Tag: finance

The "most shorted" stocks have quadrupled the performance of the broad market this week as the dash-for-trash remains the best-performing strategy under the premise of an ever-rising strike Yellen put. The ammo for this latest rampapalooza, as we noted here, was hedge fund specs the 'shortest' in over a year which were then squeezed by an ever-present visible hand willing to sell JPY against any and everything in the world (or smash VIX – which ever works best). But as one more skeptical manager noted, "I’ve been a non-believer for so long that I just am not believing yet."

 

What's better than being long stocks? Being Long the "most shorted" stocks…!

 

It didn't take long for investors to full bulltard once again…

h/t @Not_Jim_Cramer

As Bloomberg notes,

Five years after the credit crisis, equity markets are showing zero tolerance for bears.

…

 

“If I were bearish, I’d be very concerned,” Doug Foreman, chief investment officer at Kayne Anderson Rudnick Investment Management in Los Angeles, said by phone. His firm oversees about $9 billion. “What’s it going to take for me to be right? I don’t know. There is no evidence that they’re going to be right any time soon.”

 

…

 

“What we’re seeing is a resilient economy and I’m afraid there’s been a reluctance on some people’s part to focus on the bigger picture,” Howard Ward, the chief investment officer for growth equity at Rye, New York-based Gamco Investors Inc., which oversees about $47 billion, said in a Feb. 25 phone interview. “There’s a lot of good news out there that has not been received.”

But there is still skepticism,

“I’ve been a non-believer for so long that I just am not believing yet,” said Landesman, who helps oversee about $1.3 billion. “We’re going to see a very volatile year, with the potential of low 1,500s to the downside.”

 

…

 

“The rose-colored glasses being worn by investors might be cleared in the year ahead as the withdrawal from QE and low rates might be harsher than many expect,” Kass said. The Fed’s stimulus, known as quantitative easing, “doesn’t create a safe world, it creates a temporary high and the danger always comes on the flip side,” he said.

 

But perhaps it's deja vu?

 

As we concluded previously,

…every time even a modest threat of a downside correction reappears, momentum ignition across key FX carry pairs sends the Spoos and other equity indices higher triggering upside stops, which in turn forces even more hedge funds to cover short positions, once again sending the S&P too all time highs. And so on. Until the volume in the market is so low one block of E-mini futures sends the whole thing limit up, and everyone can just sit back and laugh.

via Zero Hedge http://ift.tt/1cQIOUY Tyler Durden

As today’s actions by Russia have raised concerns and stirred flight-to-safety flows in the markets, The White House has decided to add its $0.02 worth:

• *OBAMA AIDE EARNEST URGES ‘OUTSIDE ACTORS’ TO RESPECT UKRAINE TERRITORY
• *EARNEST SAYS RUSSIA SHOULD AVOID `PROVOCATIVE’ ACTIONS
• *U.S. WARNS RUSSIA TO RESPECT UKRAINE SOVEREIGNTY

Or else…? On the bright side, he did not say anything about crossed lines of color.

Via AP,

The White House is urging “outside actors” to respect Ukraine’s sovereignty, as neighboring Russia prepares for massive military exercises.

 

White House spokesman Josh Earnest said the U.S. is aware of Russia’s plans to launch the military maneuvers. While Russian officials said the exercises were unrelated to the tensions in Ukraine, these exercise will take place near the shared border between the countries.

 

Without specifically mentioning Russia, Earnest also called on others in the region to end “provocative rhetoric and actions.”

 

Russia has questioned the legitimacy of Ukraine’s acting government, which took charge after pro-Russian President Viktor Yanukovych fled after signing an agreement aimed at ending his country’s three-month political crisis.

via Zero Hedge http://ift.tt/MupG4K Tyler Durden

Submitted by Simon Black of Sovereign Man blog,

Pop quiz: When really nasty criminals and dictators want to hide their illicit gains, which country do they go to?

I’ll make this easy for you – multiple choice:

a) Switzerland
b) British Virgin Islands
c) Hong Kong

With all the drama, history, and stigma surrounding Switzerland, most people would choose (A).

