- The new normal name of a broken market: glitches - NYSE, Nasdaq Consider Cooperating to Address Glitches (WSJ)
- Early Thursday Humor: Abe Tells Wall Street Japan’s Economy Is Exceptionally Good (BBG)
- Rising Rates Seen Squeezing Swaps Income at Biggest Banks (BBG)
- JPMorgan Mortgage Talks Said to Discuss $11 Billion Deal (BBG)
- Can't make this up: HFT firm "finds" Fed did not leak data early to benefit HFT firms (FT)
- Hertz Cuts Full-Year Forecast on Weak U.S. Airport Rentals (BBG)
- Greece does not need third bailout, seeks debt 'reprofiling' - deputy PM (Reuters) - right, it needs a fourth and fifth
- Hezbollah gambles all in Syria (Reuters)
- Twitter Adds J.P. Morgan and Morgan Stanley as Bankers on IPO (WSJ)
- Messi in Court Shows Tax Collectors Set to Pursue Star Athletes (BBG)
The best summary of what has (not) been going on in the downward drifting equity markets comes from DB's Jim Reid, quoting: "Markets are in non-panicky limbo at the moment ahead of the upcoming US budget debate. US equities fell for the 5th day in row (S&P 500 -0.27%) and although this is the worst run since the Christmas/New Year’s Eve period of 2012 (due to the fiscal cliff debacle), the cumulative fall is only -1.9% over this decline. Meanwhile Treasuries hit a 7-week low in yield as they recorded their 12th decline in the last 14 days." As has been the case over the past week, stocks in Asia have generally traded lower with the exception of the Nikkei225 which day after day continues to do its insane penny stock thing, first dropping -1.5% only to close up 1.2% on absolutely no news, but some chatter the Abe administration would raise the sales tax on October 1, only to offset the fiscal benefit by lowering corporate tax. How this has any net impact is beyond us. Proceeding to Europe, stocks failed to sustain the initial higher open and moved into negative territory, with Italian asset classes underperforming, as market participants digested reports citing Italian MP Gasparri saying that PdL lawmakers are ready to quit if Berlusconi is ousted. This in turn saw a number of Italian banking stocks come under intense selling pressure, with the Italian/German yield spread widening in spite of supportive reinvestment flows that are due this week.
Here is Part Two of our exclusive interview with World Bank Whistleblower Karen Hudes in which I discuss with Ms. Hudes the need to end an immoral fractional reserve banking system that continually drains the wealth of citizens without their consent and without their knowledge.
It is somehow fitting that on the day when even more undisputed evidence is revealed, surrounding the most brazen market manipulation scheme in history - one involving the "unmanipulable" Libor benchmark rate which serves as the foundation for hundreds of trillions in interest rate sensitive instruments - that the CFTC would also come out moments ago, and announce that in its long-running investigation of alleged manipulation in the silver market... there is absolutely nothing wrong.
- Derivatives Broker 1: Make 6m go lower! They r going up. [Senior yen trader] will buy you a ferrari next yr if you move 3m up and no change 6m (February 29, 2008, via text message to personal mobile phone)
- Yen Desk Head: Lord Baliff, I would suggest a lunch over golden week. Monday or Tuesday if you are around. *** As for kick backs etc we can discuss that at lunch and I will speak to [Senior Yen Trader] about it next time he comes up for a chat.
- JPMorgan eyes $4bn ‘pay for peace’ deal (FT)
- Prosecutors Pursue Big SAC Settlement (WSJ) - in the US if you are rich enough, no crime is bad enough
- Cruz's Defiant Stand Is Also a Lonely One (WSJ); Texas senator speaks for more than 14 hours (FT)
- Iran Applies Brakes to U.S. Mideast Plans (WSJ)
- Americans in Poll Doubt Economy Rebound in Defiance of Forecasts (BBG)
- Big Banks Cut Basel III Shortfall by $112 Billion at End of 2012 (BBG) - the equivalent of 10 bridges to the Kalahari desert
- Obama’s Jabs at Russia on Syria Shows Diplomacy Tensions (BBG)
- ICAP Staff Face Criminal Charges Tied to Libor (WSJ)
- Alibaba Is Said to Shift Target for I.P.O. to U.S. From Hong Kong (NYT)
- Home gold rush is over (Reuters)
- Conoco in landmark Alaska drone flight (FT)
- Iran Icebreaker Set at U.N. (WSJ)
- Chrysler Feud Triggers IPO Filing (WSJ)
- JPMorgan Chase, 12 More Banks Said to Be Sued Over Libor (BBG)
- Regulator sues Morgan Stanley, eight others over faulty securities (Reuters)
- Monte Paschi Seen Boosting Cost Goals to Meet EU Demands (BBG)
- Here we go again - "not enough funds": CFTC chair Gary Gensler warns on fund cuts to police derivatives (FT)
- Congress Fuels Private Jails Detaining 34,000 Immigrants (BBG)
- KKR, Sycamore looking to buy Jones Group this week (NYPost) - take with lots of salt
- Fiat rethinks alliance with Chrysler after IPO filing (Reuters)
- Young Invincibles Caught in Crossfire Over Obamacare Cost (BBG)
- Mayfair Office Squeeze Spawns New London Real Estate Hubs (BBG)
Yes, yes, only the Fed matters. Still, there was some event flow overnight which while completely meaningless for the epic liquidity bubble, may have some implications eventually when the music finally stops. In thie regard, perhaps the best summary of the the lunacy coming out of the Marriner Eccles building is the following sentence from Bloomberg: "Bernanke said he was concerned that market interest rates, driven higher by his own suggestion he would scale back QE, would curb growth." One can't make this up.
