• Pivotfarm
    04/18/2014 - 12:44
    Peering in from the outside or through the looking glass at what’s going down on the other side is always a distortion of reality. We sit here in the west looking at the development, the changes and...

GETCO

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Korea's Boy Who Cried Wolf Is Now Screaming "Thermonuclear War"





The boy who cried wolf is now openly screaming "global thermonuclear war." No, really. AFP reports that North Korea said Tuesday the Korean peninsula was headed for "thermo-nuclear" war and advised foreigners to consider leaving South Korea, as the UN chief warned of a potentially "uncontrollable" situation. "Tuesday's advisory -- greeted largely with indifference -- followed a similar one last week to foreign embassies in Pyongyang, to consider evacuating by April 10 on the grounds war may break out. "The situation on the Korean Peninsula is inching close to a thermo-nuclear war," the Asia-Pacific Peace Committee said in a statement carried by the North's official Korean Central News Agency." The result - a big yawn, which sadly for Kim Junior is the worst reaction. After all what is a dictator with an inferiority complex and a laughable military to do to get some respect around here and score some "nuisance value" cash from the superpowers (which has been his entire plan all along).

 


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IB Prepares For Surge In Japanese Bond Volatility, Removes All Intraday Margins On Japanese Products





On Friday morning, after the humiliating for the BOJ halt of the ¥1 quadrillion Japanese government bond market, the second largest in the entire world due to unprecedented 13-sigma volatility, we joked that as a result of the central bank's desperation, it has now made trillions in the formerly world's "safest" security trade like a penny stock. It appears our joke was not far off the mark as a few hours ago, in advance of the Sunday reopening of the JGB, at least one broker has decided to prepare for another record vol session by completely eliminating intraday margins and thus avoid the possibility of even more limit up/down crashes as a result of margin stops being hit and starting a self-reinforcing feedback loop of even more buying or selling.

 


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Meet Mary Schapiro's New "Revolving Door" Employer





When Mary Schapiro quit the laughing stock US stock market regulator, the only question was which Wall Street firm the latest SEC "revolving door" migrant would end up with, with most bets being on, naturally, Goldman and JPM. Today, to some surprise, the news hit that the former head of the internet porn-addicted regulator (which like clockwork always complains about its low budget: maybe get a refund for that bangbus.com subscription?) has decided to join none other than the revolving door extraordinaire consulting firm Promontory Financial. Per the WSJ: "Ms. Schapiro will work full-time in Promontory's office in Washington as a managing director leading the consulting firm's governance and markets practice and advising clients on risk management and compliance. Ms. Schapiro and a Promontory spokesman declined to say how much she will be paid in the new job." So who is Promontory? Nothing short of an "expert network" of all former government workers who having moved on, are willing to spill the beans about all the secrets of government operations... for a fee of between $1000 and $10,000 per hour. The chart below shows a sampling of all current and former employees of Promontory, explaining why it is a perfect fit for anyone intent on justifying the allegations of those who claim all the SEC does is provide a revolving door opportunity for ex-government workers.

 

 


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Another Overnight Levitation Ramp





The BTFD mantra is alive and well in a market, where futures overnight briefly dipped to a low of -0.5% only to be set to open at record high, following the biggest one day drubbing in China in months, where the Shanghai Composite closed -2.82% after new rules were issued by the Chinese banking regulator to limit the expansion and improve the transparency of so-called “wealth management products”. The products, which are marketed as higher yielding alternatives to bank deposits, are often used to fund risky projects including property developments, short-term corporate lines of credit or for speculative purchases of commodities and have been identified as contributing to the rise of shadow-banking in China’s financial system. As Deutsche reports, Fitch estimates the total amount of outstanding wealth-management products was around 13 trillion yuan at the end of last year—equal to about 15% of total banking-system deposits. Japanese equities were also weaker overnight (Nikkei –1.3%) and the yen is 0.3% firmer against the dollar after BoJ Governor Kuroda told parliament that he has no intention of buying foreign bonds because doing so could be seen as currency intervention. Finally, South Korea informally entered the currency wars after it slashed its GDP forecast from 3% to mid-2%, announcing it would use "interest rates" to boost growth, which naturally means use of monetary means and directly challenging the BOJ.

