finance – Page 18500

Despite Late-Day Melt-Up, Stock Stumble-On As Treasury Curve Crushed

Credit markets had been nervous for the last 48 hours heading into today's Fed minutes and reflective of the FOMC's worries over small-cap forward multiple and covenant-lite loan issuance (both of which we have discussed in great detail as excessive) sparked weakness in the Russell and credit spreads. Yesterday's bounce gave way to selling after the minutes (and on a "good" data day). But a late-day no-JPY-supported melt-up saved the day but stocks are still down after first 5 days of the year – still worst since 2008. Treasury yields leaked higher into the minutes then flattened dramatically with 10s and 30s rallying and 5s and below weakening. 5s30s dropped 7bps on the day – biggest flattening since Taper. 10y did not close above 3%. Gold and silver slipped lower after 2pm then recovered into the close, but WTI crude slid all day – holding losses after the Fed ($92.50). The USD limped lower after the Fed with EURUSD unch on the week before tomorrow's ECB statement.

Market went a little nuts post-Fed…as always…catching down to EURJPY then ripping higher to VWAP into the close…

But overall, all indices remain red from the 2013 closing highs (even as the NASDAQ overtook the Dow)…

as 330RAMP CAPITAL saved the day perfectly…

Credt markets have been nervous again…

Treasuries limped higher in yield into the minutes then flattened dramatically after…

Oil slipped all day – holding post fed losses; but gold and silver recovered most of their kneejerk losses..

Charts: Bloomberg

Bonus Chart: JCPummeled…

Bonus Bonus Chart: Brent-WTI surged to one-month highs today as WTI slumped…

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/Ik14OJ3s9n0/story01.htm Tyler Durden

The Clear Evidence That QE FAILS to Produce Jobs

Over the last five years, the US Federal Reserve has substantially changed the investing landscape of the capital markets in the last 12 months. In particular we need to assess how ongoing QE programs affect notions of “risk” and rates.

In the period from March 2008 to late 2013, the Federal took a series of strategic steps to attempt to rein in the financial crisis and to support certain financial institutions that it deemed most critical to the health of the financial system.

These steps consisted of cutting interest rates to zero and engaging in rounds of Quantitative Easing, commonly referred to as QE.

QE in its simplest form consists of printing new money that is then used to buy US debt, called Treasuries. The Fed has made a myriad of claims for why it did this (to help housing, the help the economy, etc.) but the blunt reality is that this policy was primarily a means of financing the US deficit, which swelled in the post-2008 period as the public sector expanded rapidly in an effort to pick up the economic slack in the private sector.

The US went into the 2007-2008 Crisis with a national debt of $5 trillion and unfunded liabilities (Medicare, social security) somewhere in the ballpark of $50 trillion. And as the debt ballooned in the post-2008 era due to Government spending, it became more and more important for the Fed to maintain low rates: any increase in interest rates would mean much larger interest payments on a rapidly growing debt load.

This is why the Fed has maintained near zero interest rates as the US nati0nal debt swelled to $16 trillion. It’s also why the Fed continues to engage in QE despite the clear evidence over the last four and a half years that it is not an effective tool for stimulating economic growth or a rise in employment.

Regarding this latter point, I want to draw your attention to the labor participation rate below. The official unemployment rate is highly charged politically as it is used by the media to gauge how well a particular administration is doing at generating job growth.

As such the unemployment numbers are routinely massaged to the point of no longer reflecting the true number of unemployed Americans. For this reason, I prefer to use the labor participation rate when gauging the health of the US jobs markets: this metric represents the number of Americans who are currently employed as a percentage of the total number of Americans of working age.

As you can see, the number of employed Americans of working age peaked in the late ‘90s. It has since fallen to levels not seen since the early ‘80s. Moreover, looking at this chart it is clear that job creation has failed to keep up with population growth.

This negates any claims of “recovery” in the jobs market.

In particular, I want to draw your attention to the last five years of this chart below. The US Federal Reserve began its first QE program, called QE 1, in November 2008. Since that time it has launched three other such programs, spending over $2 trillion in the process.

During this period, the labor participation rate has not once experience a sustained uptrend. Put another way, job creation has never outpaced population growth to the point of creating a significant turnaround in the jobs market. This has happened despite the recession officially “ending” in mid-2009.

