Lehman

Guest Post: Trying To Stay Sane In An Insane World - Part 1

Facts are treasonous and dangerous in an empire of lies, fraud and propaganda. It is maddening to watch the country spiral downward, driven to ruin by a psychotic predator class, while the plebs choose to remain willfully ignorant of reality and distracted by their lust for cheap Chinese crap and addicted to the cult of techno-narcissism. We are a country running on heaping doses of cognitive dissonance and normalcy bias, an irrational belief in our national exceptionalism, an absurd trust in the same banking class that destroyed the finances of the country, and a delusionary belief that with just another trillion dollars of debt we’ll be back on the exponential growth track. The American empire has been built on a foundation of cheap easily accessible oil, cheap easily accessible credit, the most powerful military machine in human history, and the purposeful transformation of citizens into consumers through the use of relentless media propaganda and a persistent decades long dumbing down of the masses through the government education system. This national insanity is not a new phenomenon. Friedrich Nietzsche observed the same spectacle in the 19th century: “In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule.”

SEC Warns: Prepare For Repo Defaults

As we warned here most recently, the shadow-banking system remains the most crisis-catalyzing part of the markets currently as collateral shortages (and capital inadequacy) continue to grow as concerns. In recent weeks, between The Fed, Basel III, and the FDIC, regulators have signalled the possible intent to change risk, netting, and capital rules that could have dramatic implications on the repo markets and now, it seems, the SEC has begun to recognize just how big a concern that could be. As Reuters reports, the SEC urged funds and advisers last week to review master repurchase agreement documentation to see if there are any procedures to handle defaults, and if necessary, prepare draft templates in advance. A retrenchment in repo markets is unwelcome news for the liquidity of the underlying securities and the impact on the derivative portfolios should not be underestimated.

Stocks Close At Another All-Time High On Lowest Volume Day Of Year

Thank to Boeing's 'recovery' - since there was no fire today - the Dow gained 20 points (of which 29 points were Boeing). The S&P managed new closing all-time highs on the lowest non-holiday volume day of the year. Bonds were well bid early in following the bad-is-better retail sales print (-7bps from early high yields). Commodities were leaking lower into the early macro data but as soon as it was confirmed that the US consumer is tapped out - gold, silver, copper, and WTI all started to surge higher. Homebuilders notably underperformed, Utilities significantly outperformed with the rest treading water. Early USD strength (on ripping JPY weakness) was removed rapidly following the 'yes, the US economy is dismal' confirming data and the slide continued all day - leaving the USD practically unchanged by the close. This is the 14th up-day in a row for the Nasdaq (longest streak since May 1990), the Russell is over 15% above its 200DMA (a multi-year record), and volume has cratered in the last 14 days.

Bill Black: The Banks Have Blood On Their Hands

In the US, our regulators have publicly embraced a "too big to prosecute" doctrine. We are restraining, underfunding and dismantling regulatory oversight in the interests of short-term stability for the status quo. Which as a criminologist, Black knows with certainty creates an environment where bad actors will act in their self-interest with assumed (and likely real, at this point) impunity... And so there is no more destructive asset against trust than elite fraud.

What Is A "Liquidity Trap" And Why Is Bernanke Caught In It?

Much has ben written lately about the fact that the Federal Reserve is beginning to realize that they are caught in a "liquidity trap."  However, what exactly is a "liquidity trap?" And perhaps more importantly how did we end up in it - and how do we get out?

US Banks As Broken As Ever: JPM Excess Deposits Rise To New Record; Loans At Pre-Lehman Levels

The final item of note from today's JPM release is perhaps also the most important one, and once again serves as evidence of all that is broken with the US financial system. To wit: deposits held by JPM rose modestly to a new all time high of $1,202,950 million, or $1.2 trillion. This compares to $970 billion in Q3 2008 at the time Lehman failed. What about the flip side of this key bank liability: loans. As of June 30, 2013, total JPM loans declined from $729 billion to $726 billion, the lowest since September 2012. But more disturbing, this number is $35 billion less than the $761 billion at September 2008. It means that JPM's excess deposits have now risen to a new all time high of $477 billion, up from $474 billion last quarter.

SPX EBITDA GP <go>

Luckily nobody in the New Abnormal cares about actual cash flow.