Update 2: and spreads some more: Sterne Agee Not Routing Trades to Knight Capital
Update: it spreads: Fidelity Investments Not Routing Orders Through Knight: Reuters
Earlier, when interviewed by Bloomberg TV, Knight Capital CEO refused to say, prudently under advice of counsel, if any counterparties have cut off their lines to the fallen Knight. Well now we can confirm with 100% certainty that at least one Prime Broker has terminated all funding to and fro the firm which may not have much time left. We are certain it is not the only one. And now the scramble for a deal is on. If Lehman and MF Global are any indication, the odds are good to quite good. Inversely of course, just like Knight's berserk algo yesterday.
- What's wrong with this headline: Obama authorizes secret support for Syrian rebels (Reuters)
- Hilsenrath promptly dusts off ashes of sheer propaganda failure, tries again: Fed Gives Stronger Signals of Action (WSJ)
- Fed Hints at Fresh Action on Economy (FT)
- Fed Poised to Step Up Stimulus Unless Economy Strengthens (Bloomberg)
- IMF Chief Lagarde Praises Greece, Spain for Efforts (Bloomberg) - efforts to beg as loud as possible?
- US sanctions against bank 'target' China (China Daily)
- Trimming China's Financial Hedges (WSJ)
- ganda central bank cuts key lending rate to 17 pct (Reuters)
- Greece Agrees €11.5bn Spending Cuts (FT) - Agrees? Or does what a good debt slave is told to do
- Germany Retains Stable AAA Outlook at S&P After Moody’s Cut (Bloomberg)
- Spain’s Bond Auction Beats Target as Borrowing Costs Rise (Bloomberg)
- Bundesbank’s Weidmann Says ECB Shouldn’t Overstep Mandate (Bloomberg)
- Hollande and Monti Vow to Protect Euro (FT) - be begging Germany to death
- Monti Calls French, Finns to Action as Italy Yields Rises (Bloomberg)
- not working though: Banking license for bailout fund is wrong: German Economy Minister (Reuters)
- Switzerland is ‘New China’ in Currencies (FT)
- Regulator Says no to Obama Mortgage Write-Down Plan (Reuters) - tough: there will be socialism
- Gauging the Triggers to Fed Action (WSJ)
- When domestic monetization is not enough: Azumi Spurns Calls for Bank of Japan to Buy Foreign Bonds to Curb Yen (NYT)
- Indonesia’s July Inflation Accelerates on Higher Food Prices (Bloomberg) - remember: the Deep Fried black swan
- China Manufacturing Teeters Close to Contraction (Bloomberg)
- Spain Introduces Regional Debt Ceilings to Achieve Budget Goals (Bloomberg) - yes, they said "budget goals"
The blunt trauma that JPMorgan was implicated in the missing millions from segregated accounts in Jon Corzine's bankrupt MF Global may have passed but the memory lingers, especially for all those whose cash is still locked up somewhere in vapor space. Yet one event that may tear the scab that patiently was healing, courtesy of a Copperfield market full of distractions such as JPM's CIO fiasco, Lieborgate, oh and, Europe, right off is the recent bankruptcy of Peregrine Financial, aka PFG, whose story we first broke, and which just as we suspected, has promptly become the second coming of MF Global, as at least $200 million has "evaporated." It is thus with little surprise that we find that the first party of interest is none other than JPMorgan, which together with various other banks, will be the target of a subpoena by the PFG trustee. How shocking will it be to find that Dimon's company is once again implicated in this particular episode of monetary vaporization.
Gary Gensler Explains How CFTC Allowed PFG To Steal $200 MM In Client Funds 8 Months After MF GlobalSubmitted by Tyler Durden on 07/25/2012 10:13 -0400
Former Goldman appartchik Gary Gensler is about to take the stage (again) and explain why the CFTC should exist at all after allowing not only MF Global but a few weeks ago, Peregrine Financial, to steal hundreds of millions in client money without any regulatory supervision at all. All we can say here is: Free Corzine!
According to the IMF’s “official” analysis, EU banks as a whole are leveraged at 26 to 1. I would argue that in reality many of them are well north of 30 to 1 and possibly even up to 50 or 100 to 1. The reason I can claim this with relative certainty is because the EU housing bubbles dwarfed that of the US. In the chart below the US housing bubble is the lowest line. After it comes Britain (blue) and Italy (orange) then Ireland (green) and finally Spain (dark blue).
We’ve recently published a report showing investors how to prepare for this. It’s called How to Play the Collapse of the European Banking System and it explains exactly how the coming Crisis will unfold as well as which investment (both direct and backdoor) you can make to profit from it.