Yet over the last few years, Switzerland has worked hard to shed this reputation, even going so far as to propose laws making it easier for them to freeze dictators’ funds.

But in reality, the correct answer to the question is (D), none of the above. It’s the United States of America.

Despite being at the forefront for every other country in the world to eradicate banking privacy, the US government has hardly done a thing about the huge cracks in its own banking system… at least when it comes to foreigners.

Many states ranging from Delaware to New Mexico boast corporate entities that can be completely private, especially for foreign shareholders.

Not to mention, attorney-client privilege laws in the US mean that a lawyer can be inserted between a foreigner and their Delaware bank account, making the funds virtually untraceable back to the original shareholder overseas.

Last– the US banking system is so large with hundreds of billions of dollars of inflows and outflows, it’s quite easy for several hundred million to slip right past the radar.

So if you’re a villainous dictator who has plundered your citizens’ wealth, you’d be a fool to stash that cash away in Switzerland. Wall Street banks are waiting with open arms, and Saul Goodman is just a phone call away.

None of this, by the way, is any wild conspiracy theory. It’s all fact… validated by the US government itself.

You see, the Financial Crimes Enforcement Network (FinCEN), an agency of the US Treasury Department, sent out a rather frantic email blast to banks across the United States yesterday about former Ukrainian President Viktor Yanukovych.

Mr. Yanukovych recently fled his home country and is on the run from mass murder charges. And as you can imagine, he has spent years plundering the wealth of Ukraine.

FinCEN recognizes that Yanukovych has substantial assets stashed away in the Land of the Free… and they’re keen to avoid yet another embarrasing public scandal in which the US banking system is caught financing a fugitive dictator.

So their email yesterday was a not-so-subtle suggestion to banks across the country that they should sound the alarm bells with respect to “suspicious movements of assets related to Viktor Yanukovych. . . and other senior officials resigning from their positions or departing Kyiv.”

It certainly begs the question– why would FinCEN send out such an admonishment to US banks?

Simple. Because while ordinary citizens are treated like dairy cows and medieval serfs, FinCEN knows that the United States is the #1 financial safe haven in the world for foreign criminals and dictators.

via Zero Hedge http://ift.tt/1ptX8rL Tyler Durden

If yesterday’s 2 Year auction was largely blah, today’s issuance of $15 billion in 5 year bonds can only be described as blistering. While the high yield of 1.53% was strong enough to stop through the 1.538% When Issued, and the lowest since November’s 1.34%, it was the Bid to Cover that showed just how much demand there was for paper, as 2.98 dollars in tendered bids were waiting for every dollar of allocation: this was the highest Bid to Cover since September 2012 and well above the 2.62 TTM average. This outlier print snapped the recent trend of declining BTCs and showed that when it comes to Bill Gross once favorite spot on the curve, there is no lack of demand, especially from foreigners, who took down 50.7% of the allotment, the highest since July and solidly above the 44.5% average. On the other hand, Directs who lately are hardly the best friends of the Dealer community, took down only 9.2%, the lowest also since July, leaving 40.2% for the dealers.

In summary: if there is any indication of an ongoing great rotation from demand for bonds to stocks, don’t for it here.

via Zero Hedge http://ift.tt/1dA5SnY Tyler Durden

Ocwen Financial, dubbed by Moody's as poised to become the "next generation" of subprime lenders, has come under considerably pressure this morning amid news that NY State regulators are investigating the firm for "conflicts of interest"…

• *NY DEPT FINL SERVICES FINDS POTENTIAL CONFLICTS OF INTEREST
• *NY CITES REVIEW OF OCWEN'S MORTGAGE SERVICING PRACTICES
• *NY SEEKS INFO ON FINL INTEREST OF OCWEN EXECS IN AFFILIATED COS

It is the Mortgage Servicing Rights (MSRs) that has Moody's the most-concerned as the volumes required may force Ocwen (and others) to shift their business model to ever lower quality loans.

 

 

As The FT reports,

Non-bank mortgage servicers are poised to become the “next generation” of subprime lenders as the companies seek to diversify their rapidly expanding businesses in the face of mounting regulatory scrutiny, Moody’s says.

