Bank of New York

Is having the CEOs of two of the largest, most powerful banks sit on the board of their own regulator literally worse than putting a fox in charge of the hen house? Here's why the name "Morgan" get's you a regulator board seat and what regular people can do about it.

In the latest example of Washington playing catch up in the global "war" on terror PR battle, “officials familiar with the matter” have told WSJ about a concerted effort to cut off the flow of dollars to ISIS. Allegedly, the US became concerned about the amount of hard currency being shipped to Iraq over the summer. The problem: the requested amounts didn’t seem to be consistent with the country’s economic fundamentals and so, the US cut off Iraq’s access to dollar funding, nearly plunging the country into crisis.

So far today's trading session has been a repeat of what happened overnight on Monday, when following a weak start on even more weak Chinese data, US equities soared on the first trading day of the month continuing their blistering surge since that dreadful September payrolls report, which as we showed was mostly catalyzed by a near record bout of short's being squeezed and covering, which accelerated just as the S&P broke the 2100 level.

Having watched the credit markets grow more and more weary of the major US financials, it should not be total surprise that ratings agency S&P just put all the majors on watch for a rating downgrade:JPMORGAN, BANK OF AMERICA, WELLS FARGO, CITIGROUP, GOLDMAN SACHS, STATE STREET CORP, MORGAN STANLEY MAY BE CUT BY S&P. Despite all the talking heads proclamations on higher rates and net interest margins and 'strongest balance sheets' ever, S&P obviously sees something more worrisome looming. S&P blames The Fed's new resolution regime for its shift, implying "extraordinary support" no longer factored in. This comes just hours after Moody's put Bank of Nova Scotia on review also (blaming the move on concerns over increased risk appetite).

The Federal Reserve was supposed to serve the nation, however as even Bloomberg observes today, ended up "steamrolling" Main Street. One reason why: directors such as this one. Presenting former Morgan Stanley CEO, James Gorman, whose former employer got a $107 billion loan from the Federal Reserve to avoid implosion.

Anyone else found to have obtained at least "35 confidential documents" from the Fed on at least "20 occassions" would be sent straight to jail with a prison sentence anywhere between several decades and life.  Goldman's punishment? 0.6% of its 2014 Net Income.

Back in 1999, a quarter of all 25-year-olds lived with their parents. By 2013 this number has doubled, and currently half of young adults live in their parents home. Here, according to the St. Louis Fed, is the answer why.

• Hilsenrath - The Fed Strives for a Clear Signal on Interest Rates (WSJ)
• Tentative Budget Deal Reached, Raising Debt Limit (WSJ)
• China Calls U.S. Challenge Over Island Threat to Regional Peace (BBG)
• UK economy slows more than expected in third quarter (Reuters)
• In China’s Alleyways, Underground Banks Move Money (WSJ)
• Inside the Secretive Circle That Rules a $14 Trillion Market (BBG)
• A Frustrated Koch Brother Decides It’s Time to ‘Spout Off’ (WSJ)

Perhaps it was the public shaming of Iceland's diametrically opposite approach to 'dealing' with its bankers, or perhaps Janet Yellen needs a distraction from her own 'Fed Leak' problems, or finally perhaps Carmen Segarra's 2013 whistleblowing over the cozy relationship between Goldman and The New York Fed was just too conspicuous to brush under the carpet. Despite Bill Dudley's insistence that The New York Fed is not a subsidiary of Goldman, The NY Times reports, federal prosecutors are preparing to announce a criminal case this week against a former Goldman banker suspected of taking confidential documents from a source inside the government.

Back in February, we noted that NIRP had officially arrived in the US as JP Morgan announced it was preparing to charge some large institutional customers for deposits. This represented a kind of de facto (if not yet de jure) NIRP. Now, a combination of pinched margins and new regulations has led some of the largest financial institutions in the US to penalize corporate and institutional deposits on the way to instituting what amounts to a stealth version of negative interest rates.

After yesterday's closing ramp "prudently" just ahead of an abysmal IBM earnings report with the lowest revenues since 2002, and the latest rally in capital markets which sent European stocks to their highest level since August on the back of a barrage of global bad data which has unleashed the Pavlovian liquidity dogs screaming for moar central bank bailouts, this morning has seen a modest decline in the Stoxx 600 driven by energy names, while S&P500 futures are set to open lower on IBM's disappointment at least until the latest massive BOJ USDJPY buying spree sends the pair to 120 and the S&P solidly in the green. The biggest political event overnight was the Canadian election, where Trudeau's liberals swept PM Harper from power, capping the biggest political comeback in the country's history; the Canadian dollar is largely unchanged after initially weakening then rising.

Another day, another "crackdown" by the CFTC on an "evil spoofing mastermind."

· ECB rate decision and press conference is set to take place on Thursday, with participants looking for indications as to if and how the central bank’s QE programme may be expanded

· US earning season continues next week, with high profile names including IBM, Alphabet, Amazon.com, Morgan Stanley and Bank of New York Mellon all scheduled to report

If you’re a fan of dovish policymakers who are committed to Keynesian insanity, you can always count on Minneapolis Fed chief Narayana Kocherlakota who is out today with the latest hint that NIRP is coming to America.

"There’s a lack of faith in monetary policy -- you’ve thrown the kitchen sink at it, you’ve cut rates to zero, you’re printing money -- and still inflation is lower. I think this is a dangerous situation if people perceive that it has the responsibility and it doesn’t have the tools."