The Bundesbank, Germany’s powerful central bank, announced very publicly this morning the further repatriation of some of it’s gold being held in foreign locations – namely in Paris and New York with the Bank of France and the Federal Reserve.
UPDATE: Knight Trading 2.0? Jefferies executive are reportedly on-site at FXCM discussing a $200 million bailout
As we first reported last night, FXCM was among the first of many retail FX brokers (and the largest) to see its clients suffer massive losses from yesterday's Swiss Franc surge following the SNB decision to unleash market forces. There are now at least 4 retail FX brokers (FXCM, Excel Markets, OANDA, and Alpari) who have announced "issues" but FXCM, being among the largest and publicly traded is the most transparent example of wjust what can go wrong when average joes are allowed 100:1 leverage. FXCM is now stuck chasing clients for money they do not (and will never) have.. and its stock is down 90%, trading a $2 this morning (down from $17 on Wednesday). As Credit Suisse notes, time is running out as regulators "tend to be impatient once capital requirements are breached."
In comparing pre-collapse USSR to Russia today, commentators and analysts showcase their ignorance. Recent events, such as the overthrow of the government in Ukraine, the secession of Crimea and its decision to join the Russian Federation, the subsequent military campaign against civilians in Eastern Ukraine, western sanctions against Russia, and, most recently, the attack on the ruble, have caused a certain phase transition to occur within Russian society, which, I believe, is very poorly, if at all, understood in the west. This lack of understanding puts Europe at a significant disadvantage in being able to negotiate an end to this crisis.
Last week we focused on potential manipulations of the opaque and self-regulated process by which the conflicted members of ISDA’s Determinations Committee (“DC”) determine whether a triggering event has occurred. This week we will focus on the inherent problems in the External Review process, as set out in the Determinations Committee’s rules.
- Earnings Pessimism Jumps as Oil Threatens S&P 500 Growth (BBG)
- It’s Amateur Hour in the Booming Chinese Stock Market (BBG)
- France mobilizes 10,000 troops at home after Paris shootings (Reuters)
- European Stocks Gain With S&P 500 Futures While Oil Drops (BBG)
- Nasdaq Looks to Operate Dark Pools for Banks (WSJ)
- This Guy Called Bonds in ’14. You Listening This Time? (BBG)
- Paris attacks boost support for Dutch anti-Islam populist Wilders (Reuters)
- OPEC price war in Asia intensifies as oil falls below $50 (Reuters)
That markets are rigged, at both the macro level, through central banks, and micro, through HFTs, dark pools and purposeful market fragmentation, should be painfully obvious to everyone by now. But when even the regulators engage in "jury rigging", or in this case blocking prominent HFT-critic Joseph Stiglitz, a Nobel prize winning economist (a prize which doesn't count for much on these pages but should - at least on paper - impress such statist cronies as the SEC), has been blocked from a government panel that will advise regulators on issues facing U.S. equity markets, it becomes clear as day that the rigging is not just in the markets: worse, it is openly involves the market's "regulator" and "enforcer."
Meet Emerge Energy Services: the poster boy for the “irrational exuberance” that has become institutionalized throughout the length and breadth of the Wall Street casino. Today’s Wall Street Journal story coming just five months after last summers potboiler is therefore not simply an update on a speculation gone horribly wrong. It’s actually a template for the deluge to come.
As investors and market participants become increasingly aware of the regulatory failures that allowed for manipulation of LIBOR, FOREX, municipal bond bidding and certain commodities markets, regulatory sources are increasingly expressing concern that they have paid too little attention to potential manipulations of an arguably larger, more systemically important and less regulated market – the CDS market as self-governed, through ‘regulatory license’, by the International Swaps and Derivatives Association (ISDA).
While North Korea had made it very clear that it had nothing to do with the Sony hack, it did demand a full UN-backed investigation, a proposal quickly shot down by none other than the US which always demands full "transparency" of all actions except when actions are its own, or when the resulting transparency would shine an unwanted light on the hypocrisy behind US national interests. Furthermore, in its first statements regarding The Interview, North Korea was actually quite cordial, and said nothing offensive regarding Obama. All that changed overnight when in its first official statement since its Internet went dark - something which if indeed North Korea did not hack Sony, as it claims, would be seen as a clear act of war if it were to happen to any other "developed" country - North Korea finally lost it and decided that the time to troll the US president has finally arrived, when, as the TV anchor says beginning 1:10 minutes in the clip blow, "Obama always goes reckless in speech and action like a monkey in a tropical jungle."
Despite the authorities' best efforts to keep everything orderly, we know how this global Game of Geopolitical Tetris ends: "Players lose a typical game of Tetris when they can no longer keep up with the increasing speed, and the Tetriminos stack up to the top of the playing field. This is commonly referred to as topping out."
"I’m tired of being outraged!"
Every year, David Collum writes a detailed "Year in Review" synopsis full of keen perspective and plenty of wit. This year's is no exception. "I have not seen a year in which so many risks - some truly existential - piled up so quickly. Each risk has its own, often unknown, probability of morphing into a destructive force. It feels like we’re in the final throes of a geopolitical Game of Tetris as financial and political authorities race to place the pieces correctly. But the acceleration is palpable. The proximate trigger for pain and ultimately a collapse can be small, as anyone who’s ever stepped barefoot on a Lego knows..."
"I just get annoyed with the ridiculous foolishness of people. We’ve got to start using our own brains. The Fed stopped using any benchmarks because while the benchmarks were improving, the economy wasn’t and isn’t. And so they were being railroaded by the transparency that benchmarks provide. And now it is just a black box of various indicators that will be analyzed in real time to form justifiable actions, far too complex for you and I but trust them that there is a definite method and it’s very quantifiable at that, they just can’t tell us what it is because it would just confuse everyone. Does anyone really not get it?? What is happening is the grandest con job in the history of the world."
- Sydney Siege Sparks Muslim Call for Calm Amid Backlash Fear (BBG)
- Oil Spilling Over Into Central Bank Policy as Fed Enters Fray (BBG)
- Biggest LBO of 2014: BC Partners to acquire PetSmart for $8.7 billion (Reuters)
- Tremble algos: the SEC has hired... "QUANTS" (WSJ)
- When the bubble just isn't bubbly enough: There’s $1.7 Trillion Locked Out of China’s Stock Rally (BBG)
- Oil price slide roils emerging markets, yen rises (Reuters) - may want to hit F5 on that
- Libya Imposes Force Majeure on 2 Oil Ports After Clashes (BBG) ... and will resume production in days
- Amid Crisis, Pimco Steadies Itself (WSJ)
The only thing that saves us from the bureaucracy is its inefficiency