 

The warning from the credit rating agency comes as specialised mortgage servicers, particularly Ocwen Financial, face increasing criticism from regulators, who argue that the companies have grown too quickly in recent years.

 

…

 

Mortgage servicers such as Ocwen, Nationstar and Walter Investment have been buying hundreds of billions of dollars worth of “mortgage servicing rights” from big banks including JPMorgan Chase and Bank of America.

 

Under these MSRs, the companies collect payments on US mortgages in exchange for a small portion of the income. Banks have sold the rights in the face of a wave of troublesome post-financial crisis foreclosures as well as regulatory pressure to offload the assets. The amount of outstanding mortgages serviced by Ocwen, the biggest non-bank mortgage servicer in the US, has risen from $43bn in 2005 to more than $500bn now.

 

Ocwen estimates that banks still have $1tn worth of MSRs to sell, but servicing mortgages has a finite shelf life and originations of the subprime loans in which the company has historically specialised are unlikely to recover to pre-crisis levels.

 

That could spur Ocwen to expand its nascent prime lending business to include making subprime loans, which have historically been the domain of banks.

And then they get hit with today's news…

• *NY DEPT FINL SERVICES SEEKS ADDED INFORMATION FROM OCWEN
• *NY SAYS POTENTIAL CONFLICTS WITH COMPANIES CHAIRED BY ERBEY
• *NY SAYS OCWEN MGMT OWNS STOCK OR OPTIONS IN AFFILIATED COS.
• *NY SEEKS INFO ON FINL INTEREST OF OCWEN EXECS IN AFFILIATED COS

As Bloomberg reports,

“Presently, Ocwen’s management owns stock or stock options in the affiliated companies,” Lawsky said in the letter.

 

“This raises the possibility that management has the opportunity and incentive to make decisions concerning Ocwen that are intended to benefit the share price of affiliated companies, resulting in harm to borrowers, mortgage investors, or Ocwen shareholders as a result.”
 

via Zero Hedge http://ift.tt/1hgOSaU Tyler Durden

Update as things just got worse: TURKISH POLICE CLOSE DOWN GEZI PARK IN ISTANBUL, CNN-TURK SAYS

As we reported previously, on Monday new revelations in the graft scandal surrounding Turkish PM Erdogan in the form of a leaked phone conversation between him and his son, Bilal, detailing plans how to hide huge sums of cash, by some estimates up to $1 billion, brought back the political crisis that has gripped the nation front and center, and led to renewed demands by the opposition party that the PM resign. It also sent the USDTRY surging to levels not seen in weeks. We said: “Somehow we doubt that Erdogan will resign, however, this latest confirmation that the graft scandal that is and will continue to dodge the Turkish Prime Minister is not going away, may just be the catalyst that pushes the TRY, and with it some of the other recently pacified EMs, back into volatile mode.” Today the crisis is fully back and so is the predicted volatility, with the Lira blowing out by another 400 pip to a level of 2.240, not seen since the first week of February when the Turkish central bank was scrambling to restore confidence in the imploding currency.

 

What prompted this latest risk flaring? Several things. As Turkish media outlet Hurriyet reported, Turkey’s main opposition took to the streets of Istanbul on Feb. 26 to throw away millions of fake bills, in protest against the latest leaked voice recordings incriminating Prime Minister Recep Tayyip Erdo?an and his son.

In the call, apparently made in the wake of the Dec. 17 graft investigation, the prime minister and his son can be heard desperately trying to hide considerable amounts of cash.

 

“Everywhere is bribery! Everywhere is corruption!” shouted the demonstrators, a chant coined following the graft scandal, in reference to the symbolic slogan of the Gezi Park protests, while urging the government to resign.

 

The Republican People Party’s (CHP) candidate for the Istanbul mayoralty Mustafa Sar?gül used harsh language targeting the government over the revelations.

 

“All across Istanbul you can see billboards of the prime minister saying ‘strong will.’ Here is a test of your will. Either you prove [that you are not guilty] or you resign and go,” Sar?gül said, referring to the campaign launched by an NGO close to the government after the corruption scandal surfaced. Huge posters of Erdo?an with the motto “strong will” can be seen across Istanbul, plastered near main arteries, on construction buildings and even on stadiums.

