, the divergence goes away.

What does this suggest about the direction of stocks?

position in SPX

Wednesday, August 5, 2015

Shrinking Trade

There will be no isolation
In our secret separation
--The Fixx

List of data points pointing toward recession includes shrinking global trade and commensurate decline in cargo vessel capacity utilization.

With market discounting mechanisms essentially broken, chances that prices will significantly lead this news stream are remote.

position in SPX

Baby Body Part Markets

Benjamin Franklin Gates: Of all the ideas that became the United States, there's a line here that's at the heart of all the others. 'When a long train of abuses and usurpations, pursing invariably the same object evinces a design to reduce them under absolute despotism, it is their right, it is their duty, to throw off such government, and provide new guards for the future security.
Riley Poole. Beautiful. I have no idea what you just said.
Benjamin Franklin Gates: It means that if there's something wrong, those who have the ability to take action have the responsibility to take action.
--National Treasure

It is difficult to fathom how anyone can defend the market for aborted baby body parts being facilitated by the government sponsored organization called Planned Parenthood Federation of America.

Yet, the US Senate voted to continue funding this organization yesterday. And millions of supporters of broad scoped abortion look the other way.

Throughout history atrocities have persisted because 'good' people did not rise to stop them. Here is another case where each of us will be held accountable for our actions.

Tuesday, August 4, 2015

Parasite State

And there's some chance we could fail
But the last time someone was always there for bail
When will we fall down
--Toad The Wet Sprocket

Jacob Hornberger analogizes the welfare state to parasites. A welfare program is like a blood sucking parasite. The parasite latches onto a host and begins extracting resources.

A single blood sucker is tolerable. But more come. At some point, the host weakens, loses its tolerance to the parasites, and dies.

The smaller the host, the quicker it collapses. Greece, Puerto Rico, for example. The US is a larger host, meaning that it can tolerate more parasitic welfare activity before succumbing. The longer lag convinces many that the US is immune to parasitic welfare activity.

But succumb it certainly will.

Monday, August 3, 2015

Judicial Term Limits

Cromwell: I have evidence that Sir Thomas, while he was a judge, accepted bribes.
Duke of Norfolk: What? Goddammit, he was the only judge since Cato who didn't accept bribes!
--A Man For All Seasons

Should federal judges be appointed for life? Certainly not. Term limits should apply to judges as they do for other political offices.

The proposal here is to amend the Constitution to authorize fixed terms for federal judges. 10-12 years for Supreme Court justices, or perhaps renewable 6-8 year terms. Staggering terms would spread presidential appoints and reduce likelihood of court packing.

Personally, I would also like to see each prospective judge take an exam on Constitutional law and its application that included case-based analysis. Scores should be presented to the people ahead of the judge's term.

The exam questions and 'correct' answers themselves would surely elevate civil discourse on the law.

Term limits on judges would increase the likelihood of rule of law rather than today's discretionary rule facilitated by the bench.

Sunday, August 2, 2015

Hazardous Health

Only shadows ahead
Barely clearing the roof
Get to know the feeling of liberation and relief
--Crowded House

Observation that the best health insurance is behavior that maintains and improves physical fitness. Working out, eating well, rest and lifestyle.

Why don't more people practice such preventive policy?

A primary reason is moral hazard. In 19th century England, insurance firms observed that people tended to engage in riskier behavior once they took out insurance policies. The rationale is that I will take more risk if I figure someone will bail me out if things go wrong. Insured behavior therefore creates a 'moral hazard' because I am willing to 'put' the consequences of my risky behavior onto others.

Moral hazard increases when a person is not on the hook for paying insurance premiums or deductibles.

In a socialized medicine scenario where some pay for the health care of others, then moral hazard is exacerbated as risky health practices are being subsidized.

As socialized medicine increases its hold on the US, it should come as no surprise that general health profiles of US citizens are deteriorating. The subsidy for unhealthy behavior has been increasing.

Saturday, August 1, 2015

Concealed Carry Trends

She's the dollars
She's my protection
She's a promise
In the year of election

Chart taken from this study showing decline in murder rates alongside increase in concealed carry permit issuance.

Since the beginning of Barack Obama's presidency, concealed carry permits have nearly tripled. The percentage of the adult population with concealed carry permits is now north of 5% and growing parabolically. Nearly 13 million people have a permit.

Between 2007 and 2014, US murder rates fell from 5.6 to 4.2 per 100,000 people. Violent crime also fell 25%.

Data suggest that concealed carry permit holders are extremely law abiding. In Texas and Florida, permit holders have been convicted of felonies and misdemeanors at approximately one sixth the rate of police officers.