Archive - Apr 2, 2014

It was so fitting that Obama sauntered into the Rose Garden on April Fools day to proclaim the wonderful success of Obamacare. We are the fools for allowing this fool and his fellow fools in Congress to further bankrupt our country with this disastrous government run clusterf*ck. Their is so much propaganda, spin, disinformation and outright lies circulating in the captured mainstream media that the dumbed down, distracted, disinterested American populace believe the sound bites from Obama and the talking heads on MSNBC and the rest of the Obama loving media. You may have noticed the non-stop 30 second ads trying to convince iGadget addicted morons to sign up for Obamacare over the last three months, building to a crescendo in the last few weeks. Let’s assess the tremendous success  the Savior was blustering about yesterday. He sold the plan to the American public back in 2009 with a number of promises.

The Nikkei shot up last night because the Yen was weak and, best of all, Japan's $1.25Tn pension fund will be handing money to the Banksters to put into the stock market. 

Round 2 of the HFT vs Reality death match just took place on Bloomberg TV. Once again the clear winner was Katsuyama and Lewis version of the real world as Manoj Narang finally lost all credibility with the mind-0bumbing comment that "speed matters less in today's market than it has ever mattered." But the Tradeworx CEO was a background singer compared to Michael Lewis who explained in his clearest analogy yet how the casino works and then devoured the anchor's constant efforts to play down the "rigged" market perspective... "it's very clear that people are being front run in the market... so, why are you even arguing about this?"

Biotechs ended positive but for the 10th day in a row saw the early pump, dumped (as did a number of the momo names). But the big news is the Dow getting back into green for 2014...and then failing to hold it! Trannies and the S&P both hit new record highs. Treasury yields continue to press higher with 5Y now at 7-month highs (testing 1.80%) as 30Y yields are up 11bps on the week. The USD rallied modestly all day (ahead of tomorrow's hope-strewn ECB meeting) but commodities were mixed with general flatness interrupted by significant spikes in gold and silver around 8amET. Copper faded during the US day session. VIX was slammed under 13 into the close but faded back higher into the close.

Spot what is missing in the just blasted headline from Bloomberg:

IRAN, RUSSIA SAID TO SEAL $20B OIL-FOR-GOODS DEAL: REUTERS

If you said the complete absence of US Dollars anywhere in the funds flow you are correct. Which is precisely what we have been warning would happen the more the West and/or JPMorgan pushed Russia into a USD-free corner.

Just over a month ago, we reported on the Supreme Court's ruling that police may search a home without obtaining a warrant thus denigrating the Fourth Amendment to the funeral pyre under the Obama Administration's totalitarian might. Today that decision (and the end of the 4th) were confirmed when the country's top intelligence official confirmed in a letter to Congress that the Obama administration has conducted warrantless searches of Americans' communications as part of the National Security Agency's surveillance operations. While efforts were made to suggest agencies do not deliberately track Americans' emails, phone calls, and online activity without a warrant, as Sen. Wyden notes, "the facts show that was misleading."

As if to prove all the HFT naysayers right, milliseconds before 3:30 pm - the traditional time when HFT algos come out and ramp stocks into the last half hour of the day, a massive E-mini order block slammed the tape, driven by a tremor in the USDJPY, sending the DJIA green for the year in the most unriggedly of manners.

Presented with no commentary and with lots of laughter as yet one more "expert" who has no clue what HFT actually is (and every clue about being the market's best contrarian indicator - see here and here and here and here) comes out of the woodwork with a "world-renowned" opinion. Again.... and Again.... and Again. Needless to say, Gartman opining in favor of HFT effectively seals the debate if the vacuum tubes should all be done away with this nanosecond.

Though the mainstream financial media and the blogosphere differ radically on their forecasts - the MFM sees near-zero systemic risk while the alternative media sees a critical confluence of it - they agree on one thing: the Federal Reserve and the “too big to fail” (TBTF) Wall Street banks have their hands on the political and financial tiller of the nation, and nothing will dislodge their dominance. In addition, the U.S. dollar’s status as a reserve currency is a key component of U.S. global dominance. Were the dollar to be devalued by Fed/Wall Street policies to the point that it lost its reserve status, the damage to American influence and wealth would be irreversible. What if there is another possibility to the consensus view that the Fed/Wall Street will continue to issue credit and currency with abandon until the inevitable consequence occurs, i.e. the dollar is devalued and loses its reserve status. What if Wall Street’s power has peaked and is about to be challenged by forces that it has never faced before. Put another way, the power of Wall Street has reached a systemic extreme where a decline or reversal is inevitable.

As Acting-Man's Pater Tenebrarum notes, a recent Der Spiegel article highlights the fact that in spite of the fact that Russia and especially Putin are demonized with great verve in the Western media (including Germany's), it seems German citizens from all walks of life and all political camps are highly devoted fans of Russia and its president. As the following two maps show, "Europe" means a lot of different things to the Germans and the Russians.

We doubt it: first wait until the next market crash is blamed on HFT (as we speculate it will)... and then watch as the entire world suddenly goes all tar and feathers on a few million vacuum tubes.

On the heels of NATO's declaration that is was suspending all practical cooperation with Russia (and ordered military planners to draft new measures to strengthen its defenses), Bloomberg reports that the US will be sending a Navy warship back to the Black Sea. Pentagon spokesman Army Colonel Steve Warren told reporters that the ship (as yet unnamed) wil be there to conduct exercises with allies and is a "direct response to the circumstances in Ukraine." and is the first in the Black Sea for 2 weeks.

A week ago we wrote: 'While it has been public for a long time that i) JPM is eager to sell its physical commodities business and ii) the most likely buyer was little known Swiss-based Mercuria, there was nothing definitive released by JPM. Until moments ago, when Jamie Dimon formally announced that JPM is officially parting ways with the physical commodities business. But while contrary to previous expectations, following the sale JPM will still provide commercial gold vaulting operations around the world, it almost certainly means farewell to Blythe Masters." Sure enough:

JP MORGAN COMMODITY CHIEF BLYTHE MASTERS LEAVING, WSJ SAYS       

Farewell Blythe: we hope your replacement will be just as skilled in keeping the price of physical gold affordable for those of us who keep BTFD every single day.

Almost a month ago, we wrote "This Is The One Financial Product Now Targeted By The HFT Swarm", in which after briefly perusing the Virtu S-1 filing, we concluded that "one product stood out. It is highlighted on the chart below: FX."

We are happy to report that this time the mainstream media is following our reports much more closely then five years ago, because overnight none other than Bloomberg came out with "High-Frequency Traders Chase Currencies as Stock Volume Recedes" in which we read, guess what, "Forget the equity market. For high-frequency traders, the place to be is foreign exchange." But our readers already knew this of course...

John Stewart is stunned by the world of HFT (where "stock exchanges sell the right to advance information to high frequency traders [by locating their computers closest to the exchange]") and the mainstream media's immediate jump to defend it "as good for us", but as Michael Lewis explains "anyone whose livelihood is dependent on Wall Street [from CNBC, FOX and even the SEC] is invested in this... it sounds like a conspiracy." As Lewis explains, HFTs "function on volume and volatility" alone and "they know the prices before you do... which is illegal if it's a person, but as a computer, meh?"