We have discussed RINs a number of times in the past year - pointing out the surge in the price of these ethanol credit-related derivatives and how they are the gas-market's four-letter word. As we explain below, the NY Times notes that the recent surge in the price of this little-known financial instrument - which was in large part responsible for the rise in the price of gas at the pump - could have been manipulated by JPMorgan's alleged stockpiling. As they note, the market in ethanol credits is exactly the kind Wall Street loves: opaque, lightly regulated and potentially very lucrative; and the ability for a major player to build a stockpile of these credits (effectively cornering the market) is relatively straightforward given the lack of detailed regulation. As Senator Thomas A. Coburn, Republican of Oklahoma, notes "When you see something change as rapidly as this, somebody’s hoarding them, somebody’s buying them, somebody’s making big bucks."
Gold and silver futures surged 2.1% and 3.6% respectively and the dollar fell on the open in Asia prior to determined selling which again capped precious metal prices. Analysts and media attributed the price gains on the withdrawal of Larry Summers from the race to be the new Fed Chairman, leaving Janet Yellen as the new frontrunner.
The most important event of the "coming" week was unexpected, and did not even take place during the week, but the weekend. So with Summers unexpectedly, and uncharacteristically out, here is what else is in store.
- Syrian Rebels Hurt by Delay (WSJ), U.S. seeks quick proof Syria ready to abandon chemical weapons (Reuters)
- Lavrov Brings Acerbic Pragmatism to Syria Meet With Kerry (BBG)
- Five years after Lehman, risk moves into the shadows (Reuters)
- U.S. shares raw intelligence data with Israel, leaked document shows (LA Times)
- Japan to raise sales tax, launch $50 bln stimulus (AFP) - so 1) lower debt by sales tax, then 2) raise debt through stimulus.
- Blackstone’s Hilton Files for $1.25 Billion U.S. Initial Offer (BBG)
- Second Life Bankers Thrive in Dubai as Boutiques Boost Fees (BBG)
- Brussels probes multinationals’ tax deals (FT)
- Wall Street's Top Cop: SEC Tries to Rebuild Its Reputation (WSJ) ... and fails
- Tablet sales set to overtake PCs (FT)
- The end of angst? Prosperous Germans in no mood for change (Reuters)
- Obama Shrinking Second-Term Hastened by Syria Opposition (BBG)
- Obama says Russian proposal on Syria a potential 'breakthrough' (Reuters)
- Poll Finds Support Fading for Syria Attack (WSJ)
- France to Introduce Resolution Aimed at Dismantling Syria's Chemical Arsenal (WSJ)
- Apple to Unveil IPhones Seeking End to Year of Struggles (BBG)
- Verizon Plans Largest Debt Sale Ever: Proceeds From Deal, Expected to Raise $20 Billion, Would Fund Venture Buyout (WSJ)
- Shipping Rates Seen at 2010 High on Record Ore to China (BBG)
- Ads coming to Twitter: Twitter makes its largest acquisition, a mobile ad company (FT)
- Houses on fire as fighting erupts in southern Philippines (Reuters)
- Banks Seen at Risk Five Years After Lehman Collapse (BBG)
For the second day in a row, better than expected Chinese "data" set sentiment across the board when following an improvement in its trade data (even as crude oil imports dropped to an 11 month low), last night China reported a better than expected August Industrial Production print of 10.4%, compared to 9.7% for July, and higher than the 9.9% expected. This was driven by a pick up in Chinese M2, which rose from 14.5% to 14.7% Y/Y, as the PBOC has once again resuming what it does best, injecting liquidity into the system, even if said liquidity no longer makes its way into the proper channels, as new CNY loans missed the expected CNY730bn, rising to 711.3bn for August. Elsewhere, not all was good on the Industrial Production front, following a French miss of -0.6% on expectations of a rebound to +0.5%, as well as a miss in mfg production of -0.7%, down from -0.4% and below the expected 0.7%. This, in parallel with Moscovici once again saying the 2013 deficit will be "slightly higher than 3.7%" means that just like in 2012, and with German economic metrics continuing to contract, as the periphery stages a modest rebound it is the core that threatens Europe's stability once again. Finally, and since in Europe everything is ultimately funded by current account positive Germany either directly or via TARGET2, the recent Italian economic strength, which also means a bounce in imports, meant that Italian TARGET2 liabilities (through which Germany indirectly funds Italy's current account deficit) are once again back at a 4 month high. And so the cycle repeats.
- UN Insecptors to leave Syria early, by Saturday morning (Reuters)
- Yellen Plays Down Chances of Getting Fed Job (WSJ)
- JPMorgan Bribe Probe Said to Expand in Asia as Spreadsheet Is Found (BBG)
- No Section 8 for you: Wall Street’s Rental Bet Brings Quandary Housing Poor (BBG)
- Euro zone, IMF to press Greece for foreign agency to sell assets (Reuters)
- Brothels in Nevada Suffer as Web Disrupts Oldest Trade (BBG)
- U.S., U.K. Face Delays in Push to Strike Syria (WSJ); U.S., U.K. Pressure for Action on Syria Hits UN Hurdle (BBG)
- Renault Operating Chief Carlos Tavares Steps Down (WSJ)
- Vodafone in talks with Verizon to sell out of U.S. venture (Reuters)
- Dollar Seen Casting Off Euro Shackles as Fed Tapers (BBG)