The evidence here is clear. QE does not generate jobs in the broad economy.

For a FREE Special Report outlining how to protect your portfolio from this, swing by: http://phoenixcapitalmarketing.com/special-reports.html

Best Regards

Phoenix Capital Research

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/nHkZAmq2n7I/story01.htm Phoenix Capital Research

Proof Gold’s Latest Slam Was Not A “Fat Goldfinger”

With December's "fat finger" in US Treasury Futures proved as nothing but an HFT algo gone wild, Nanex has turned its deep-thought to the recent halt in gold futures markets. Their conclusion, this was not the result of a fat finger, but rather the work of a high frequency trading algorithm that would pause, and (probably) test the market before continuing. A fat finger would not have had such distinguishing features.

December's bond melt-up was not a fat finger but an HFT algo gone wild..

Video replay of trading action in T-Bond Futures casts doubt that this was a "fat-finger" event
A fat-finger trade would send prices straight up, but video replay clearly shows pauses and ample back-and-forth trading.

And so was the recent gold smack down…

Via Nanex,

On January 6, 2014 at 10:14:13, Gold futures plummeted $30 on heavy volume. About 4,200 contracts send gold futures prices tumbling $30 and trigger a 10 second trading halt.

Update – 8-Jan-2014

The chart below shows the entire $30 drop in the price of Gold futures that occurred in just under 100 milliseconds (1/10th of a second). When we separated groups of trades by a jump in the exchange sequence number (a technique to determine the size of a larger order) we discovered there were 9 groups where the sum of the trade sizes was exactly 338 contracts! Each group is composed of widely different number of trades (211, 186, 120, 193, 97, 193, 137, 112 and 109 to be precise), yet the sum of the sizes of each group totals exactly 338. We show these 9 groups in the chart below. What's more, there are other trades occurring between these groups of 338 contracts.

What this tells us is that this was not the result of a fat finger, but rather the work of a high frequency trading algorithm that would pause, and (probably) test the market before continuing. A fat finger would not have had such distinguishing features.

The next chart shows the cumulative sum of trade sizes for each group of trades where a group is distinguished by a jump in the exchange sequence number. Since exchanges use one sequence number for multiple products, you can usually tell if a group of trades is the result of a larger order by the lack of gaps in the sequence number. That means no other contracts traded during that time.

The time axis is the millisecond time component of the second 10:14:12, so that the value 889 corresponds to 10:14:12.889. The value axis is the cumulative number of contracts. The red diamond indicates the total size of a group when a sequence jump is detected.

Notice there are 9 groups that total exactly 338 contracts. Also note that each of these groups are separated by smaller groups of trades, and 3 of these smaller groups total 61 or 62.

1. February 2014 Gold (GC) Futures

2. February 2014 Gold (GC) Futures

3. February 2014 Gold (GC) Futures

5. March 2014 Silver (SI) Futures

6. SLV ETF trades

7. GLD ETF trades

Compare the next 4 charts which all zoom in on the first 1/10th of a second of activity (10:14:12.880 to 10:14:13) in Gold and Silver ETFs and futures. The futures trade in Chicago, while the ETFs trade in NY. It takes information about 4 to 5 milliseconds to travel between these two locations.

8. February 2014 Gold (GC) Futures – Zooming in on about 1/10th of a second.

9. GLD ETF trades – Zooming in on about 1/10th of a second.
Compare to Chart 8 above – note how the futures activity starts about 5 milliseconds earlier, indicating the move started in Chicago (futures) and not in NY (GLD).

10. March 2014 Silver (SI) Futures – Zooming in on about 1/10th of a second.
Trading didn't start in silver futures until a good 30 milliseconds after gold, which indicates silver was reacting and not part of the same strategy affecting gold.

11. SLV ETF trades – Zooming in on about 1/10th of a second.
Activity in SLV appears 5 milliseconds after activity in GLD. The silver ETF reacts faster to the the gold ETF (both in NY), than the silver futures reacts to gold futures in Chicago.

12. GLD ETF trades – Zooming in on about 1/2 second of time.
Note how trades from EDGX (blue diamonds), Dark Pools (squares) and BOST (light green circles) are reported significantly late.