The CME, which is seeing an unprecedented exodus in trading and clients due to the recent fiascoes at MF Global and Peregrine Financial, and which is completely helpless to do anything about what is fundamentally a core feature of modern US 'capital markets', has resorted to the last ditch effort of every failing enterprise: writing and mailing letters to clients full of hollow promises. "We want you to know that CME Group is committed to making whatever changes are necessary to strengthen customer protections, restore confidence in the futures industry and ensure the effectiveness of these critical markets." Or until the next MFG or PFG at least. Sorry: too little, too late.
Market-top economics could be an entire university course, if people cared enough about such phenomena. Most only consider the signs of a market top months or years after a crash when some unyielding economics researcher puts the pieces together. As human-beings we have developed an uncanny ability to rationalize what we know to be bad news and convince ourselves, "This time is different," despite the fact that it usually never is. In a previous article we provided analysis on economic/equity decoupling (cognitive dissonance) and showed that the economy as we know it cannot persist--we are either due for a literal gap-up in leading economic conditions, or we are due for a serious correction in US equities. With today's 5.4% slip in existing home-sales, let's go with the latter.
Remember when various students of the Econ. PhD persuasion (not to mention various paywall holdco-funded blogs, both desperate for namedropping-based page views), alleged that reading Zero Hedge makes one's money "vanish" (instead of focusing their brilliantly insightful googling efforts on such worthier topics as MF Global or its successor, PFG, or even Libor)? We were going to present a picture of your typical "testosterone" addicted reader below as a reminder, but instead we opted for a picture of MBIA's intraday price, which is up 8.5% from where we broke news that the company may soon be worth much, much more. And to facilitate these same academics in their abacus-based pursuits of truth, justice and the Keynesian way, we will even calculate the annualized return: 847,801,191% (we will withhold calculating what the return on various short-term call options may have been - we are confident even career Economists can figure that one out after several hours of consultations). But since when have facts ever been part of the status quo's arsenal...
There remains some confusion about the timing of actions around the PFG Best disaster. From withdrawn salary cuts to liquidation-only orders to forced liquidations from Friday to Monday, CNBC's Rick Santelli provides a succinct and shocking insight into what real money accounts and brokers have dealt with and continue to try to comprehend. The sad truth about where the money went is summed up by his guest that "we're just hearing rumors; it could be, on a percentage basis worse, than MF Global."
US Attorneys General Jump On The Lieborgate Bandwagon; 900,000+ Lawsuits To Follow, And What Happens Next?Submitted by Tyler Durden on 07/11/2012 21:00 -0400
The second Barclays announced its $450 million Libor settlement, it was all over - the lawyers smelled not only blood, but what may be the biggest plaintiff feeding frenzy of all time. Which is why it was only a matter of time: "State attorneys general are jumping into the widening scandal over whether banks tried to manipulate benchmark international lending rates, a move that could open a new front against the top global banks. A handful of state attorneys general said they are looking into whether they have jurisdiction over the banks, and are starting preliminary discussions to determine what kind of impact the conduct involving the Libor rate may have had in their states."
We throw 7 billion cars into the air every year. What's that about?
Ultimately, the surge in demand for gold reflects one thing alone: distrust of the increasingly messy, interconnected, over-leveraged and fraudulent financial system. Whether it is China — fearful of dollar debasement — loading up on bullion, or retail investors in the United States or Europe — fearful of another MF Global (or PFG, or Lehman Brothers) — stacking Krugerrands in their basement, demand for gold reflects distrust in finance, distrust in the financial establishment, distrust in banks, distrust in regulators, distrust in government and distrust in the financial media. And it is that distrust — not (by any stretch of the imagination) central bank interventionism — that is the force moving demand for gold. There will be no bear market for physical gold until trust in the financial system and regulators is fixed, until markets trade fundamentals instead of the possibility of the NEW QE, until governments represent the interests of their people instead of the interests of tiny financial elites.
If there is an event that should cost Gary Gensler his job as head regulator at the CFTC, it is this. According to a just released Reuters report, the head of MFG(lobal) part 2, PFG, whose story we broke yesterday, Russell Wasendorf Sr. "intercepted and forged bank documents for more than two years to cover up hundreds of millions of dollars in missing money, a person close to the situation." Once Wasendorf realized he was caught, and knew the implications of his actions would be exposed for the whole world to see, he tried to commit suicide, and failed. "Wasendorf, 64, is reported to be in a coma after a suicide attempt Monday morning, according to a complaint filed by the Commodity Futures Trading Commission on Tuesday that accuses Wasendorf and Peregrine of fraud." And while crime happens all the time, what is truly stunning is that as we reported previously, the CFTC gave the firm a clean bill of health in its January inspection of Peregrine Financial Group. That's 6 months ago. The CFTC, as a reminder, was it regulator. The entity whose sole charge is to make sure that firms at least have real, not rehypothecated, cash in their segregated client bank accounts. PFG never did for the past two years. And somehow the CFTC missed this. MF Global was a warning shot, and the CFTC missed it entirely. And not only that but 2 months later ir pronounced PFG clean. For this Gensler has to be fired immediately, and with prejudice.