New York Stock Exchange
Two months ago we first observed the scramble by various hedge funds, in this case Blue Mountain, to take advantage of the peak sentiment in housing, and specifically rental housing (which just hit an all time high as reported previously) by rushing to capitalize on recent investments and dump exposure to the witless public. Specifically, we envisioned the then just announced IPO of the aptly named American Homes 4 Rent (yes, with a "4" not "for"), also known as AMH, which however came at precisely the wrong time for the market: just as mortgage rates were soaring and Colony American Homes postponed its own parallel IPO. Two months later, with the market about to pass 1700 and fears about the housing market put back in the shelf despite a glaringly obvious collapse in mortgage demand, these IPOs are back and with a vengeance, although now reflecting a far more subdued, tapered if you will, view about the house leasing sector. Not surprisingly, AMH priced overnight, selling 44.1 million shares at a price at the bottom of the $16-18 range to raise a total of $706 million: a 44% discount to the $1.25 billion suggested in the prospectus filed back in June.
Here We Go Again: Step Aside RMBS, Rent-Backed Securities Are Here, And With Them The Beginning Of The EndSubmitted by Tyler Durden on 07/30/2013 16:03 -0500
Earlier today, when we reported that median asking rents in the US had just hit an all time high, we had a thought: how long until the hedge funds that also double down as landlords decide to bypass the simple collection the rental cash flows, and instead collateralize the actual underlying "securities"? One look at the chart below - which compares the median asking "for sale" price in black and the median rent in red - shows why. The last time there was a great divergence (to the benefit of housing), Wall Street spawned an entire Residential Mortgage-Backed Securities industry where Paulson, Goldman willing sellers would package mortgages, often-times synthetically, slice them up in tranches of assorted riskiness, and sell them to willing idiots yield-starved buyers. As everyone knows, that particular securitization bubble ended with the bankruptcy of Lehman, the bailout of AIG and the near collapse of the financial system. As it turns out, the answer to our original question was "a few hours" because securitizations are back, baby, and this time they are scarier and riskier than ever.
It seems there was only one thing on the minds of the machines today - get us green (on the day and the week). Following ugliness in Asia overnight, US equity markets were sliding into the open and so cash markets opened gap down. Good-is-bad confidence data legged us down one more time leaving the Dow down over 140 points but as Europe closed things started to pick up (apart from volume). By the close, equity markets had managed an almost perfectly linear liftathon back to unchanged leaving the Dow also unchanged on the week. As we tweeted:
The US consumer isn't allowed to enter the weekend with a market closing red.
— zerohedge (@zerohedge) July 26, 2013
Do you believe in miracles? Away from stocks, Bonds ended the week notably higher in yield (10Y +8bps), JPY signficantly higher on the week (+2.5%), USD down 1.2%, Gold and Silver up 2.8% on the week, and WTI down 3% (ending under $105).
After weeks of emptying of their Gold vaults and making headlines in recent days over their oligolopolization of commodity warehousing, it seems the threat of a probe has excited Blythe and her colleagues to dump while the dumping is good:
- JP. MORGAN TO EXPLORE STRATEGIC ALTERNATIVES FOR ITS PHYSICAL COMMODITIES BUSINESS
Options include sale, spin-off, or strategic partnership as they re-confirm that they are "fully committed to traditional banking activities," as they look to drop the holdings of commodities assets and the physical trading business. We can only assume that "physical commodities" include the company's extensive inventories of tungsten (as well as the vault housing it), and not so extensive stores of gold and silver. That said, we are confident that the collapse in represented (but not warranted) JPM Comex gold vault holdings to a record low, and this news is completely unrelated.
Goodbye sweet blue-eyed prince. It's been bittersweet. Just out from Bloomberg and Reuters:
- SAC CAPITAL ADVISORS INDICTED BY FEDERAL GRAND JURY IN NEW YORK
- COHEN'S HEDGE FUND, SUBORDINATES SUBJECT OF CRIMINAL INQUIRY
- U.S. SEEKS TO FORCE SAC TO FORFEIT ILLEGAL PROFITS STEMMING FROM FRAUD
- U.S. SAYS THAT FROM ROUGHLY 1999 TO 2010, SAC OBTAINED AND TRADED ON INSIDE INFORMATION TO BOOST RETURNS, FEES
Perhaps now is a good time to retreat to the hockey rink behind 9 feet of electrified fence, before the TV newsvans arrive at 72 Cummings Point road. As for what happens to the 5-10% of daily NYSE volume traditionally associated with the SAC, we will find out soon enough.
