Category: zerohedge

Entire OTC Market Breaks As Finra Halts All Quotes And Trading

As we noted earlier, today’s Twitter IPO, while pricing without the Facebook associated histrionics or crashing the NASDAQ, has had an impact on markets. A rather profound impact it appears, because as the OTC BB site, the host of pink sheet, OTC and Bulletin Board stocks just reported, the entire OTC market has been shut down by Finra.

From OTCBB:

Market Wide Quotation and Trading Halt for All OTC Equity Securities

 

On Thursday, November 7, 2013, the Financial Industry Regulatory Authority, Inc. (“FINRA”) halted trading in all OTC Equity Securities pursuant to FINRA Rule 6440(a)(3). FINRA determined to impose a temporary halt because of a lack of current quotation information. Therefore, FINRA has determined that halting quoting and trading in all OTC Equity Securities is appropriate to protect investors and ensure a fair and orderly marketplace. The trading and quotation halt began on Thursday, November 7, 2013, at 11:25:00 a.m. E.T. FINRA will notify the market when trading may resume.

 

Contact Information: Questions regarding this notice can be directed to: FINRA Operations at (866) 776-0800.

So to protect investors, Finra is shutting down the entire market. Let’s hope this is not just a test of what is coming to far more liquid exchanges.

As to why the entire OTC BB market just break? Who knows, or cares. As long as the NYSE, and more importantly Twitter, is fine all is well.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/8dELsR1Z9Og/story01.htm Tyler Durden

European Stocks Dump, Reverse Gains; Demand Moar From Draghi

For a few brief minutes this morning, the world celebrated Mario Draghi’s ‘surprise’ rate cut as just the medicine that an all-time high stock market needs to go even higher. European stocks popped champagne-like (with Italy and Spain jumping 2 to 2.5% on the news), EUR collapsing, and peripheral bond spreads dropping notably. However, as he began to speak and it was clear that growth is not there, deflation is a real risk, and – most importantly – there will be no LTRO anytime soon, market reversed and did not look back. It seems, as JPM warns, an LTRO is no longer likely early next year, and the market appears to be disappointed by that. Of course a few more down 2% days (4% drop from highs) and we are sure Draghi will find a way to unleash more…

 

 

And EURUSD retraced Fob 61.8% of its Draghi losses…

 

As JPMorgan notes,

We also think that an LTRO is no longer likely early next year, given that the full allotment has been extended to mid-2015. More likely is that the ECB will, at some point, enhance this by offering a few 6-9 month LTROs to ease the transition from the three-year operations.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/HZLWhhdmD8E/story01.htm Tyler Durden

As Bitcoin Soars Over $300, A Question Arises: Could It Become A Global Reserve Currency?

Having now tripled since August, Bitcoin's break above $300 ($324 highs) raises an important thought experiment – can a digital currency act as a global reserve currency?

 

 

It seems yesterday's CNBC discussion that Bitcoin is nothing but a beanie-baby fad just served to feed the beast… on heavy volume after Draghi's comments…

 

Charles Hugh-Smith, from OfTwoMinds blog, attempts an answer of just that question:

Could a non-state issued digital currency like Bitcoin become a global reserve currency? The idea came up in my recent conversation with Max Keiser on the Keiser Report during our discussion of reserve currencies.

The idea is intriguing on a number of levels. In terms of retaining value though thick and thin, the ultimate reserve currency cannot be printed (and thus devalued) with abandon by a government. Gold and silver have served as the ultimate reserve currency, as precious metals can be traded for commodities and services, provide collateral for debt and serve as reliable stores of value.

While many observers believe gold is still the only reliable reserve currency (or if you prefer, the only reliable backing for government-issued paper money), it's a worthy thought experiment to ask if a digital currency could also act as a reserve currency.

Since there is no real-world commodity backing the digital currency, its value must be based on scarcity and its ubiquity as money. The two ideas are self-reinforcing: there must be demand for the digital money to create scarcity, and the source of demand is the digital currency's acceptance as money that can be used to buy commodities, goods, services and (the ultimate test) gold.

It follows that the first step in a non-state issued digital currency becoming a reserve currency is that it isn't created in quantities that dwarf demand. If the digital currency is issued with abandon, it cannot be scarce enough to gain any value. If I own one quatloo (our hypothetical digital currency) and a trillion new quatloos are issued tomorrow, the value of my one quatloo will decline to near-zero.