13. GLD ETF – Direct Edge-X trades and NBBO
It's easier to notice the significant delay in trades reported from Direct Edge-X

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/w9vZfEGLCTE/story01.htm Tyler Durden

Proof Gold's Latest Slam Was Not A "Fat Goldfinger"

December's bond melt-up was not a fat finger but an HFT algo gone wild..

And so was the recent gold smack down…

Via Nanex,

On January 6, 2014 at 10:14:13, Gold futures plummeted $30 on heavy volume. About 4,200 contracts send gold futures prices tumbling $30 and trigger a 10 second trading halt.

Update – 8-Jan-2014

Notice there are 9 groups that total exactly 338 contracts. Also note that each of these groups are separated by smaller groups of trades, and 3 of these smaller groups total 61 or 62.

1. February 2014 Gold (GC) Futures

2. February 2014 Gold (GC) Futures

3. February 2014 Gold (GC) Futures

5. March 2014 Silver (SI) Futures

6. SLV ETF trades

7. GLD ETF trades

8. February 2014 Gold (GC) Futures – Zooming in on about 1/10th of a second.

12. GLD ETF trades – Zooming in on about 1/2 second of time.
Note how trades from EDGX (blue diamonds), Dark Pools (squares) and BOST (light green circles) are reported significantly late.

13. GLD ETF – Direct Edge-X trades and NBBO
It's easier to notice the significant delay in trades reported from Direct Edge-X

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/w9vZfEGLCTE/story01.htm Tyler Durden

They Give Awards For That?!

Submitted by Simon Black of Sovereign Man blog,

The “Ig Nobel Prize” is parody of the Noble Prize that is awarded every year for the most trivial scientific achievement. (‘ig’ is short for ‘ignoble’)

For example, the 2007 recipient for the ‘Ig Nobel Peace Prize’ went to the United States Air Force Wright Lab in Ohio, for proposing the development of a ‘gay bomb’ that could be dropped in hostile territory and make enemy troops sexually attracted to each other. Make love, not war?

(This actually happened. The proposal was part of a $7.5 million funding request in 1994 to develop non-lethal weapons, including one that would create “severe and lasting halitosis”, and “could be used on mixtures of enemy personnel and civilians.” Your tax dollars at work.)

So when I opened my email yesterday and saw the subject line: “Central Bank Governor of the Year”, I immediately presumed it was a similar satire. It wasn’t.

It’s bad enough that our modern society considers the hoodoo of economics to be “science”.

And that we award our most esteemed prizes for intellectual achievement to its master practitioners like Paul Krugman who tell us how bountiful our national wealth could be if we would only conjure more paper currency out of thin air.

These ‘scientists’ have managed to convince the entire world that it’s a good idea to award a tiny banking elite with supreme, totalitarian control over the money supply.

Frankly this idea is even dumber than the Air Force’s. And perhaps the framework of modern central banking will one day receive its own ‘Ig Nobel Prize’.

But for now, it’s taken very seriously. So seriously, in fact, that the Financial Times’ “Banker” intelligence service recently announced the aforementioned ‘Central Bank Governor of the Year’.

Guess who won?

Nope, not Ben Bernanke. You see, while Mr. Bernanke has spent the last several years aggressively expanding the balance sheet of the US Federal Reserve, he has been handily out-printed by some of his peers.

No, this dubious honor goes to Haruhiko Kuroda of the Bank of Japan (BOJ).

Mr. Kuroda’s claim to fame is pushing to double the BOJ’s monetary base within just two years, and joining Japanese Prime Minister Shinzo Abe to create more inflation.

He’s off to a hell of a start.

Since assuming office in March 2013, Mr. Kuroda has printed enough money to inflate his balance sheet by 35.5% in just 9-months. And the Japanese yen has plummeted along with it.

Despite obliterating his currency, the FT absurdly claims that Mr. Kuroda has “restored credibility to the Bank of Japan and inspired confidence in Japan’s economy.”

Bear in mind, the Japanese government is already in position where the NET government debt is over 140% of GDP.

And they’re spending a full 25% of its tax revenue just to make INTEREST PAYMENTS… at a time when interest rates are effectively ZERO.

If interest rates rise to just 1%, the Japanese government will go bankrupt. Yet this is exactly the direction that Mr. Kuroda is going.