Those trading microcap uranium supplier USEC Inc (USU) were treated to a rare spectacle moments ago: one or a series of absolutely berserk algos took the stock up from $8 to nearly $16 in a wondrous example of momentum ignition, where one algo was telegraphing it knew something in a bid to get other algos to ramp the thinly traded stock , and succeeded. This move followed Friday's comparable surge by 70% on even more "no news." A circuit breaker halt followed and then the usual $1 bid/ask spreads as algo after algo was positioning to frontrun other algos, but by then all hell had broken loose. Volume as of moments ago: over 2 million on a stock that has ADV of under 100k. Management reiterated what it said on Friday, namely that it had no comment: "In view of the unusual market activity in the company’s stock, the New York Stock Exchange has contacted the company in accordance with its usual practice. The company stated that its policy is not to comment on unusual market activity" ensuring that the newsfree lunacy would continue.
Overnight there has been a flood of viral reports that 'there was a fire at JPM's gold vault' based on a self-made video showing a barrage of fire trucks located on Broad Street between Wall Street and Exchange Place, further subsantiated additionally by a @FDNY tweet around 6:30 pm on Saturday which indeed confirmed there had been a "commercial fire in a vault." So did a sweeping fire "take place" (in broad daylight and in front of video camera armed streetwalkers) provide the fire brigade a pretext to abscond with JPM's gold, or merely give JPM an alibi to say it's gold is "gone... all gone" or rather "burned... all burned" (leaving aside the propensity of a fire to propagate in the confined oxygen constraints to be found on top of the Manhattan bedrock and far below street level)? No.
Oil and gas exploration is getting bigger, deeper, faster and more efficient, with new technology chipping away at “peak oil” concerns. While hydraulic fracturing has been the most visible revolutionary advancement, other high-tech developments are keeping the ball rolling - from the next generation of ultra-deepwater drillships, subsea oil and gas infrastructure and multi-well-pad drilling to M2M networking, floating LNG facilities, new dimensions in seismic imagery and supercomputing for analog exploration.
Real, meaty analysis and ideas!
Ethopian Airlines Releases Statement On Smoldering Dreamliner; UTX Climate System Implicated In FireSubmitted by Tyler Durden on 07/13/2013 09:54 -0500
In the aftermath of the latest humiliation for Boeing, which after getting Dreamliner clearance by absolutely every "authority" imaginable, from the NTSB to the FAA to CNBC's Phil LeBeau, that it was absolutely safe to fry, pardon, fly, just had a major meltdown, oops there we go again, on live TV in Heathrow airport, one wonders - what happens when the regulators rush to give the all clear once more, only for yet another Dreamliner to mysteriously burst in flames several months hence? Alas that would mean that the very same regulators that lifted the fry, pardon, fly ban on the plane will have to impose it all over again, thus disgracing their pre-clearance methods (likely accelerated courtesy of an occasional envelope full of cash under the door somewhere in the decision chain) even more. And how long until the damage to the brand is so great that Boeing will have no choice but to replace every 8 in its 787 nomenclature with a 9, thus pulling the brilliant GMAC->Ally Bank conversion. All these are questions that Boeing, the FAA and the NTSB will have to answer very soon, and for the benefit of BA shareholders, with a favorable resolution. Then again, in the matter of recalls, be it of cars or airplanes, the math is well-known. In the meantime, here is the latest.
My muse today was from the movie Network from nearly 40 years ago. In this clip you merely need to substitute global central banks (Fed, ECB, BOE, BOJ and etc) and mega-banks (GS, JPM, C and etc) into the mix.
When we tapered our coverage of HFT manipulation and stock market abuse some time ago, we thought that the message had been heard loud and clear: high frequency trading is a sophisticated market manipulating parasite, whose only real function is to abuse market structure and integrity, by making conventional market manipulation practices more difficult to spot and identify. It turns out some, i.e., Newedge, thought they could still get away with traditional manipulative practices such as spoofing, layering, momentum ignition, wash trading, bypassing, and others, if only they were wrapped in an HFT blanket. It did so for four years from 2008 until 2011. As it turns out it was wrong, and in a stunning example of actually doing its job, FINRA fined Newedge, which is one of the largest futures brokers in the world and ranks third in terms of U.S. customer assets on deposit, a record $9.5 million.
- MSM discovers that soaring dollar hurts corporate profits: P&G to Apple Hurt by Strong Dollar Keep S&P 500 Profits in Check (BBG)
- China Posts Surprise Drop in Exports (WSJ) - lol: "surprise"
- Plan Reins In Biggest Banks (WSJ)
- European Commission Seeks Authority to Wind Down Banks (WSJ) - and Germany just says 9
- U.S. Banks Seen Freezing Payouts as Harsher Leverage Rules Loom (BBG)
- Brussels sets up clash with Berlin over banks (FT)
- EU to Toughen Creditor-Loss Rules at Failing Banks From August (BBG) - or September, or October, but definitely November... 2023
- China's crude, iron ore imports falter as demand cools (Reuters)
- Obama pushes economic case for immigration as House eyes next steps (Reuters)
Surging shale oil production has exposed the lag in the U.S. infrastructure to transport the new domestic energy source in a safe and the most cost-efficient timely manner to the end users.
It can't happen... It can't happen...It can't happen... It just happened.