The second step is its widespread acceptance globally as money, i.e. a store of value and something which can be traded for goods and services.

There is a bit of a built-in conflict in these two requirements. To be useful in the $60 trillion global economy, the quatloo must be issued in size: there must be enough of it around to grease transactions large and small in all sorts of markets. Using the U.S. dollar as a guide (since the USD is the primary reserve currency), we can estimate that a minimum of $1 trillion in quatloos would be needed to become a practical global currency.

To act as a reserve currency, another trillion or two would be needed, as nations would hold these quatloos as reserves. (Nations hold an estimated $7 trillion in USD reserves, about $3 trillion euros and $1 trillion or so in yen, pounds and other currencies.)

But issuing quatloos in these quantities would remove any scarcity value. Thus the issuer of the quatloo would have to carefully issue more quatloos only when demand justified the need for more monetary "grease" for the global economy.

If on the other hand skyrocketing demand/scarcity drove the value to the stratosphere, holders of the quatloo would rejoice, but this volatility would present its own set of risks for those seeking to use the quatloo as a reserve against currency volatility in the home-country currency. If a digital currency can leap ten-fold in a short time, then might it not drop with equal volatility?

Volatility is the enemy of reserves; the holder of reserves needs a liquid (meaning it can easily be sold or traded in size) currency that predictably retains its value. A volatile currency poses risks, as do currencies that cannot be traded in size without drastically influencing the market value of the currency.

These conditions pose a steep challenge for any digital currency, but they are not insurmountable. Even as a niche currency, non-state issued digital currencies could play a role in the global economy, especially if government-issued fiat currencies destabilize/ devalue due to massive money creation by desperate central banks and state treasuries.

Is scarcity enough to back a non-state issued currency? Bitcoin offers a real-world experiment.

* * *

Meanwhile, in Russia if you pay with Bitcoin, you get a 10% discount:


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/odkaNXFL148/story01.htm Tyler Durden

Markets Are Going Crazy

There is no news as a catalyst here but bonds, FX, commodity, and stock markets are smashing around as Twitter break below its open price. JPY is rushing higher against the USD (as is EUR which has retraced Fib 61.8% of its losses from Draghi). Treasury yields are collapsing. Nasdaq and all the other US equity indices are dumping as momo names suffer the most.

 


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/sEKHKxm5-y4/story01.htm Tyler Durden

Is The ECB Implementing ZIRP or ZEURP: Zero European Union Return on Potential

Inflation vs deflation vs stagflation 

Inflation vs deflation vs stagflation

The primary business of banks is lending.

  1. In a recession, not many people and businesses borrow, hence lending tends to be a poor business.
  2. In order to make money off of lending assets you need a reasonable return.
  3. When ZIRP (Zero Interest Rate Policy) is applied, said reasonable return does not exist unless banks dramatically mark up the cost of the loan which brings up back to point one.

In the states I made this point when most analysts insisted that ZIRP was good for the banks, to wit…

 

Now remember, I’ve been very bearish on the EU and thier banks and sovereign debt in particular, since Q! 2010 – way before most – reference Pan-European sovereign debt crisis. Yesterday morning if you were to Google the term EU recovery, you would see something like this in return… 

Well, somebody better tell Draghi, as per Bloomberg: ECB Cuts Key Rate to Record Low to Fight Deflation Threat

The European Central Bank cut its benchmark interest rate to a record low after a drop in inflation to the slowest pace in four years threatened its mission to keep prices stable.

Policy makers meeting in Frankfurt today reduced the main refinancing rate by a quarter point to 0.25 percent. The decision was predicted by three of 70 economists in a Bloomberg News survey. The ECB kept its deposit rate at zero and trimmed the marginal lending rate to 0.75 percent. ECB President Mario Draghi will hold a press conference at 2:30 p.m.

The ECB now has just one more quarter-point cut left before reaching zero, increasing the likelihood of unconventional tools such as quantitative easing or a negative deposit rate if prices slow further or the economic recovery stalls. Euro-area inflation is less than half the ECB’s target and unemployment is at the highest level since the currency bloc was formed in 1999.

“There comes a point where inflation is so weak, and coming in weaker than anticipated, that the case for loosening policy becomes too hard to resist,” said Richard Barwell, senior European economist at Royal Bank of Scotland Group Plc in London, who predicted the cut. “Bad unemployment numbers only make the case stronger.”