 

The fresh tape, leaked onto the Internet late Feb. 24 and allegedly featuring four phone conversations, is significant for being the first source to implicate Erdo?an personally in the vast corruption scandal.

 

The recordings feature Erdo?an and his son discussing how to get rid of a sum of cash equivalent to 2.2 billion Turkish Liras, according to the opposition. In one part of the alleged recording, the son, Bilal Erdo?an, is heard saying that he still needs to dispose of 30 million euros.

 

In a clear reference to the tape, CHP officials handed out fake money amounting to 30 million euros during a demonstration near Taksim Square, throwing the paper banknotes in the air like confetti.

 

“We are ashamed of this situation. Those 30 million euros are only a small share of the amount of cash that the prime minister told [his son] to ‘clean’ on Dec. 17. There is also the mother share. Think about how huge that must be,” said the CHP’s Istanbul provincial head, O?uz Kaan Sal?c?.

 

Erdo?an has virulently rejected the voice recordings on Feb. 25, calling them “fake” and denouncing as a “montage.” CHP head Kemal K?l?çdaro?lu has claimed that they are “as authentic as the Mount Ararat.” The Ankara Prosecutor’s Office has launched an investigation into the tapes, following a request from the ruling Justice and Development Party (AKP).

As we said on Monday, “since Erdogan has already eliminated any judges that are not sympathetic to his regime, the question of how much justice will be revealed is irrelevant.” However, in an indication of how desperate the government is to redirect attention from this latest scandal, a follow up article from Anadolu news agency, reported that a Turkish attorney, Hudaverdi Yildirim, has filed a complaint to Istanbul Chief Prosecutor’s Office against Fethullah Gulen on Wednesday, asking him to be tried of crimes such as, “forming an organization”, ” an organized coup attempt” and “organized deceit”.

Yildirim claimed in his petition that national ‘economic secrets’ and the activities of National Intelligence Service (MIT) were disclosed and an illegal chase was launched.

 

Referring to the December 17 anti-graft operation, Yildirim said: “National secrets were disclosed at the end of the anti-graft operations, which were illegally conducted and the country’s economy was damaged by around US$ 200 billion.”

 

Crimes of treason, a coup against a legal government, qualified deceit, and abuse of power were committed at the same time and by the same people, alleged the petition, adding that Fethullah Gulen, “used his political and moral power on prosecutors, by which he becomes instigator of the prosecutors that target legal government”.

 

The attorney demanded Gulen and his allies be tried of crimes of “forming an organization”, “an organized coup attempt” and “organized deceit and abuse of power.”

 

An anti-graft operation was launched on December 17 in Turkey, which resulted in the detentions and arrests of high-profile bureaucrats, including the sons of three former cabinet ministers and businessmen.

 

Turkey’s government claim it is targeted by a group within the state that has international links. Prime Minister Recep Tayyip Erdogan and senior government officials have blamed the group for ‘attempting to run an agenda of its own with the December anti-graft operation’.

Recall that Gulen, a dissident who currently lives in Pennsylvania, was the person whom the government accused of staging the graft probe which revealed just how deep the government corruption rabbit hole truly goes. That the PM is willing to go all the way in this latest scapegoating persecution perhaps confirms just how concerned the administration is, even if for the time being nothing dramatically has changed except for ever bolder revelations of just how much theft and corruption the current Turkish regime has engaged in.

Finally, should indeed the central bank once again lose control of Turkish FX rates, and should the EM crisis once again return, perhaps the DE Shaw correlation algos will finally realize just how far ahead of themselves they have gotten by simply chasing various carry funding currency pairs as an indicator of “fundamental” value.

via Zero Hedge http://ift.tt/1o6dPpX Tyler Durden

It does not appear that things are getting any better for the virtual currency exchange named after “Magic: The Gathering.”

• *FBI SAID TO BE PROBING POSSIBLE CRIMINAL VIOLATIONS BY MT. GOX
• *U.S. SAID TO REQUEST DOCUMENTS FROM BITCOIN SERVICE PROVIDERS
• *MANHATTAN U.S. ATTORNEY SAID TO BE REVIEWING MT. GOX SHUTDOWN

No real reaction yet in price across Bitcoin exchanges.

