We believe Fed’s actions would be more appropriately described as permitted cancerous beliefs to spread throughout the financial system, thereby killing Democratic Capitalism which is the basis of the capital markets.
- Ukraine Says Russia Exporting ‘Terror’ Amid Eastern Push (BBG)
- Civil War Threat in Ukraine (Reuters)
- China Shoe Plant Strike Disrupts Output at Nike, Adidas Supplier (BBG)
- Mt Gox to liquidate (WSJ)
- Ex-Co-Op Bank Chairman Charged With Cocaine Possession (BBG)
- Goldman Sachs plans to jump-start stock-trading business (WSJ)
- Credit Suisse first-quarter profit falls as trading tumbles (Reuters)
- U.K. Unemployment Rate Falls to Five-Year Low (BBG)
- Lawmakers Back High-Frequency Trade Curbs in EU Markets Law (BBG)
- Yahoo's growth anemic as turnaround chugs along (Reuters)
- Spain ETF Grows as Rajoy Attracts Record U.S. Investments (BBG)
Futures are treading water once more now that Ukraine has stormed to center stage from the backburner after everyone was convinced Putin would let the situation cool off after annexing Crimea. Guess not. Adding the renewed geopolitical jitters to what has already been a beta stock bloodbath into a holiday shortened week assures some high volatility fireworks. Cautious sentiment was observed over in Asia (Nikkei 225 -0.36%) amid renewed fears that geopolitical tensions in Ukraine will flare up again following reports of exchange gunfire with pro-Russian militants. This sentiment carried over into the European session with stocks lower across the board (Eurostoxx50 -0.71%). EUR is lower after ECB’s Draghi said any further strengthening of the EUR would warrant further action by the ECB, including non-standard measures such as quantitative easing - it is amazing how frequently and often the Virtu algos still fall for Draghi's jawboning trick which has now become all too clear will never be implemented and certainly not if he keeps talking about it daily, as he does.
It’s perplexing that analysts are perplexed by the rout.
Back on March 21, before the release of Michael Lewis' Flash Boys and before the infamous 60 Minutes interview, when Goldman COO Gary Cohn wrote his infamous WSJ Op-ed bashing HFT, it was clear that something was afoot. That something became promptly clear when it was revealed that Goldman is among the core backers of the pseudo dark-pool IEX exchange popularized as the protagonist in Flash Boys, and juxtaposed to the frontrunning, and faceless, HFT antagonist that Lewis maanged to demonize so well in the span of a few hundred pages, he promptly provoked a renewed investigation by the FBI, the SEC and DOJ into HFT. A few days later, the shocker became a double whammy when Goldman announced that in addition to turning its back on HFT which had served it so well for years, the firm would also say goodbye to the NYSE and its designated market maker post, the last remaining legacy of its $6.5 billion Spear Ledds & Kellogg acquisition from 2000. Moments ago we got the third and final "shocker" in this series of stunning disclosures by Goldman, this time involving Goldman's own "unlit" venue - one involving its own Dark Pool - the infamous, and market dominant Sigma X, which according to the WSJ, is about to be shut down!
The 1900 target for the S&P 500 that Credit Suisse since the start of the year but are seeing increasing signs of a market top with a meaningful correction lower likely to emerge. Volume divergences, DeMark clusters, and reversal days all point to weakness and, as CS concludes, a break of 1844/34 (for the S&P) could lead to a decline to 1800 and then to 1768.
