Lehman

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.

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

Gold Borrowing Costs Hit Post-Lehman High - Hong Kong Jewellers And Banks Face Supply Issues

Gold is little changed near a one-week high, and is marginally higher in dollars as the dollar has retreated from a three-year high, and higher in most currencies. The gold market continues to digest the ramifications of gold borrowing costs surging to the highest since the post-Lehman Brothers scramble for gold bullion. Gold Forward Offered Rates (GOFO) or the cost to borrow gold remains negative and overnight the 1 month GOFO has gone from -0.106% to -0.11167%. Other durations eased marginally. The lack of liquidity in the the interbank London Good Delivery gold market (400 ounce gold bars) has pushed gold forward rates, known as “gofo”, into negative territory, meaning that gold for future delivery is trading at a discount to physical market prices – a rare situation that has occurred only after the Lehman Brothers collapse and near the bottom of the gold market in 1999. The last time forwards were negative was in November 2008, when a scramble for physical gold led a sharp price rally of 46% from $682/oz to over $1,000/oz between October 2008 and February 2009.

Exposing The Lie Behind The Nonfarm Payroll Numbers

While we have already extensively deconstructed the quality components of jobs in the US, showing first that in June 240K full time jobs were lost, even as 360K part-time jobs were "gained", and second that so far in 2013 only 130K full time jobs have been added offset by 557K part-time jobs, we had sinking suspicions that there was something off with the quantity component as well: after all, at an average monthly gain of precisely 201.8K jobs in the past six months (or in 2013), this number seemed just a little too perfect considering the Fed's implicit target of generating just over 200K jobs in a half year period before it begins tapering, which in light of declining gross issuance and less monetizable instruments, has been the Fed's goal all along. Today, courtesy of the monthly JOLTS survey we got just the confirmation we needed that, indeed, the official non-farm payroll number as per the Establishment Survey has been substantially off to the tune of a whopping 40% above what is quantitatively happening in reality.

A Historic Inversion: Gold GOFO Rates Turn Negative For The First Time Since Lehman

Today, something happened that has not happened since the Lehman collapse: the 1 Month Gold Forward Offered (GOFO) rate turned negative, from 0.015% to -0.065%, for the first time in nearly 5 years, or technically since just after the Lehman bankruptcy precipitated AIG bailout in November 2011. And if one looks at the 3 Month GOFO, which also turned shockingly negative overnight from 0.05% to -0.03%, one has to go back all the way to the 1999 Washington Agreement on gold, to find the last time that particular GOFO rate was negative.

Chart Of The Day: Taper Fears Lead To Biggest Monthly Loss In Bank Securities Portfolios Since Lehman

Wondering how the blow out in interest rates is impacting commercial banks, which just happen to have substantial duration exposure in the form of various Treasury and MBS securities, not to mention loans, structured products and of course, trillions in IR swap, derivatives and futures? Wonder no more: the Fed's weekly H.8 statement, and specifically the "Net unrealized gains (losses) on available-for-sale securities" of commercial banks in the US gives a glimpse into the pounding that banks are currently experiencing. In short: a bloodbath.