US Markets Closed On Fifth Anniversary Of Jerome Kerviel Day

Tyler Durden's picture

To some, today is Martin Luther King day and as a result the US markets are closed, especially since today is also the day when Obama celebrates his second inauguration with Beyonce, Kelly Clarkson and James Taylor at his side (hopefully not on the taxpayers' dime). To others, January 21 is nothing more than the anniversary of the real beginning of the end, when five years ago a little known SocGen trader named Jerome Kerviel could no longer hide his massive futures positions and was forced to unwind them, sending global indices plunging resulting in the biggest single day drop in the Dax (-7.2%), and punking the Fed into an unannounced 75 bps cut. Luckily, today such cataclysmic unwinds are impossible as the market is priced perfectly efficiently, without central bank intervention, price transparency is ubiquitous and the Volcker rule has made prop trading by banks, funded by Fed reserves (which are nothing more than the monetization of excess budget deficits) and excess deposits, impossible.

Sarcasm aside, and hoping nobody will blow up forcing the Fed to cut rates by another 75 bps as a precaution to keeping markets float, as Deustche Bank summarizes we can expect a rather eventful calendar ahead for global macro despite the shortened trading week in the US. In Asia the much anticipated Bank of Japan 2-day meeting will conclude tomorrow where markets are expecting the central bank to embark on a more aggressive easing programme that could include inflation targeting. These hopes are somewhat dampened by the weekend comments from the government’s economic advisor Mr Hamada who said that the BoJ may need to slow the pace of easing if the effect on inflation and Yen “goes too far”. Overnight the Nikkei is about 1% lower while the JPY is off its 2.5 year low at 89.53 against the USD as we type.

In Europe, we have the Eurogroup/ECOFIN meetings on Monday and Tuesday. Wednesday sees the start of the five-day World Economic Forum in Davos where global leaders from Ms Merkel to Mr Dimon are set to speak/interact under the official theme of “Resilient Dynamism”. The same day will also see the IMF publish its updated outlook on the global economy. The Washington based group slashed its 2013 global GDP forecast to 3.6% from 3.9% in October so it’ll be interesting to see where they go from there. On the data front, flash PMIs from Europe, China and the US on Thursday will be the week’s highlights. The US earnings season shifts up a gear with 84 S&P 500 companies expected to report this week. Apple’s results on Wednesday will be a prime focus as market consensus is looking for its first year-on-year earnings decline since 2003. On that note, we also include our oft-updated earnings beat/miss tracker below as well as a recap of the stats for previous reporting season. The current earnings season is tracking rather well relative to the previous one.

Before we get to all that let’s recap the Asian session overnight. Equities are mixed despite the stronger finish to the US session on Friday. Gains in equities are being paced by the Hang Seng (+0.05%) and Shanghai Comp (+0.16%), while the KOSPI (-0.1%) is lagging but there aren’t too many catalysts in what has been a light session in terms of data. In credit markets, Asian bonds are quoted slightly tighter amidst better new issue performance and the Australian and Asian IG indices are marked flat to 1bp tighter.

It was a rather quiet weekend in terms of news flow, but one of the more interesting developments was the outcome of state elections in Lower Saxony on Sunday where the centre-left coalition scored what was described by the Spiegel as an “upset” victory. Early exit polls suggested that Angela Merkel’s CDU and its allies, the FDP, would manage to cling on to a one-seat majority, but that turned later in the evening after preliminary results gave the “red-green” alliance of the opposition SPD and Greens Party a total of 69 seats in the state parliament, against 68 for the CDU-FDP. Perhaps the silver lining for Merkel is that her allies, the FDP, polled much stronger than expected, after previously being in danger of falling below the 5% support threshold needed to retain seats in the state parliament.

The FDP ended up winning almost 10% of votes, however most of the gains came at the expense of Merkel’s CDU.

In other headlines, Bundesbank chief Jens Weidmann reiterated his opposition to the ECB’s OMT program. Weidmann added that it was “wrong and dangerous” to think of the ECB as the only able “crisis manager”. The IMF warned that the EU will need to come up with an additional EU10bn in funds for Greece even if the current programme stays on track, in a 260 page report issued on Friday (FT). In the UK, PM David Cameron’s office is expected to announce a date for his highly anticipated speech on the future of the UK’s relations with  the EU this week.

Briefly recapping the US session on Friday, the S&P500 rallied from the early lows to close moderately higher (+0.34%). Gains were broad-based with nine out of 10 industry sectors posting gains. The sole laggard was the tech sector (-0.36%) which was weighed by a  mixed result from Intel (-6.3%) which reported weak sales in the PC market and disappointed with its Q1 outlook. On the earnings front we had encouraging news as Morgan Stanley and GE both beat top and bottom line expectations. More broadly, the catalyst for the  midday turnaround in risk sentiment was a report that House Republicans are considering extending the US debt ceiling by three months in a bill to be considered next week. According to the Washington Post, the move is a retreat from earlier GOP demand that a debt  ceiling increase is matched by spending cuts. However in exchange for the concession, Republicans are expected to demand that a longer-term budget is passed by both houses of Congress by April 15th. The move was described as a means of forcing the Democrat-controlled Senate to pass a budget, which it hasn’t done in about four years. Over the weekend, Democrat Senator Charles Schumer responded that the Senate was working on a budget anyway which will include an overhaul to the tax code that is intended to raise  significant revenue over the next decade (NY Times).

