Rogue Trader

The saga of Rochdale, or the firm that is now officially Too Little To Fail, following its hilarious screw up in Apple trading as reported previously, when it got the size if not direction of AAPL stock post earnings wrong, and as a result the guy who otherwise would have had a massive X-mas bonus has been outed as a "rogue trader", is nearing its logical conclusion.

• ROCHDALE SAID TO BE IN ADVANCED RESCUE TALKS AFTER APPLE TRADES
  
• ROCHDALE SAID TO POTENTIALLY ANNOUNCE DEAL AS EARLY AS TODAY

What happens next? DBRS buys them for their strong integrity and work ethic? The NYT gets a licensing deal and makes Dick Bove into a political forecaster taking advantage of his infallible predictive Black Box (see his Bank of America reco rating below)? Inquiring minds want to know.

Moments ago AAPL broke the 200 DMA. Whether or not this was due to the earlier news from Rochdale getting caught with its pants down, and supposedly losing tons of money due to a rogue trader "buying" the stock as its proceeded to tumble from its all time highs less then 45 days ago (during which time it has lost more than 10 years worth of dividends in market cap), is unclear. What is quite clear, is the moment when the general market realized what had just happened. Sure enough, the jobs number came and want, and ES largely faded that move in under an hour. It remains to be seen if a technical indicator for the world's most widely held stock is more important to the general stock market than how many 60 year old workers the US economy added in October. Oh, and as for that whole iPad mini launch spectacle? Sorry. Time for the iPad Mini Magnum launch... or maybe even the maxiPad.

Bloomberg has an update on the most amusing story of the day, namely that Rochdale appears to have blown daytrading Apple. And guess what: taking a cue from SocGen, UBS, and JPM, it's all a "rogue trader's" fault. Of course, if the trade had gone the "other way", Rochdale would not be needing a bailout, and the rogue trader would be looking forward to a generous holiday bonus.

• Rochdale bought more Apple shares than the brokerage’s management intended around the time of the technology company’s Oct. 25 earnings report, two people familiar told Bloomberg’s Hugh Son, Saijel Kishan and Zeke Faux.
• Rochdale officials told employees a rogue trader amassed the position, one of the people said.

We wonder how many more such "rogue traders" who dabbled in AAPL, and blew up after leveing the house in hopes to make their year on AAPL soaring into year end, will emerge before the next week is over...

Or “lamentable injustice”

When fringe-blogs highlight the reality of the US banking system and its financial engineering as nothing but overly complex three-card-Monte, it can be shrugged off; but when the head of China's sovereign wealth fund (yes the same one that will bail the world out) notes that the JPMorgan loss highlights a system that has become too complex, perhaps some should listen. As Bloomberg BusinessWeek reports, Gao Xiqing of CIC stated that "I think we do need to slow down a little bit instead of rushing up to all these fancy derivatives." The fact that the 'whale' loss was not a rogue trader but a systemic decision gone wrong on weak risk management of an overly-complex position was "the single most revealing thing" to Gao as he expressed concern about a society in which "all the best engineers are engineering financial products." Summing up the entire ethos of US financial innovation he concluded: "You have all the smartest kids to design these products, the only purpose of which is to get money out of other people’s pockets, that is not very good."

• China To Maintain Prudent Monetary Policy (China Daily)
• Why Exit Is An Option For Germany (FT)
• China-Japan Ministers Hold 'Severe' Talks As Spat Damages Trade (Bloomberg)
• Eurozone Deal Over Bank Bailout In Doubt (FT)
• UBS Co-Workers Knew of Fake Trades, Adoboli Told Lawyer (Bloomberg)
• Banks Seek Changes To Research Settlement (FT)
• Secession Crisis Heaps Pain On Spain (FT)
• SEC: NY Firm Allowed HFT Manipulation (Bloomberg) - busted 'providing liquidity'?
• Germany To Tap Brakes ON High-Speed Trading (WSJ)
• Rajoy Outlines Fresh Overhauls (WSJ)
• BBC Apologizes To Queen Over Radical Cleric Leak (Reuters)
• British Banks Step Back From Libor Role (WSJ)
• Obama Seeks To Recast Ties With Arab World (FT)

• Weeks before U.S. election, Mideast gives Obama perfect storm (Reuters)
• Clashes intensify near US embassy in Cairo (Al Jazeera)
• Puppet governments in trouble: Mursi Risks Rift With U.S. or Voters as Islamists Rally (Bloomberg)
• Protests Put Egypt Relations on Edge (WSJ)
• Fed insists politics had no role in decision (FT)
• UBS "rogue trader" fraudulently gambled away $2.3 billion, court told (Reuters)
• Obama Holds Lead in Three Key States (WSJ)
• China's Xi recovering from bad back, could appear soon - sources (Reuters)
•  Japan voices anger over Chinese incursion after vessels entered waters around disputed Senkaku islands  (FT)
• Goldman Scales Back Junior-Analyst Program; No Contracts for College Hires (WSJ)
• China commentary slams Romney's "foolish" China-bashing (Reuters)
• Aging Baby Boomers Face Losing Care as Filipinos Go Home (Bloomberg)

Standing at the crossroads, believe I'm sinking down. (Some charts are saying not so fast.)

A land grab shrouded in a banking takeover, wrapped in a financial crisis "rescue." As always, insiders get first dibs.  (And, yes, there is an MF Global connection.)

Someone has to take the other side of the JPM debate. I'll try.

He has some new ammo, and he is striking back.

Back to basics with some definitions:

DEFAULT, n. Semi-mythical celestial occurrence that passes by Earth every 76 years. 
I was worried for a second about that Greek default, but I realise there's nothing to see now and all is well.

FEDERAL RESERVE, n. A wholly owned subsidiary of Goldman Sachs.
The Federal Reserve voted to give a few more billion dollars to Wall Street.

US GOVERNMENT, n. Another wholly owned subsidiary of Goldman Sachs.
We seem to be running out of Goldman Sachs alumni here in the Treasury. No, wait, we've still got hundreds of 'em. 

This could probably explain a lot. According to the FT, which has managed to sneak a peek into Kweku Adoboli aka, the scourge of UBS, Facebook profile, in a July 31 update said: "Will they? Won’t they? Reduced to watching Fox News for guidance, it’s a grim affair". It appears that Adoboli should thus be commended - under those conditions we believe it is a miracle a person's loss can be confined to just $2 billion. FT continues with the cyberstalking: " That was followed a week later amid steep market falls, by an entry that read: “Can we shut down global markets for a week so everyone can just chill out?” It also appears that the Delta One'er (which is just a fancy name for "correlation desk" trader) enjoyed his downtime as well: "He came across as someone who worked quite hard to get where he was and played quite hard too," said the acquaintance. Yet by all counts it appears that the event that did ole' Kweku in was the Swiss intervention on September 6: "However, the final message left by the trader on his own Facebook page on September 6 simply read “need a miracle”." Odd: so does Tim Geithner and the Eurozone. Alas, as the latest "rogue trader" incarnation just found the hard way, those are in short supply these days.

Rogue Trader in the Brent oil market causes spike in prices.