LIBOR

Tyler Durden's picture

Are FX Markets "Rigged" At The London Closing Fix?





"Banging the close," is hardly a new 'event' but the ubiquity with which it is occurring around 4pm GMT (when major FX market benchmarks known as 'WM/Reuters rates' are set) is prompting authorities to investigate potential abuse of these benchmarks by the major banks. From Libor to ISDAFix and from base-and-precious metals to energy markets, adding the largest markets in the world - foreign exchange - to the banks' pernicious manipulations does not seem like a stretch. Critically, benchmark providers base daily valuations of indexes spanning different currencies on the 4 p.m. WM/Reuters rates (which in turn drives derivative settlements and triggers). Stunningly, the same pattern - a sudden surge minutes before 4pm in London on the last trading day of the month, followed by a quick reversal - occurred 31% of the time across 14 FX pairs over 2 years, according to data compiled by Bloomberg. For the most frequently traded pairs, such as EURUSD, it happened about half the time! U.S. regulators have sanctioned firms for banging the close in other markets; we await the results of the current probe...

 

 
Tyler Durden's picture

Guest Post: Is The Gold Market Manipulated?





“Is the gold market manipulated?” This is one of those extremely dodgy questions that has left both investors and economists very divided. By arguing whether or not gold manipulation exists, we may find that we are wasting our brain cells on the question. A better question, and one that we might choose to monitor on a regular basis, might be, “To what degree is successful manipulation taking place?” We might then use the on-going answer as a guide, to inform our reasoning going forward, as to what impact any perceived manipulation is likely to have with regard to our precious metals investment.

 
Tyler Durden's picture

Chinese Trade Data Brings New Hope Even As Old Discrepancies Remain





Overnight equity markets are getting a lift from headline-making beats for Chinese exports and (more importantly) imports. A 10.9% YoY rise in imports (compared to a +1.0% expectation) and a surge in copper 'demand' has the media calling the turn on the global economy (even as China's trade balance at $17.82bn missed expectations of $26.9bn by the most in 4 months and for the second month in a row). But... one glance below the surface of this 5.5 Sigma beat for imports and the other absurdities discrepancies are glaring...

 
Tyler Durden's picture

Frontrunning: August 7





  • Libor Settlements Said to Ease CFTC’s Path in Rate-Swaps Probe (BBG)
  • Manhattan Homes Under $3 Million Never Harder to Buy (BBG)
  • Just two years late: Abe Pledges Government Help to Stem Fukushima Water Leaks (BBG)
  • Chesapeake drops energy leases in fracking-shy New York (Reuters)
  • Hedge Fund Magnetar Won't Face Charges Tied to Mortgages (WSJ)
  • U.S. envoy leaves Cairo after talks declared over (Reuters)
  • Credit-Crisis Oracle Rajan to Head India’s Central Bank (BBG)
  • Bank of England Changes Policy Tack (WSJ)
 
Vitaliy Katsenelson's picture

Jesse Livermore: Parallels Between 1920s and Today





There are lot of similarities between the 1920s and today.  In fact Livermore’s quote says it all: “There is never anything new on Wall Street, because speculation is as old as the hills.”   1924-1929 bull market was rigged by stock manipulators.   Ninety-some years later the market is still (or at least is perceived to be) rigged by ...

 
Tyler Durden's picture

"What's In The Vault?"





Given that the demand for physical gold among private investors has remained strong throughout 2013, the significant price declines in recent months took many investors by surprise. Attempting to make sense out of this situation, speculation has arisen that the so-called 'bullion banks' (the mostly "Too Big to Fail" institutions that are known to work closely with the central banks) have lent out, or even sold, gold on a fractional basis, far in excess of what is supposedly held in their vaults. The result would have been to multiply greatly the amount of 'apparent' gold in the market and thereby depress prices. Such an action would provide needed cover for the embarrassment of currency depreciating central banks' policies.

 
Monetary Metals's picture

What Drives Negative GOFO and Temporary Gold Backwardation?





Any backwardation in gold at all is serious. Recently, a related phenomenon has occurred: the GOFO rate has gone negative.