 


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Meanwhile, Cash Exodus From Cyprus Surges Despite Bank Closures, Capital Controls





When Cyprus put its banks into lockdown last weekend until... well indefinitely, now that capital controls are established, the main reason was to halt all capital outflows from the henceforth liquidity starved island whose banks will only exist as long as the ECB provides an ever greater dose of liquidity to account for the collapse in deposit funding. Which is why it is surprising, make that shocking, that as Germany FAZ reports, in the past week there has been a surge in cash outflows from Cyprus, even as its financial system has been supposedly ringfenced from the world, which by the way is the only thing preventing the EUR17 billion bailout from soaring by orders of magnitude because should a liquidity leak be discovered, it is all over for the country's financial system.

 


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Eurogroup Meeting On Cyprus Begins In Brussels





A few moments ago, no bailout proposal in hand, no parliamentary discussion having taken place, and certainly no votes having been cast, the Eurogroup sat down with Cyprus' president Anastasiades, in order to preserve the "democratic" theatrical facade of European decisionmaking. Here, to keep up appearances that  Cyprus' opinion is even remotely relevant, Europea's unelected leaders will do what they does best - make a closed door decision affecting the lives of millions of people, which ultimately have one purpose: to preserve the crumbling edifice of the Eurozone project (so carefully preserved in the past few months with superglue, scotch tape and empty promises) and of course the jobs and livelihoods of a few unelected EUrocrats. A preview of this elaborate song and dance ritual is below from Kathimerini. It will be next followed by an even more elaborate song and dance from the Eurozone finance ministers, which will then finally go back to Cyprus, where a decision will likely have to be reached ahead of the Asian FX market open, or all that late Friday "Cyprus is saved" enthusiasm will evaporate in a GETCO millisecond.

 


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Hope Of Good News From Moscow Sees Return Of Overnight Futures Ramp





The Cyprus finance minister Michael Sarris may or may not have submitted his resignation after the president formally declined to accept it, but now that he is back on the saddle he is back to spreading hope, cheer and goodwill. Those wondering why both the EURUSD, and its derivative, US stock futures have surged overnight and retraced all of yesterday's losses and then some, it is not due to any anachronistic events such as "good economic news" (especially since the Spanish PM said Spain will have to cut its economic outlook once again, or rather, as usual), but due to the following phrase uttered by Sarris a few hours ago: "We are hoping for a good outcome, but we cannot really predict" regarding his views on talks with Russia. That's right - the entire overnight ramp is based on the hope of one man, who thinks Russia can be blackmailed through deposit haircuts, into bailing out the tiny island which has now said nein to Europe and bet the ranch on a well-meaning Vladimir Putin. What can possibly go wrong: according to the GETCO algos all alone in levitating stocks, absolutely nothing. What is clear is that Cyprus is fully intent on seeing Europe "blink" whether due to Russia's involvement or just because it thinks (correctly) it has all the leverage as the alternative is a breakdown of the Eurozone.

 


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French Minister Tasked With Fighting Tax Fraud Resigns For Having A Secret Swiss Account





While everyone awaits in stunned silence to see what Citadel, GETCO and of course the NY Fed will do with stocks in the aftermath of the shocking Cypriot decision, which nobody has any idea how to respond to because as Europe made it very clear ahead of the vote, there is no "Plan B", here is some comic interlude. The name Jerome Cahuzac should be familiar to our readers: he is the French Budget minister who had been tasked with battling tax fraud. Well, technically it is not is but was: moments ago Monsieur Cahuzac resigned, for the same reason he had been investigated several months ago. Namely, having an "undisclosed" Swiss bank account. Minister in charge of battling tax fraud... resigns for having a secret Swiss account. We'll let that sink in for a bit before we go back to that other farce in the eastern Mediterranean.

 


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SAC Unit CR Intrinsic To Pay Largest Ever Insider Trading Case Settlement: No Charges Are Admitted Or Denied





The Securities and Exchange Commission today announced that Stamford, Conn.-based hedge fund advisory firm CR Intrinsic Investors has agreed to pay more than $600 million to settle SEC charges that it participated in an insider trading scheme involving a clinical trial for an Alzheimer’s drug being jointly developed by two pharmaceutical companies.   The settlement filed today in federal court in Manhattan is the largest ever in an insider trading case, requiring CR Intrinsic – an affiliate of S.A.C. Capital Advisors – to pay $274,972,541 in disgorgement, $51,802,381.22 in prejudgment interest, and a $274,972,541 penalty. “The historic monetary sanctions against CR Intrinsic and its affiliates are sharp warning that the SEC will hold hedge fund advisory firms and their funds accountable when employees break the law to benefit the firm,” said George S. Canellos, Acting Director of the SEC’s Division of Enforcement. The settlement is subject to the approval of Judge Victor Marrero of the U.S. District Court for the Southern District of New York. The settlement would resolve the SEC’s charges against CR Intrinsic and the relief defendants relating to the trades in the securities of Elan and Wyeth between July 21 and July 30, 2008. The settling parties neither admit nor deny the charges