Does it seem like I’ve predicted the future hear once again as that Financial Nostradamus Dude???


 

Quantitative Easing

A Fed-style quantitative easing program has repeatedly been ruled out by ECB policy makers. The central bank is barred by European Union treaties from financing state debt, making large-scale purchases of government bonds open to a legal challenge.

While Draghi has floated the prospect of a negative deposit rate, the rate for commercial lenders who park excess cash at the central bank, policy makers have said that its effects can’t be adequately predicted. A negative deposit rate could hurt banks’ profitability by lowering money-market rates, potentially hampering credit supply to companies and households and reducing banks’ incentive to lend to other financial institutions.

“If inflation stays low, as seems likely, and the threat of inflation expectations becoming unanchored to the downside increases significantly, then all the tools in the box can come into play,” said Ken Wattret, chief euro-area economist at BNP Paribas SA in London. “But knowing the way the ECB operates
and how long it has taken to try and get support for a refi rate cut, doing the big stuff could take some time.”

Well, I believe QE has already been implemented by the ECB accepting trash sovereign debt as marketable collateral, but that’s a discussion for another day. Just listen to the Financial Nostradamus dude when he warns what happens when a larger, admitted QE program is instituted. For one, you’d probably eliminate that inflation problem… replacing it with…


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/PbCun3Pkp0s/story01.htm Reggie Middleton

Is The ECB Implementing ZIRP or ZEURP: Zero European Union Return on Potential

Inflation vs deflation vs stagflation 

Inflation vs deflation vs stagflation

The primary business of banks is lending.

  1. In a recession, not many people and businesses borrow, hence lending tends to be a poor business.
  2. In order to make money off of lending assets you need a reasonable return.
  3. When ZIRP (Zero Interest Rate Policy) is applied, said reasonable return does not exist unless banks dramatically mark up the cost of the loan which brings up back to point one.

In the states I made this point when most analysts insisted that ZIRP was good for the banks, to wit…

 

Now remember, I’ve been very bearish on the EU and thier banks and sovereign debt in particular, since Q! 2010 – way before most – reference Pan-European sovereign debt crisis. Yesterday morning if you were to Google the term EU recovery, you would see something like this in return… 

Well, somebody better tell Draghi, as per Bloomberg: ECB Cuts Key Rate to Record Low to Fight Deflation Threat

The European Central Bank cut its benchmark interest rate to a record low after a drop in inflation to the slowest pace in four years threatened its mission to keep prices stable.

Policy makers meeting in Frankfurt today reduced the main refinancing rate by a quarter point to 0.25 percent. The decision was predicted by three of 70 economists in a Bloomberg News survey. The ECB kept its deposit rate at zero and trimmed the marginal lending rate to 0.75 percent. ECB President Mario Draghi will hold a press conference at 2:30 p.m.

The ECB now has just one more quarter-point cut left before reaching zero, increasing the likelihood of unconventional tools such as quantitative easing or a negative deposit rate if prices slow further or the economic recovery stalls. Euro-area inflation is less than half the ECB’s target and unemployment is at the highest level since the currency bloc was formed in 1999.

“There comes a point where inflation is so weak, and coming in weaker than anticipated, that the case for loosening policy becomes too hard to resist,” said Richard Barwell, senior European economist at Royal Bank of Scotland Group Plc in London, who predicted the cut. “Bad unemployment numbers only make the case stronger.”

Does it seem like I’ve predicted the future hear once again as that Financial Nostradamus Dude???


 

Quantitative Easing

A Fed-style quantitative easing program has repeatedly been ruled out by ECB policy makers. The central bank is barred by European Union treaties from financing state debt, making large-scale purchases of government bonds open to a legal challenge.

While Draghi has floated the prospect of a negative deposit rate, the rate for commercial lenders who park excess cash at the central bank, policy makers have said that its effects can’t be adequately predicted. A negative deposit rate could hurt banks’ profitability by lowering money-market rates, potentially hampering credit supply to companies and households and reducing banks’ incentive to lend to other financial institutions.

“If inflation stays low, as seems likely, and the threat of inflation expectations becoming unanchored to the downside increases significantly, then all the tools in the box can come into play,” said Ken Wattret, chief euro-area economist at BNP Paribas SA in London. “But knowing the way the ECB operates
and how long it has taken to try and get support for a refi rate cut, doing the big stuff could take some time.”