- The counter-HFT-attack begins with first target - dark pools: Dark markets may be more harmful than high-frequency trading (Reuters)
- Malaysia Jet Team Hears Pings Consistent With Black Box (BBG)
- At Toyota as Humans Steal Jobs From Robots (BBG)
- ‘Reverse Auctions’ Draw Scrutiny (NYT)
- Death knell sounds for Brazil’s economic strategy (FT)
- Technology Traders Head for the Exit as Put Trades Surge (BBG)
- NSA Uses Corporate News to Spread Propaganda and Silence Dissent (TruthDig)
- Holcim, Lafarge agree to merger to create cement giant (Reuters)
- Any minute now: Investment Jump Seen From Macy’s to Berkshire After 2013 Fizzle (BBG)
- India kicks off world's biggest election in remote northeast (Reuters)
- Nato chief defends eastern advance (FT)
- Russia looks east as it seeks to rebalance trade interests (FT)
- Plane from Guinea briefly quarantined in Paris after Ebola scare (AFP)
- US attacks Japan’s stance on Trans-Pacific Partnership (FT)
- Thank you IMF: Ukraine PM says will stick to austerity despite Moscow pressure (Reuters)
- U.S. Army seeks motive for Fort Hood shooting rampage (Reuters)
- China Slowdown Adds to Emerging-Market Growth Hurdles, IMF Says (BBG)
- Top investors press Allianz to step up oversight of Pimco (Reuters)
- U.S. to Evaluate Role in Mideast Peace Process, John Kerry Says (WSJ)
- Scientists dismiss claims that Yellowstone volcano about to erupt (Reuters)
- Ukraine detains 12 riot police on suspicion of 'mass murder' (Reuters) - on CIA orders?
Yesterday, we read with some amusement that Goldman has moved Guy Saidenberg, reportedly one of the greater profit centers at the firm - and how could he not be when he always traded against Tom Stolper's recommendations which led to tens of thousands of pips in losses to those who listened to him over the past five years - from head of global foreign-exchange trading to a new role, as co-head of commodities. Why did Goldman decide to scrap its once uber-profitable FX vertical and redo it from scratch? Simple - the ability to rig and manipulate FX markets, which are now under every global regulator's microscope after the "Cartel" members so foolishly let themselves be exposed to the entire world, is no longer there, as confirmed last night by news that a dozen large investors have filed a joint lawsuit against 12 banks for "allegedly conspiring to rig global foreign-exchange prices." Allegedly? Hasn't everyone read the Cartel chatroom transcripts yet?
The stock market really was rigged... “It’s 2009,” Katsuyama says. “This had been happening to me for almost two years. There’s no way I’m the first guy to have figured this out. So what happened to everyone else?” The question seemed to answer itself: Anyone who understood the problem was making money off it...
For all the talk about how High Frequency Trading has rigged markets, most seem to be ignoring the two most obvious questions: why now and what happens next?
- US, Russia talks fail to end Ukraine deadlock (AP)
- Russian forces 'gradually withdrawing' from Ukraine border (AFP)
- Turkish PM Erdogan tells enemies they will pay price after poll (Reuters)
- And Goldman arrives: Credit markets open to Argentina for first time in years (Reuters)
- Regulators Twice Failed to Open GM Probes (WSJ)
- Bad loan writedowns soar at China banks (FT)
- Investors Breathe Life Into European Banks' Bad Loans (WSJ)
- Euro zone inflation drops to lowest since 2009 (Reuters)
- Yellowstone National Park rattled by largest earthquake in 34 years (Reuters)
After ramping in overnight trading, following the spike in Japanese stocks following another batch of disappointing economic data out of the land of the rising sun and setting Abenomics which sent the USDJPY, and its derivative Nikkei225 surging, US equity futures have pared some of the gains in what now appears a daily phenomenon. Keep in mind, the pattern over the past 6 consecutive days has been to ramp stocks into the US open, followed by a determined fade all the way into the close, led by "growthy" stocks and what appears to be an ongoing unwind of a hedge fund basket by one or more entities. Could the entire market be pushed lower because one fund is unwinding (or liquidiating)? Normally we would say no, but with liquidity as non-existant as it is right now, nothing would surprise us any more.
As we noted earlier this week, the Fed is growing increasingly concerned of a bubble forming in the financial markets. Previously we noted that Janet Yellen was issued warnings regarding this.
- Australia says nothing spotted in search for plane (AP)
- Putin looks to Asia as West threatens to isolate Russia (Reuters)
- China Billionaire Builds Metals With Dreyfus, Glencore Hires (BBG)
- China Beige Book Says Economy Slowing (BBG)
- Caterpillar Said to Be Focus of Senate Overseas Tax Probe (BBG)
- US Cancels Summit With Divided Group of Gulf Nations (WSJ)
- Cyprus defense minister suffers aneurysm (AP)
- Abe to zero in on economy as tax hike looms (Nikkei)
- Europe strikes deal to complete banking union (Reuters)