Swiss Franc

This Is What A Volcker Rule Loophole Looks Like

After the carnage of the 2008 crash, former Federal Reserve Chairman Paul Volcker proposed a rule that would prevent banks from making short-term proprietary trades with financial instruments. In other words, no gambling allowed. This rule would become known as The Volcker Rule, and it went into partial effect on April 1, 2014. Full compliance is required by July 21, 2015. Of course, the bank lobbyists were hard at work, and numerous exceptions and loopholes were created.

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Deutsche Bank’s derivatives position is truly enormous. It was recently estimated to be around $54 trillion. Germany's GDP, the 4th largest in the world, was a mere $3.64 trillion in 2015. Were Deutsche Bank caught off-side in its derivatives positions there is not a government or institution on earth that could bail it out and it could lead to contagion in the German financial system and indeed in the global financial system.

Frontrunning: June 5

  • Europe shares set for worst week of 2015 (Reuters)
  • Jobs Report Not Likely to Trigger June Rate Hike (Hilsenrath)
  • U.S. jobs market seen firming despite lackluster growth (Reuters)
  • Gross Says Bond Rout Scary as Hell Even Without Bear Market (BBG)
  • Apple Is the New Pimco, and Tim Cook Is the New King of Bonds (BBG), which ZH said in 2013
  • In 'year of Apple Pay', many top retailers remain skeptical (Reuters)
  • OPEC Nations Signal Few Prospects for Oil-Production Change (BBG)
  • China regulator says amending rules on margin trading, short selling  (Reuters)

The Coming Capital Controls Are Designed To Protect The Banks From You

If governments have proven anything to us over the last seven years, it is that they will do anything to keep the banks from going down.  If just 10% of people hit their breaking points and withdrew their money in cash - there wouldn’t be enough cash in the system to support this demand. And the banks would subsequently collapse. When a government is bankrupt, the central bank is nearly insolvent, the banking system is illiquid, and an entire population suffers from interest rates that are either negative or below the rate of inflation, capital controls are a foregone conclusion. In fact, we expect the next round of capital controls will be designed to protect the banks... from you.

Traders Are Buying Gold & Silver At Fastest Pace In Over A Decade

The last time large speculators were as aggressively buying silver as last week was September 1997. The net long non-commercial positioning in Silver futures, according to the CFTC rose almost 22,000 contracts last week to a 3-month high (which is closing in on the 'longest' since 2005). Gold, not be out-precious'd also saw major buying. Net speculative longs in gold added over 45,000 contracts - the most since July 2005 - lifting net long positions to their highest in 3 months. Perhaps, just perhaps, as Alhambra's Jeffrey Snider notes, this is due to Yellen putting the 'dollar' back on suicide watch.

Behind The Scenes In FX Trading: What Is Really Going On

With HFT algos now firmly entrenched in FX markets we weren't surprised to learn that volatility is rising, bid-ask spreads are blowing out, and liquidity is vanishing. Expect things like last October's algo-driven, Fed-assisted Treasury flash crash to become par for the course in FX markets as well, with harrowing USD, EUR, JPY, [fill in the blank] ramps and flash crashs becoming the norm and leaving panicked central bankers desperately trying to figure out what happened after the fact.