Well, I believe QE has already been implemented by the ECB accepting trash sovereign debt as marketable collateral, but that’s a discussion for another day. Just listen to the Financial Nostradamus dude when he warns what happens when a larger, admitted QE program is instituted. For one, you’d probably eliminate that inflation problem… replacing it with…


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/PbCun3Pkp0s/story01.htm Reggie Middleton

Twitter Tags $50 Then Dumps Back Below Open Price

Nope, no bubble here… Having traded up to $50 (over 33x Price-to-Sales), it seems hitting every analyst profit target (aside from Topeka’s Anthony) within one hour of its release was enough for most… The ‘profit-taking” has started and now TWTR is trading back below its break price… But do not worry – everyone can rest assured as Cramer just said “we’re out of the woods here.” Of course, as everyone knows, it’s not where you start, it’s where you finish that counts…

 

 

 

Only Topeka sees more…


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/c8XscMAZV2I/story01.htm Tyler Durden

Gold Below EUR 1,000/oz – ECB To 0.25%, QE And Negative Deposit Rates?

Today’s AM fix was USD 1,316.00, EUR 973.45 and GBP 818.46 per ounce.
Yesterday’s AM fix was USD 1,317.00, EUR 975.05 and GBP 817.66 per ounce.

Gold climbed $6.40 or 0.49% yesterday, closing at $1,317.20/oz. Silver climbed $0.10 or 0.46% closing at $21.78. Platinum rose $13.25 or 0.9% to $1,460.99/oz, while palladium rose $13.50 or 1.8% to $751.50/oz.


Gold in Euros, 30 Day – (Bloomberg)

Today, all eyes are on the ECB rate decision. The ECB is expected to leave rates unchanged at 12:45 GMT (7:45 EDT), but may indicate that it will reduce rates soon which would be gold supportive, particularly in euro terms.

Gold in euro terms is down 23.4% year to date. It appears to be consolidating between EUR 900/oz, the low on June 28th and EUR 1,100/oz, gold’s high back in late May. A signal from the ECB that it is going to loosen monetary policies even further could be the spark that gold needs to help prices get momentum to the upside again.

There is increasing pressure on the ECB, particularly from the banking sector, to adopt the ultra loose monetary policies being pursued and experimented with by the Federal Reserve. Policies, incidentally, which have not succeeded in reviving the moribund U.S. economy.

This pressure and a lack of inflation today may lead the ECB to signal that they intend reducing interest rates from 0.5% soon. They may also consider adopting even more radical monetary policies involving  quantitative easing (QE) or the creation of euros in order to buy or monetise government debt as the U.S. is doing with their $85 billion a month bond buying programme.

An even more radical option of negative deposit rates is also being considered. There are suggestions that the ECB is considering charging banks for depositing their reserves with the ECB by imposing a negative deposit rate.

Many banks would then pass on this negative rate to depositors meaning that extremely low yielding deposit instruments could become negative and actually cost depositors money.


Gold in Euros, 3 Year – (Bloomberg)

Expectations the ECB would cut its 0.5 refinancing rate rose last week after official figures showed a fall in euro zone inflation.  Citizens in most European nations would likely question the figures as the real world experience of people in most European countries is of rising prices. 

Draghi’s news conference, when he may prepare the ground for a cut in December, is at 13:30 GMT.


World Currency Ranker, Euro in G10 and Gold, Year To Date – (Bloomberg)

If the ECB suggest that they will reduce rates to a new record low of 0.25%,  this would put pressure on the euro and lead to higher prices in gold terms.

In dollar terms, the euro remains above strong chart support at $1.3462 from a trendline drawn from lows hit in early July. Technical analysts say a break below this line could lead to further losses for the euro, which only last week traded as high as $1.38 before the weak inflation data.

The euro will come under pressure if Draghi signals the possibility of negative deposit rates.

As soon as the ECB rate decision is over, attention will move to Friday’s U.S. jobs number. A poor jobs number tomorrow, should see gold rise on safe haven buying due to concerns about the struggling U.S. economy. A weaker economy will likely lead to a continuation of ultra loose monetary policies.

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via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/YqWxOhAXP1s/story01.htm GoldCore

Twitter Opens At $45.10 (+73%); Trades Up To $48 (+84%)

+73% at the open… HFT activity is extreme

 

 

 

For now TWTR has reached $47.23…


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/NCX7IvBAoMI/story01.htm Tyler Durden