Capital Markets

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Janet Tavakoli On The "Biggest Fraud In The History Of Capital Markets"





In the following interview with the WaPo's Ezra Klein, Janet Tavakoli shares some more information on why every bank is about to shut down all foreclosures, in what she calls the "biggest fraud in the history of capital markets." Not very surprisingly, we are, so far, spot on in our 29th September projected timeline at this point: "We predict that within a week, all banks will halt every foreclosure currently in process. Within a month, all foreclosures executed within the past 2-3 years will be retried, and millions of existing home sales will be put in jeopardy."

 
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Bank Of America Cutting 5% Of Capital Markets' Personnel, Firing 400 Employees Globally, Many More To Come...Er... Go





The much anticipated "low volume market" casualties are accumulating. As we noted first a few weeks ago, and subsequently picked up by other MSM publications, it was only a matter of time before Wall Street, which earlier in 2010 decided to foolishly lever up on the economic "reflation" myth and hire tons of people, is once again preparing to fire in droves, a phenomenon which traditionally is the best indicator a given economic cycle's peak has come and gone. Bloomberg has just disclosed that Bank of America is following similar actions from RBS disclosed earlier, and is firing as many as 400 employees in global banking and markets division. Charlie Gasparino, who first broke the news, also added the twist that the departures are taking place now "so as to deprive the unlucky employees year-end bonuses." Gotta love Wall Street's code of ethics. At least in the past layoffs would wait until after year end. No such luck anymore, now that most other banks are also likely considering comparable steps, and news of terminations start flooding in.

 
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Restoring Confidence In Capital Markets...





... Will not commence by looking at this chart of the existing market structure

 
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Main Street's Boycott Of Capital Markets Succeeding: Barclays First Casualty, To Fire Hundreds Due To Plunge In Market Activity





For the longest time it was consensus thought that only Wall Street could fuck Main Street. The ride is now turning. After what the FT reports was a 16% decline in fixed income, currencies and commodities trading
revenues for Q2, coupled with advisory revenues down 17%, the bank is now "planning to cut up to several hundred employees following a sharp fall in market activity in the second quarter. Sources close to the bank say that the job losses, which could be announced as early as Wednesday, will be spread across BarCap’s sales and trading staff as well as its back office support functions." Too bad the SEC has not, and will not realize that its only function is to restore the faith of the retail investors in the credibility of the capital markets. Yes, the same retail investor who both on margin and in total has always been the primary driver of stocks. Alas that has not happened and tens of thousands of Wall Streets will soon feel the wrath of Main Street as the boycott of stocks by the broader population comes to fruition, allowing the former "strategists" to experience just how real the difference between the U-3 and U-6 rate is first hand.

 
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Greece Pretends It Has Capital Markets Access By Continuing To Sell Ultra-Short Term Debt At Astronomical Spreads





After a frabjous placement of 6 month bills last week (at just under a whopping 5%), Greece continues the charade of pretending it has capital markets access by announcing it will sell another €1.5 billion of 3 month bills on July 20, 2 days before the Stress Farce results are announced.

 
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Latest Observations On Ponzi Markets Courtesy Of Capital Markets





"According to the US Federal Reserve’s latest Flow of Funds report released on Thursday, the market
value of corporate equity at the end of the second quarter was 0.78 times companies’ net worth at
replacement cost. We suspect the continued rise in share prices during the current quarter has since
pushed up this ratio – known as “equity Q” – to around 0.9. The geometric average of equity Q since
1900 is around 0.64. The stock market is therefore roughly 40% overvalued relative to historical
trends based on this yardstick. Our other favoured metric, the 10-year cyclically-adjusted P/E ratio
(CAPE) of the S&P 500, also suggests the market is overvalued. At a current level of more than 19, the
CAPE is about 30% above its long-run average of below 15." - John Higgins, Capital Economics

 
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Recent Capital Markets Transactions Update





Recent trends indicate that the pick up in corporate finance transactions, especially in the equity capital market may be petering off. After hitting an unprecedented high in June as the market reached the head of what had previously been seen as a fake head and shoulders formation, the July afterburners in the secondary market did not translate into primary market strength. Additionally, the August run rate indicates that the primary market may well have peaked in the May-June timeframe.

 
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