 


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1,200 Dead Pigs Found In Shanghai River





Over the past month the west had its "horsemeat" scare, where horse DNA traces have been found in pretty much everything. It is now China's turn to reciprocate, with 1,200 pigs found in Shanghai's Huangpu River. Why someone would dump thousands of dead pigs in the river? Who knows - we are confident that it is bullish, however, and it is time fro GETCO or K-Hen to do something about this strange reddish color in the futures. It is not helping with confidence in central planning...

 


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Every "Record" Dow Jones Point Costs $200 Million In Federal Debt





The past week brought us history: on Tuesday, GETCO and Citadel's HFT algos were used by the Primary Dealers and the Fed to send the Dow Jones to all time highs, subsequently pushing it to new all time highs every single day of the week, and higher on 8 of the past 9 days: a 5ish sigma event. But there is never such a thing as a free lunch. And here is the invoice: in the past 5 days alone, total Federal Debt rose from$16.640 trillion to $16.701 trillion as of moments ago: an increase of $61 billion in five days, amounting to $198,697,068 for every of the 307 Dow Jones Industrial Average points "gained" this week. Because remember: US debt is the asset that allows the Fed to engage in monetization and as a result, hand over trillions in fungible reserves to banks... mostly foreign banks.

 


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Previewing Today's Payrolls Report





Below are the expectations of the biggest banks for today's Nonfarm Payroll number to be announced in just over two hours:

  • Morgan Stanley +135K
  • Barclays Capital +150K
  • Goldman Sachs +150K
  • Bank of America +160K
  • JPMorgan +165K
  • HSBC +179K
  • Deutsche Bank +180K
  • UBS +190K
 


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Gundlach Says Stocks "Obviously Overbought", Buys "More Long-Term Treasuries In Last Month Than In Four Years"





Doubleline's Jeff Gundlach must not be a GETCO algo because unlike the algorithmic programs who are all that's left of traders in this policy farce of a manipulated market and who are programmed to BTFD especially when there is a massive stop hunt program about to be unleashed on 10-20 ES contracts, he is not buying stocks. Instead the bond manager has closed his July 2012 call when he called the top in Treasurys, and told Reuters that he has bought "more long-term Treasuries in the last month" than in the last four years." And this coming form the so-called new "bond king." Gundlach said he started buying benchmark 10-year U.S. Treasury notes in the last month after yields popped above 2 percent, because he sees value there relative to other asset classes, including stocks, which he said are "overbought."

 


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Shorting The Market On These March Days Will Be Hazardous To Your Health





The last time we looked at the "hazardous" days for shorting in January and February, we found something very simple - being a bear on POMO days, or those days in which Ben Bernanke makes it his life's mission to personally annihilate anyone who dares to face his money-spewing helicopter-printer with something as pathetic as a sense of reality and a frontal lobe, leads to certain immediate or eventual destruction, depending on one's margin level. So thanks to the most recent monthly update of POMO days covering the month of March, here is Ben Bernanke at his most helpful, providing the schedule in which he, the NY Fed, and the Primary Dealers will proceed to rip the heads off those who happen to be short in the face of what are the now daily GETCO stop hunts that send the S&P higher by 5-15 point in minutes on, well, absolutely no news, except for the usual deluge of between $1 and $5 billion in additional purchasing handed over by Chairman Ben to the banks because, you see, they need the money. And sooner or later it will trickle down on everyone else.

 


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Live Webcast Of Bernanke Testimony To Senate





At 10 am Eastern the Chairman will go before Senate to deliver his agency's semi-annual Monetary Policy Report to lawmakers. Tomorrow he will do the same before the House. Speaking before the Senate Banking Committee, Bernanke will face questions about the nation's current economic situation.  He is also likely to field lawmaker's comments on how the nation's economy will be impacted by sequestration. Perhaps someone will inquire about the Fed's exit plans, but that is unlikely as there are none. Perhaps someone else will inquire what Bernanke's closing print target for the S&P and the EURUSD are. We, and numerous GETCO synthetic momentum algos, are looking forward to both.

 


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