Last but not least previewing the data calendar for the week we’ll have the German ZEW survey on Tuesday, Japanese trade data on Thursday, German IFO and Japanese inflation both on Friday. US existing and new home sales are out this Tuesday and Friday,  respectively. BoE minutes are out on Wednesday followed by the UK's advance Q4 GDP estimate on Friday.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Motorhead's picture

Gold and silver, bitchez!

GetZeeGold's picture



You didn't mine that!


Tis a glorious day comrades.......we once again anoint our dear leader. May he sign our executive orders with a gold pen surrounded by many children.....they're the future and we're kinda counting of them to pay for all of the crap.


Dear Mr. President.....why are you stealing our future with so many armed people around you? They can keep the guns.....please just give us back our money.

Zer0head's picture

No, but Barbara Walters is in hospital

Seems she was hanging out at the British Ambassadors dump and fell down the stairs, so alas she will not be participating in the festivities. 

In other news another bunch of dead hostages were discovered in Algeria bringing the number to 48 with many more still missing.

We hope Barbara has a speedy recovery, her hotel errr hospital room will be fitted with a live feed of the inauguration and President Obama is expected to have a few kind words for the aleing MSM superstar.  

GetZeeGold's picture



Was Barbara Walters slated to testify on Benghazi too?

francis_sawyer's picture

Maybe Bernanke could cut the Fed Funds rate by 100 basis points again just to celebrate... Oh wait!

vmromk's picture

With the markets being closed today, does that alo mean that Bernanke's printer will also be taking the day off ?

GetZeeGold's picture



Evil never takes the day off.

Motorhead's picture

Indeed.  In fact, it's these days off that I worry about.

ItchyBeard's picture

Who the fuck junks our battle cry?

Gold and Silver, Bitchezz!

ClassicCommodity's picture


Haus-Targaryen's picture

Does this mean that Jerome Kerviel will get a dozen streets, a few bridges, a elementary, middle and high school named after him in every American town, irrespective of the size? 

Monedas's picture

Welfare Nation !  I have a scream !

Downtoolong's picture

Luckily, today such cataclysmic unwinds are impossible

As long as we accept that Whales are really just minnows wanting to be special, and thanks to the Fed's printing press, todays billions are just yesterday's C-notes.


Sudden Debt's picture

Well, Marylin used to sing to Kennedy's birthay party in the 60's after he bonned he...

So we don't know what Obama did to Beyonce now do we?

Obama poky poky Beyonce? Who knows...





Bahamas's picture

Jerome is a rookie compared to Bennie.

Motorhead's picture

Poky, poky...hmmm.  Well, they are both 50-50 black-white, so they certainly have something in common.

Sudden Debt's picture

and whatever comes out will also have a fake birth certifacte...


tradewithdave's picture

Yes markets are closed, but the market in global governance ideas is open for business in Davos.  Did you get your invitation?  Guest list is here:

Seasmoke's picture

Is that real or a wig on Michelle's head ?

Motorhead's picture

I don't know as I'm afraid to look.

Sudden Debt's picture

Michelles head looks like your dick after 10 seconds when you ejaculated...

 her lips give it away...

eddiebe's picture

How about another Nobel prize for the leader of the free world?/sarc

Motorhead's picture

Why not?  I mean, the standards can't be too tough.

eddiebe's picture

Stop insulting my limp dick!

virgilcaine's picture

Well at least Jerome is propely dressed with a suit. The garb of the criminal class world over. I was just knocking Kyle Bass he is obviously a very bright fellow with the AUM to wear pajamas to work if he so chooses. Heck I trade in my Polo Briefs most of the time.  His time frames are an eternity though.. 16--24 Months!!!.. virgil needs to get paid today!

pine_marten's picture

Politicians associating themselves with celebrities is pathetic.  At least Clinton could play the sax.  The theme for this coronation could be "The Color Purple" - celebrating the worst of the red and blue states.

Ace Ventura's picture

I have no doubt the tab WILL be picked up by the taxpayers. As if these insufferable narcissists would do any of this at their own expense. Barry's annual salary (before taxes) is $400k. The tab for this never-ending (when did inaugurations start taking 3 fucking days??!!) parade of MSM and celebrity knob-schlobbing is already running in the tens of millions. Yeah, we're paying for this....or rather, our great grandkids' grandkids are.

The media is SO in the tank for this guy it literally generates the urge to hurl. I'm not watching it mind you, but when flipping through the channels trying to get some semblance of actual 'news' (I know I know)....every damn network was furiously pimping Bishop Barry's Coronation, Day Two.


otto skorzeny's picture

I tell my kids they got the day off for "National Hugging Day"

Sudden Debt's picture

they guys who are handing out candy at the park and driving the white vans thank you for that decision...

squexx's picture

Shoot 4 more and take the week off...........

glenlloyd's picture

the tyler durden i have read in the past did not write this...

bigkahuna's picture

Where is Jerome?


short answer: IN JAIL!!!

24OCT 2012 - 

Jérôme Kerviel, the most spectacular rogue trader in financial history, today lost his appeal and was jailed for three years and ordered to repay €4.9bn to his former employer.


Kerviel, 35, claimed during appeal hearings in June that the French bank Société Générale tacitly approved his risky trades and exploited the collapse of his position in 2008 to “bury” its own losses in the US sub-prime debacle.

frenchie's picture

today is also the sad anniversery (220th) of the execution of Louis XVI by the judo-masonic bolcheviks of the "french" revolution...