Archive - Nov 2014 - Story

Spot the banana republic:

• Nation #1 spends and issues tens of trillions in taxpayer funds and debt, crushing the growth potential of future generations, just to bail out a banking sector full to the brim with criminal "riggers" (as today's settlements once again prove), where bubble mania was so pervasive not a single bank would have survived absent a global central bank bailout, and where bank executives wouldn't bend over for anything less than a million.
• Nation #2 just sentenced two senior officials of a bank that collapsed under (a measly by New Normal standards) $1 billion in debt to 15 years in prison each for embezzlement and fraud.

Nation #1 is, of course, the US (or any other western nation). Nation #2 is Afghanistan.

If you are willing to put in another 30 minutes work per day... perhaps get that round of golf in after 1130ET and then come back for the close... in 17 of the last  21 days (14 of 14), the S&P 500 has rallied from 1530-1600ET...

The vice will close on some cities and states sooner than others, but it will eventually squeeze every city and state with declining revenues and rising fixed costs into default.

"It used to be called Black Friday, then it became Thursday, now it’s a week long...Maybe we should just call it November."

A day of contrasts: on one hand, the world just managed to land a human-created vessel on a comet. On the other hand, two window washers are hanging helplessly from the 68th Floor of WTC1.

"The banks have been allowed to investigate themselves," one source familiar with the investigation told Reuters. "The investigated decide what they want to investigate, what they admit to, and how much they will pay."

Presented with no comment...

By now, the world and his pet rabbit is aware of the 'odd' ramp in US equity markets as the European Close looms each day. Today - once again - was no exception, so we thought it worth quantifying this magical - and now self-fulfilling 'pattern'. In the last 4 months, if you bought the S&P 500 at 1100ET and sold at 1130ET, you would have won 55 times (garnering 129 points of profits) and lost 31 times (losing 70 points) for a total profit of over 59 points. This compares to the 53 point gain in the S&P 500 if you had just 'buy-and-hold'-ed over that period... and a quick glance at the chart tells you all you need to know about volatility...

While there was some selling of 10 Year paper following today's earlier 52-Week Bill auction which came in week, today's refunding of $24 billion in 10 Year paper was a snoozer. Closing moments ago at a 2.365% high yield (33% allotted at high), this was a 0.1% bp tail to the 2.364% When Issued. It was almost nearly identical to last month's 2.381% auction, although the small decline in yield means this was the lowest yield for the On The Run security since last June. The internals were also tame, with the Bid To Cover of 2.52 a carbon copy of last month's 2.52, if a little weaker than the TTM average. Finally, 42% of the allotment went to Dealers, or 4% above the 12 month average, while Indirects took down 44.7%, again nearly an identical amount to last month's 44.4$, and Directs, traditionally the domain of Pimco, were left with 13.4% of the auction. It is unclear if the Total Return Fund was the big bidder here now that Gross is long gone.

The only discernible difference we see from the Wall Street version of a casino it’s now so prominently become, and the one we find on some island or strip is this: At the least, when we have a great winning bet placed on Red or Black... The odds that someone from the house bank coming down to floor and yelling 'Fire' as the wheel is about to stop right on my stop is far, far less than a Central Banker coming out touting 'Well maybe we should or shouldn’t do...' the moment the true free hand of market is about to expose itself. At least at a true casino – they do have some level of integrity.

We finally have the answer, courtesy of the FCA's partial and very much selective disclosure of FX rigging findings by "The Cartel", the "Bandits" and so on, as part of its wrist-slapping settlement, just how the big boys make millions in FX on every single fix. Hopefully one day the regulators, who are as corrupt and conflicted as the banks they quote-unquote police, will reveal all the documents in their possession and let the public decide what is important and what isn't. But in the meantime, for all those curious just why the Too Big To Fail are also Too Big To Prosecute, here is the blow by blow.

With Boehner and McConnell already out blasting Obama's headline-grabbing emissions-deal with China...

*OBAMA INTENDS TO 'DOUBLE DOWN' ON JOB-CRUSHING POLICIES; 'CRUSADE' AGAINST AFFORDABLE ENERGY: BOEHNER
*MCCONNELL SAYS OBAMA EMISSIONS TARGET 'UNREALISTIC'

We thought a look at the 'faux reality' of the agreement would help clarify the farce: In the "historic" U.S.-China climate agreement this week, Beijing simply reiterated previously announced targets.

Wholesales Inventories and Sales beat expectations (+0.3% and +0.2% respectively) but, thanks to significant downward revisions in August, hope for a Q3 GDP boost are dashed. Sales growth remains near 2014 lows and inventory growth hovers near 14 month lows. Inventories-to-Sales ratios were flat in September at 1.19 months. Petroleum inventories plunged 5.3% MoM and down 13.2% YoY - the largest since Jul 2009.

Rarely are we speechless, but this occasion, when UBS made $513,000 from just one fix, as the FCA's complaint against the criminal Swiss bank reveals, is the rare exception. "In the immediate aftermath of the ECB fix, UBS was congratulated on the success of its trading by Firms A, B and C (“hes sat back in his chaoir [sic]…feet on desk…announcing to desk…thats why i got the bonus pool” and “yeah made most peoples year”)."

The bottom line: $513,000 from one trade.