 

As Bloomberg reports,

The office of Manhattan U.S. Attorney Preet Bharara and the Federal Bureau of Investigation are probing possible criminal violations tied to the shutdown of Tokyo-based Mt. Gox, once the world’s largest exchange for digital currency transactions, two people familiar with the matter said.

 

…

 

Bharara’s office has requested documents from businesses that provide Bitcoin services and the FBI is reviewing the matter, said the people, who requested anonymity because the matter isn’t public. One of the people said that the matter is in its preliminary stages and isn’t yet a formal investigation.

Bloomberg BusinessWeek summarizes “where did the bitcoins go?”

How did the once-largest Bitcoin exchange lose hundreds of millions of dollars’ worth of the digital currency?

Two words: transaction malleability. A hacker can tinker with the code that makes a Bitcoin transaction happen, so that it looks like it didn’t go through. The person who was supposed to receive a payment then asks again and, in Mt. Gox’s case, is paid again automatically. Mt. Gox has acknowledged this was happening. It seems that someone has been slowly bleeding it for months, leaving it without the funds to pay out legitimate withdrawals. But with the company being pretty tight-lipped about it for now, that’s only the best theory.

Was this a shot from the blue?
Not quite. Mt. Gox has been having problems for months, and people have been complaining about not being able to get their money out of the system since late last year. The company halted withdrawals altogether in early February. So while the number of lost Bitcoins is striking, many people have seen the failure of Mt. Gox as imminent for a while.

…

Where did the lost Bitcoins go?
In theory, Mt. Gox could begin to track their path by identifying the fraudulent transactions and searching for the wallets the coins ended up in. But no one is putting much faith in the accounting expertise over there at the moment. In any case, many of the tainted coins have likely moved beyond their initial destinations. If there really has been a slow leak from Mt. Gox for a long time, then the coins could have spread to the ends of the earth by now. One thing is certain: They are probably all over the place, just based on the sheer number of coins alleged to have been stolen. They’d amount to about 6 percent of the Bitcoins in existence.

Is this a security problem with Bitcoin itself?
When Mt. Gox described the issue as a bug in the Bitcoin protocol, people didn’t appreciate it. The technical issue at the root of Mt. Gox’s problem didn’t just crop up recently; it seems that Mt. Gox was left vulnerable because it didn’t protect itself against the issue.

Read more here…

via Zero Hedge http://ift.tt/1k9kQc7 Tyler Durden

It would appear French President Francois Hollande’s promise to bring jobs to the nation continues to fail dismally. Perhaps it was his recent trip to the US, but French Jobseekers rose more than expected for the 3rd month in a row to a new record high of 3.316 million. Joblessness has now risen for 30 of the last 32 months. The last 5 months have seen jobseekers reaccelerate – surging by 2.5% (the most in 6 months). So, in a nutshell, things are getting worse, faster for the 2nd largest economy in Europe (and 5th largest in the world).

 

 

Charts: Bloomberg

via Zero Hedge http://ift.tt/1hTicqM Tyler Durden

As CNY unwinds, Russia-Ukraine safe-haven bids, and Turkish Lira (erdogan corruption) concerns flood back into the USD as a safe-haven, precious metals have come under pressure this morning. Gold has been sold but remains relatively stable but Silver is suffering its biggest down day in almost 2 months ad the gold-to-silver ratio surges back up to ts 4-month average.

Silver notably underperforming Gold today…

 

With its worst day in 2 months…

 

Some have suggested today’s weakness is also being driven by BofA’s technical call to sell gold…

Time to sell gold

Gold is rolling over. The impulsive intra-day decline from today’s 1345 high says that the trend has turned ahead of the confluence of long term resistance between 1350/1367. With the ADX at trend ending extremes, and daily momentum posting bearish divergences, target 1270, potentially long term triangle support at 1185.

Sell Gold at 1337, risking 1346, target 1270, potentially 1185

via Zero Hedge http://ift.tt/1fHqM8R Tyler Durden