 
Tyler Durden's picture

Guest Post: Trying To Stay Sane In An Insane World - Part 1





Facts are treasonous and dangerous in an empire of lies, fraud and propaganda. It is maddening to watch the country spiral downward, driven to ruin by a psychotic predator class, while the plebs choose to remain willfully ignorant of reality and distracted by their lust for cheap Chinese crap and addicted to the cult of techno-narcissism. We are a country running on heaping doses of cognitive dissonance and normalcy bias, an irrational belief in our national exceptionalism, an absurd trust in the same banking class that destroyed the finances of the country, and a delusionary belief that with just another trillion dollars of debt we’ll be back on the exponential growth track. The American empire has been built on a foundation of cheap easily accessible oil, cheap easily accessible credit, the most powerful military machine in human history, and the purposeful transformation of citizens into consumers through the use of relentless media propaganda and a persistent decades long dumbing down of the masses through the government education system. This national insanity is not a new phenomenon. Friedrich Nietzsche observed the same spectacle in the 19th century: “In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule.”

 
EconMatters's picture

Ban Goldman Sachs from Playing in Commodity Markets





The bigger question is why it's taken 5 since after the financial crisis to realize these big banks are bad market participants? 

 
Tyler Durden's picture

Eric Sprott On Central Banks, Bullion Banks and the Physical Gold Market Conundrum





The recent decline in gold prices and the drain from physical ETFs have been interpreted by the media as signaling the end of the gold bull market. However, our analysis of the supply and demand dynamics underlying the gold market does not support this thesis. In our view, the bullion banks’ fractional gold deposit system is testing its limits. Too much paper gold exists for the amount of physical gold available. Demand from emerging markets, who do not settle for paper gold, has perturbed the status quo. Thus, our recommendation to investors is the following: empty unallocated gold accounts and redeem your gold in physical form (while you still can).

 
Tyler Durden's picture

From Perennial (Rumored) LBO Candidate To Imminent Restructuring: How The Unmighty Radioshack Has Fallen





There was a time when one couldn't spend an hour without some moronic rumor of a Radioshack LBO popping up. Those time are gone. Instead, as DebtWire reports, the rumor of a takeover has been replaced with the all too unpleasant reality of a corporate restructuring which may or may not end up in Chapter and which likely means the equity is all but wiped out. As DW reports the firm is set to listen to restructuring pitches from the usual restructuring suspects, which means unless someone is crazy enough to do another JCP-type deal (they aren't), the firm's debt is about to be substantially discharged. This usually means a full or at least partial wipe out of the equity tranche below it. "The move to hire a banker to explore a balance sheet fix comes as the struggling electronics retailer faces a string of maturities, escalating cash burn and bloated inventory levels, the sources said. RadioShack first engaged AlixPartners for operational help over a year ago, as previously reported by Debtwire."

 
Tyler Durden's picture

Frontrunning: July 10





  • 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)
 
Tyler Durden's picture

Frontrunning: July 9





  • ICE's NYSE to determine the rate used by key competitor CME: NYSE Euronext to Take Over Libor (WSJ)
  • Japan slams China over maritime disputes (FT)
  • The Twinkie Returns, With Less Baggage (WSJ)
  • Pentagon Workers From Pennsylvania to Ghana Hit by Cuts (BBG)
  • Why Prostitutes Aren't Enough to Deprive the World of Eliot Spitzer (BBG)
  • Groups gather in Turkish protest park after night of clashes (Reuters)
  • Apartment Rents Rise, But the Pace Is Slowing (WSJ)
  • Asiana Seen Saving Millions With Tactic to Bar U.S. Suits (BBG)
  • Bin Laden's life on the run revealed by Pakistani inquiry (Reuters)
  • Fracking Firms Face New Crop of Competitors (WSJ)
 
Tyler Durden's picture

A Historic Inversion: Gold GOFO Rates Turn Negative For The First Time Since Lehman





Today, something happened that has not happened since the Lehman collapse: the 1 Month Gold Forward Offered (GOFO) rate turned negative, from 0.015% to -0.065%, for the first time in nearly 5 years, or technically since just after the Lehman bankruptcy precipitated AIG bailout in November 2011. And if one looks at the 3 Month GOFO, which also turned shockingly negative overnight from 0.05% to -0.03%, one has to go back all the way to the 1999 Washington Agreement on gold, to find the last time that particular GOFO rate was negative.

 
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