Capital Markets

Even The Regulators Are Rigged: Prominent HFT Critic Stiglitz Blocked From SEC Panel

That markets are rigged, at both the macro level, through central banks, and micro, through HFTs, dark pools and purposeful market fragmentation, should be painfully obvious to everyone by now. But when even the regulators engage in "jury rigging", or in this case blocking prominent HFT-critic Joseph Stiglitz, a Nobel prize winning economist (a prize which doesn't count for much on these pages but should - at least on paper - impress such statist cronies as the SEC), has been blocked from a government panel that will advise regulators on issues facing U.S. equity markets, it becomes clear as day that the rigging is not just in the markets: worse, it is openly involves the market's "regulator" and "enforcer."

Knowing It Will End Badly And Turning A Blind Eye

The problem is inherent in the knowing “that it will end badly” and yet turning a blind eye and making money anyway. For that’s what a good Wall Street aficionado does after all, right? I mean, who cares about arguing about real economics or fundamentals. Who cares – I’m up 8%!! As if that’s all that now matters. For if that’s all that matters why don’t we embrace crony capitalism, embrace stagnant wages, embrace the 99% vs the 1% as that’s the best it’ll ever be. Who cares, as long as we’re getting ours. This disgusting bloated behemoth of an adulterated Central Bank infused market is now getting downright scarier.

Hugh Hendry Embraces The Central-Planning Matrix: "I Am Taking The Blue Pills Now"

Hugh Hendry's Eclectica Fund has had a great Q4 (up 3.3%, 4.0%, and 5.0% in the last 3 months) despite portfolio risk being quadruple his 'old normal'. How did he achieve this? He begins... "There are times when an investor has no choice but to behave as though he believes in things that don't necessarily exist. For us, that means being willing to be long risk assets in the full knowledge of two things: that those assets may have no qualitative support; and second, that this is all going to end painfully. The good news is that mankind clearly has the ability to suspend rational judgment long and often... He who hangs on to truth has lost. The economic truth of today no longer offers me much solace; I am taking the blue pills now."

Congressman Confirms Foreign Central Banks Buying US Stock Futures Is Good For Liquidity

Before we first exposed proof of the conspiracy fact that global Central Banks are indeed trading US equity futures, it was dismissed as tin-foil-hat-wearing, pajama-wearing, basement-living conspiracy theory. So it is, perhaps, quite notable that Congress itself has now admitted that Central Banks are trading futures and that it is good for liquidity (and thus, we pre-suppose, it's for your own good, average citizen).

As Greek Default Risk Soars To 66%, Morgan Stanley Warns ECB May Be Unable To Launch QE

"The Greek political turmoil is likely to complicate matters for the ECB’s preparation of a sovereign QE programme. The prospect of the ECB potentially incurring severe losses is likely to intensify the debate within the Governing Council, where sovereign QE remains controversial. It could also make the start of a buying programme already on January 22 even more ambitious. In addition, the spectre of default could create new limitations on any sovereign QE design."

"Non-Political" Draghi Demands Full Federalization Of Europe, Centralized Stock Market

With GREXIT once again knocking on the Euro's door, Mario Draghi has come out swinging (or jawboning). As Reuters reports, the non-political, non-meddling, completely independent central bank chief explains, structural reforms were needed to "ensure that each country is better off permanently belonging to the euro area," adding that Euro zone countries must "complete" their monetary union by integrating economic policies further and working towards a capital markets union. Brussels Uber Alles... (or else "the threat of an exit (from the euro) whose consequences would ultimately hit all members").

Futures Up In Light Volume On Renewed ECB QE Hopes As Crude Slides Again

While the last trading day of 2014 will be important if only to see if Dow 18,000 can be recaptured on what is sure to be the lowest volume in years, don't expect much help from Brent which continues to slide and was down nearly 3% at $56.20 or WTI which is also flirting with the $53 level, down almost 2% overnight both set to cap the worst year for the commodity since 2008. Not much should be expected from Treasuries either, set to return over 6% in 2014 - the best performance since 2011 - crushing the latest hoard of bond shorts all of which got the Treasury move in 2014 epically wrong, which will close early at 2 pm. Which means that the HFT algos will once again be driven off the illiquid USDJPY correlation, where low volume will mean 5-10 pip moves today should be the norm, as well as European stocks, whose Stoxx Europe 600 Index rose 0.3% earlier on the latest round of jawboning by an ECB member, this time Dutchman Peter Praet, who said in an interview with German newspaper Boersen-Zeitung that lower oil prices increasingly risk de-anchoring inflation expectations, indicating that quantitative easing is becoming more likely.

Commodity Prices Are Cliff-Diving Due To The Fracturing Monetary Supernova - The Case Of Iron Ore

The worldwide economic and industrial boom since the early 1990s was not indicative of sublime human progress or the break-out of a newly energetic market capitalism on a global basis. Instead, the approximate $50 trillion gain in the reported global GDP over the past two decades was an unhealthy and unsustainable economic deformation financed by a vast outpouring of fiat credit and false prices in the capital markets. In short, when the classical Austrians talked about “malinvestment” the pending disasters in the global steel and iron ore industries (and also mining equipment and other supplier industries) are what they had in mind.

The Clash Of Civilizations

What scares me about the Clash of Civilizations is that the three leaders of the three biggest civilizations – the US (Western), China (Sinic), and Russia (Orthodox) – will misplay their hands and take on another civilization directly or, worse, take on each other, and that will vaporize the Narrative of Central Bank Omnipotence in a nanosecond. The existential risk here for markets is not that China/Russia/Europe/America might “collapse”, whatever that means. No, the existential risk is that the great civilizations of the world will be “hollowed out” internally, so that the process of managing the ten thousand year old competition between civilizations devolves into an unstable game of pandering to domestic crowds rather than a stable equilibrium of balance of power.

From Land Of Opportunity To A Fool’s Paradise

A Fool’s paradise is what the once great “land of opportunity” is in real danger of becoming if the adults don’t stop acting like children and actually care about what’s beneath the headlines or between the book covers. Rather than the headlines of who’s between the covers with who. Today far too many are only taking in the “headlines” along with what’s known as “headline numbers.” This is an abject lesson in Tom Foolery.

 

SF Fed Warns US Equity Valuations Will Be Cut In Half In Next Decade

When "the retirement of the baby boomers is expected to severely cut U.S. stock values in the near future," is the ominous initial sentence from no lesser maintainer-of-the-status-quo than the San Francisco Fed's research department, one begins to recognize the Federal Reserve's overall need to hyper-inflate asset prices at whatever cost for fear of the 'wealth' destruction looming. As the following study reports, projected declines in stock values - based on the latest demographic and valuation data - have become even more severe. Our current estimate suggests that the P/E ratio of the U.S. equity market could be halved by 2025 relative to its 2013 level.

"Off The Grid" Economic Indicators – Q4 2014

ConvergEx's Nick Colas quarterly review of “Off the grid” economic indicators tells a story somewhat less sanguine than the typical government data. Confidence is returning, yes. But consider just how low it got: the top 3 Google autofills for “I want to sell my …” featured “kidney” for the first 3 quarters of this year. It was replaced in the current quarter with “Laptop”. Progress, of a sort...

Marc To Market's picture

When the dollar falls, we are told it is logical.  The empire is crashing and burning.  When the dollar rises, the markets, we are told are manipulated.    Well, the dollar is back, and the technical correction ended, near we told you it would.