Let The Churn In QQQQ, Citi And Bank of America Hit Infinity: ISE To Offer Special Rebates For Liquidity Providers In These Three Names

Today, one quarter of the volume in the market is attributable to trading in Citi shares. This is simply a ridiculous statistic, and shows that the broader equity market, which merely trades based on the momentum of one stock, is and has been busted for about a year, when we first wrote about this phenomenon. Yet this insane churn is not enough for some: The ISE has just announced it is introducing a "Modified Maker/Taker Fee Schedule" for the three most actively traded options products on its exchange: QQQQ, C, and BAC. In essence, the ISE will provide even greater rebates to "liquidity providers" in these three stocks. The entire market will soon consists of exactly two companies (both of which are wards of the state) and one ETF, as liquidity finds the path of least resistance and greatest (evaporating) profit margins. This is what "liquidity" in the market has become. And all the while, the latest DMM, GETCO, which is certainly not frontrunning its prop positions based on massive NYSE flow traffic, is laughing all the way to the bank.

Is Goldman's Image Problem The Reason Why The Treasury Picked Morgan Stanley To Sell Its Citi Stake? Gasparino Says Yes

Charlie Gasparino who last week interviewed John Mack (and, we contend, failed to ask any truly provocative questions especially as pertains to MS' record prop trading losses), contends that the reason why Morgan Stanley was picked over GS in selling the Treasury's shopping Citi stake, even as Pandit's firm is set to quadruple and become the most valuable worthless company in the world (with one quadrillion outstanding shares, and a projected price per share of $16, well you do the math), is Goldman's increasingly shaky public image. And that the firm's negative perception may ultimately alienate more investment banking clients who wish to avoid the "fallout of working with Goldman."

Strategic Outlook: Greece, Negative Swap Spreads, Near-Term Caution In Europe, MBS Spreads And More

The latest summary strategy deck from Morgan Stanley does a great job of capturing the key market driving themes: Greece, Europe, Principal Reduction, End of QE, Swap Spreads and the broader UST Curve

UBS Buys 3,000 Large S&P Contracts

Yesterday we discussed the S&P futures capitulation following last week's record cover in Large S&Ps of over 66,000 contracts. We just got word that as of 11:20 am CST UBS has purchased another 3,000 S&P Large (thank you open outcry). Cost to them: nearly $1 billion. On a cash equivalent margin basis, this is about $20 billion in S&P moving power. As UBS is not quite as, let's say, connected as GS et al, these are considered to be short covering trades.

Treasury To Sell $73 Billion Of Short-Term Bills Over Next Few Days

The US Treasury is filling the Primary Dealer demand for ultra-short term, zero interest Bills. Today it announced it would auction off:

• $31 Billion in 4 week Bills, maturing April 29
• $25 Billion in 56-Day Cash Management Bills, maturing May 27
• $17 Billion in 18-Day Cash Management Bills, maturing April 19

While this is the 6th 56-Day auction since the SFP reopening in February 24, the 18-Day is a new addition to plug the endless PD demand for cheap money which can be used for other much more lucrative purposes, such as buying equities for example. We expect all these Bills will come out at a yield of about 0.1% as banks do all they can do take advantage of ZIRP for as long as they can.

WGC Releases China Gold Report - "A New World Of Opportunity" As PBoC Expected To Buy Gold, Chinese Gold Mines Become Depleted

The People’s Bank of China (PBoC) is also playing an increasingly supportive role for gold on the demand side. PBoC’s gold holdings are currently at 1.6% of its US$2.4tn total reserves – a fraction by international standards. If PBoC decides to rebalance its books to its recent peak gold holding as a proportion of reserves of 2.2% in Q4 2002, WGC estimates it could account for a total incremental demand of 400 tonnes at the current gold price....Assuming the US Geological Survey’s figures are correct, China may exhaust existing gold mines in just six years. - World Gold Council

Is Goldman About To Be Stopped Out For Second Time, Less Than Week After Revised EURUSD Call?

First Goldman was stopped out on the bullish EUR call, now it appears that the firm is about to be stopped out for a second time, less than a week after its revised, bearish call on the EUR currency. This will likely be the second time the newly relocated bank will be massively wrong about the direction of the EURUSD in the span of a month. With the stop out at 1.35, and the euro almost hitting that earlier today, could we see this trade unwinding as early as today? In the meantime, Goldman will have made massive profits on both trades, even as its biggest clients lick their wounds and wonder what the hell just happened.