His goal is to create inflation of at least 2%. But if inflation is 2%, who in his right mind would loan money to the government at 0.3%? You’d be losing money.

Interest rates will HAVE to rise. Investors will demand it. So Mr. Kuroda’s path will either bankrupt the Japanese government… or he will create a currency crisis by devaluing his currency to nothing.

It’s extraordinary how dire the situation is. Yet Mr. Kuroda is now considered by the grand wizards of the financial system to be the BEST IN THE WORLD. Incredible.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/88hP7ebCCBI/story01.htm Tyler Durden

95% Of Total Consumer Credit Lent In Past 12 Months Is For Student And Car Loans

Another month, another disappointment for all those who hope the consumer will finally “charge it.” In November, consumer credit was expected to grow by $14.25 billion, instead it rose by $12.318 billion. However, it was once again the components that were key, because while $11.9 billion or the vast majority of November’s credit growth was in the form of car and student loans (i.e., non-revolving), a tiny $458 million was for revolving, or credit card, purchases.

That’s the demand side. On the supply side, no surprises here, the bulk of credit creation continues to come from the Federal Government whose contribution can be seen on the chart below courtesy of @Not_Jim_Cramer. In fact, if one excludes the contribution of the Federal government and compares how the current “expansion” matches to the last 11, well… instead of describing it see for yourselves:

Finally, putting it all into perspective, of the total $178 billion in consumer credit expansion in the past 12 months, a tiny $9 billion, or just 5% of total, was to fund credit card purchases. The rest went – you guessed it – into purchases of cars and paying for tuition, for which GM and strateospheric college tuitions are most grateful. And that is the New Normal economy in a nutshell.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/E-yuR0NC3js/story01.htm Tyler Durden

Meet the MQ-4C Triton – A New Navy Drone with the Wingspan of a Boeing 757

Spying on humanity’s every electronic move is clearly not good enough for the U.S. government. It is also necessary to be able to surveil the species’ every move from 50,000 feet in the sky. You know, because of the terrorists and all.

The past couple of years have seen many frightening new advances from the U.S. military. From “Atlas” the 6 Foot Tall Humanoid Robot, to “ARGUS” The World’s Highest Resolution Video Surveillance Platform, to domestic drone use, the Department of Defense is hard at work making sure that you can never engage in a private act again without the fear of a hellfire missile landing on your head.

Now here’s the latest…a Northrop Grumman drone with the wingspan of a 757.

From Wired:

A new drone with the mammoth wingspan of a Boeing 757 is set to give the U.S. Navy some serious surveillance power.

Northrop Grumman and the Navy say they’ve just completed the ninth flight trial of the Triton unmanned aircraft system (UAS), an improvement upon its predecessor in the Air Force, the Global Hawk.

With its 130-foot wingspan, Triton will provide high-altitude, real-time intelligence, surveillance and reconnaissance (ISR) from a sensor suite that supplies a 360-degree view at a radius of over 2,000 nautical miles, allowing monitoring from higher and farther away than any of its competitors.

Thus far, Triton has completed flights up to 9.4 hours at altitudes of 50,000 feet at the company’s manufacturing facility in Palmdale, California. According to Northrop Grumman, Triton could support missions up to 24 hours.

Now here’s this sucker in the wild.

Sleep tight serfs.

Full article here.

In Liberty,
Mike

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Meet the MQ-4C Triton – A New Navy Drone with the Wingspan of a Boeing 757 originally appeared on A Lightning War for Liberty on January 8, 2014.

from A Lightning War for Liberty http://libertyblitzkrieg.com/2014/01/08/meet-the-mq-4c-triton-a-new-navy-drone-with-the-wingspan-of-a-boeing-757/
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De Blasio’s NYC (In One Cartoon)

Presented with no comment…

Source: Investors.com

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

De Blasio's NYC (In One Cartoon)

Presented with no comment…

Source: Investors.com

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

USD, Bonds, And Bullion Down Post Fed Minutes

Broadly speaking, markets shrugged at the Fed minutes but as te last 30 minutes evolved, the relative hawkishness (though remember tapering is not tightening) QE message – and fears over excessive risk-taking – have sparked weakness in several asset classes (except stocks for now)…

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/F9c0dGDHXxg/story01.htm Tyler Durden