Archive - Aug 2013

The entire Bloomberg news feed has been overtaken with "Regulatory Halt - Extraordinary Market" messages for the last few minutes... it would seem agood time to drop that 'lowered outlook' PR or invade Syria?

The world of Industrial Design is often useful to assess everything from the Federal Reserve's current monetary policy to equity market structure (particularly timely given today's total SNAFU) to the timeless debate over the real value of gold.  As ConvergEx's Nick Colas reminds, good design is innovative, useful, aesthetically pleasing, honest and durable, whether those attributes relate to a new electronic gadget or any 'Product' in the world of high finance or economics.  Examples of "Good design" include stocks, bonds, and options – all simple, durable constructs.  "Bad design" would be the Fed’s "Taper" and current equity market structure.

While we somewhat ironically tweeted of the possibility that AAPL breaking back below the mythical $500 level was indeed responsible for the NASDAQ breaking...

Ok, who sold AAPL and broke the NASDAQ?

— zerohedge (@zerohedge) August 22, 2013

Well a glance at the following charts shows from Nanex that may well have been the case as the chaos in the market during that time was extreme to say the least...

With US equity market trading basically halted, the world has turned to Chicago and is 'hedging' stocks. Bonds are also being sold with 5Y having just hit 1.70%.

First it was BATS self-helping against NYSE Arca, now it's Nasdaq's turn to break. Joking aside, AAPL dipped below $500 literally minutes before the NASDAQ broke. We joked earlier when we said any selling is enough to break the market. Now, we are not so sure...

THE RESULTS OF THE 5-YEAR NOTE AUCTION COULD RESULT IN THE UNSCHEDULED REOPENING OF THE 7-YEAR NOTES OF SERIES P-2018 (CUSIP NO. 912828RE2)

If the auction of the 5-year Treasury notes to be held Wednesday, August 28, 2013, results in a high yield in a range of 1.500% through and including 1.624%, the 5-year notes will be considered an additional issue of the outstanding 1-1/2% 7-year notes of Series P-2018 (CUSIP No. 912828RE2) originally issued August 31, 2011. The additional issue of notes would have the same CUSIP number as the outstanding notes, which are currently outstanding in the amount of $29,886 million. If the auction results in the issuance of an additional amount of the outstanding 7-year notes rather than a new 5-year note, it will be indicated in the Treasury's auction results press release and by a special announcement. Any net long position reporting in this auction should be in regard to the 5-year notes.

Ever heard of BOSS? Didn’t think so. BOSS stands for Biometric Optical Surveillance System, and it is a crowd-scanning program that has been in development by the Department of Homeland Security (DHS) for almost three years now. Did you catch that? This is the DHS, the ridiculously dangerous, cancerous, gargantuan waste of money our “leaders” foolishly created after 9/11 to prevent “terrorism.” Whereas in the beginning most people actually believed the DHS was there to stop cave dwellers with terroristic tendencies, it is now completely clear that its primary mission is to protect the oligarchs and political criminals from domestic dissent.

The latest policy being implemented by Governments around the world consists of simply making data points up when reality doesn’t conform to their wishes.

Summarizing the entire speech in two words: "charge it"

Ezy Shysters!

After a self-imposed gag order by the mainstream media on any coverage of the Fukushima disaster (ostensibly the last thing the irradiated Japanese citizens needed is reading beyond the lies of their benevolent government, and TEPCO, and finding out just how bad the reality is especially since the key driver behind Abenomics is a return in confidence at all costs), the biggest nuclear catastrophe in history is once again receiving the attention it deserves. This follows the recent admission by TEPCO of the biggest leak reported at Fukushima to date, which forced the Japanese government to raise the assessment of Fukushima from Level 1 to Level 3, even though this is merely the catalyst of what has been a long and drawn out process in which Tepco has tried everything it could to contain the fallout from the exploded NPP, and failed. And today, in a startling and realistic assessment of Fukushima two and a half years after the explosion, the WSJ finally tells the truth: "Tepco Has Lost Control."

Premiums on the Shanghai Gold Exchange rose from $21 yesterday to $22.40 (0800 GMT) over London spot showing robust physical demand in China. Demand from the over 2 billion people, rich and poor,  in China and India alone this year alone is set to be 1,000 metric tonnes which is worth over $87 billion or roughly what the Federal Reserve is printing every single month.

UPDATE: Looks like that Goldman loss may have been a bit bigger than expected. BATS just redeclared self-help against NYSE Arca. There was a time that a red DJIA was needed for the market to break. It has become any downtick.

It's happened again... Judging by the speed with which the latest NYSE Arca market failure was resolved, we can only assume the amount of Goldman Sachs losses that are about to be DK'ed is 'only' in the 10 million range at most...

Some bad news for Pvt. Bradley Chelsea Manning, who was sentenced to spend 35 years in male prison:

U.S. ARMY SAYS IT DOES NOT PROVIDE HORMONES OR SEX-REASSIGNMENT SURGERY AFTER WIKILEAKS CONVICT BRADLEY MANNING SAYS HE WANTS TO LIVE AS A WOMAN

Well, there goes that approach: it seems Chelsea's debut was short-lived.

There are all sorts of candidates for the root cause of the systemic global financial crisis, but if we separate the wheat from the chaff we're left with risk and moral hazard. Pointing to human greed and cupidity as the cause doesn't identify anything useful about this era's crisis, as human greed, self-interest and opportunism are default settings. Programs that backstop banks and social insurance systems like Medicare are not like fire or life insurance because they are effectively open-ended in terms of costs and in exposure to risk. A system which pools risk without distributing it to the participants and eliminates the causal connection between risk and consequence introduces moral hazard on a grand scale.