- Developed-Country Growth Slows, OECD Says (WSJ)
- Charter Agrees to Buy Time Warner Cable for About $55 Billion (BBG)
- Dollar hits one-month high as periphery woes weigh on Europe (Reuters)
- IMF Says Yuan No Longer Undervalued Amid Reserve-Status Push (BBG)
- Hanergy secured $200m loan ahead of solar group stock tumble (FT)
- Congressional Inaction Threatens NSA Spy Program (WSJ)
- Germany sees progress on Greece, EU officials to confer on Thursday (Reuters)
- Hayes ‘motivated by greed’, prosecutor says in Libor case (FT)
- Whistleblowers Find SEC Rewards Slow and Scarce (WSJ)
"Zero Hedge long ago gave up discussing corporate fundamentals due to our long-held tenet that currently the only relevant pieces of financial information are contained in the Fed's H.4.1, H.3 statements... it is flow not stock that matters" - Zero Hedge, January 2010
"If there were any lingering doubt, this week’s gyrations demonstrate neatly that it is central bank liquidity, not fundamentals, driving markets. It is the flow, not the anticipated stock, of QE which counts." - Citigroup, May 2015
“Ignorance is not bliss – it is oblivion. Determined ignorance is the hastiest kind of oblivion.” As investors, we have all been warned. Not by the future, but by the past.
"It is troubling enough to consistently grant waivers for criminal misconduct. It is an order of magnitude more troubling to refuse to enforce our own explicit requirements for such waivers. This type of recidivism and repeated criminal misconduct should lead to revocations of prior waivers, not the granting of a whole new set of waivers. We have the tools, and with the tools the responsibility, to empower those at the top of these institutions to create meaningful cultural shifts, yet we refuse to use them. I am concerned that the latest series of actions has effectively rendered criminal convictions of financial institutions largely symbolic."
Janet Yellen at the Federal Reserve believes that the partying on Wall Street and in the financial institutions may “lead to trouble”.
It was about two years ago when we summarized all the known and confirmed rigged markets. Since then things have gone from bad to worse for believers in fair and efficient markets, with not only countless more banks now admitting they rigged Libor and FX. It all culminated with yesterday's settlement in which five of the world's biggest banks, including JPM, Citi and Barclays, agreed to plead guilty in a currency-rigging probe. And, to Bloomberg's dismay, the public yawned.
One Barclays FX trader, when he became the main Euro trader for Barclays in 2011, was desperate to be invited to join the Cartel because of the trading advantages from sharing information with the other main traders of the Euro.After extensive discussion of whether or not this trader “would add value” to the Cartel, he was invited to join for a “1 month trial,” but was advised “mess this up and sleep with one eye open at night.”
As the live webcast from US AG Loretta Lynch indicates, moments ago the DOJ announced five global banks including Citi, J.P. Morgan, Barclays, RBS would plead guilty to criminal charges to conspiring to manipulate FX Prices, and would pay some $5.6 billion in combined penalties to resolve a long running U.S. investigation into whether traders at the banks colluded to move foreign currency rates in directions to benefit their own positions.
As far as the Central Banks are concerned, this is a good thing because if investors/depositors were ever to try and convert even a small portion of this “wealth” into actual physical bills, the system would implode (there simply is not enough actual cash).
Not a day passes without one clueless pundit after another appearing on TV and reading from the teleprompter like a stoned zombie that one must not fight the Fed (and central banks) and buy stocks while shorting bonds. And yet what are central banks buying? Not stocks (at least not officially in the case of the Fed; only the BOJ and the SNB admit to openly monetizing equities).
The answer: bonds.
"UBS officials are confounded by the outcome, some of the people familiar with the negotiations said. The bank believes it provided early cooperation which helped prosecutors break open the foreign-exchange investigations and, as a result, was promised immunity by the antitrust division of the Justice Department."
- Amtrak train in Philadelphia wreck was traveling at twice speed limit (Reuters)
- The engineer has no recollection of the crash and “no explanation” for what happened (WSJ)
- Taliban claim attack on Afghan guesthouse that killed 14 (Reuters)
- Chicago’s Junk Rating From Moody’s Puzzles Investors (BBG)
- House votes to end spy agencies' bulk collection of phone data (Reuters)
- Wesley Clark: The Penny-Stock General (BBG)
- AOL’s Armstrong to Leave $213 Million Richer After Verizon Deal (BBG)
The conventional view is that the Fed will never need to print-and-buy more than a few hundred billion dollars to stem the tide of selling. But the conventional view has a fatal flaw that Greenspan outlined in his Foreign Affairs article: when markets go bidless, "animal spirits" may be beyond calming. Once central bank buying fails to stem the tide, markets will truly panic. Can central banks double, triple and quadruple their balance sheets almost overnight to absorb the mass dumping of risk-on assets? Will there be no consequences, political and financial, to central banks becoming the greater fools who will buy even as asset values are crashing?
The Justice Department looks set to extract "unprecedented" guilty pleas from some of Wall Street's largest banks in connection with their role in rigging FX markets. Nevertheless, fears of triggering an "Arthur Andersen effect" will ensure that once again, TBTF institutions will suffer no material consequences.
CITIGROUP SAYS DOJ DECLINED TO PROSECUTE ON LIBOR RIGGING