Category: zerohedge

Nearly three years ago, before anyone had heard of expert networks, before the SEC had brought any major enforcement action against any hedge fund and long before anyone had to gall to accuse SAC of insider trading, Zero Hedge started a series of posts commencing with “Is The SEC’s Insider Trading Case Implicating FrontPoint A Sting Operation Aimed At S.A.C. Capital?” exposing the fraudulent transactions of Steve Cohne’s hedge fund despite fears of violent legal reprisals. We are delighted to inform our readers that this particular chapter is now over: the WSJ has just reported that SAC will plead guilty to securities fraud, pay a final $1.2 billion penalty (still a tiny sum compared to all the ill-gotten gains by Steve Cohen over the years), and most importantly, end the fund’s management of outside money.

From the WSJ:

SAC Capital Advisors LP will plead guilty to securities fraud as part of a landmark criminal insider-trading settlement with federal prosecutors set to be announced by next week, people familiar with the discussions said.

 

The exact timing of the pact isn’t set, and if final details are ironed out quickly, it could still be unveiled by the end of this week, these people said.

 

SAC, run by Wall Street titan Steven A. Cohen, also will agree to stop managing outside money and pay the government criminal penalties of about $1.2 billion, according to these people—which would be the largest-ever insider-trading penalty.

 

…

 

A spokeswoman for the Manhattan U.S. attorney’s office, Jennifer Queliz, declined to comment, as did SAC spokesman Jonathan Gasthalter, Federal Bureau of Investigation spokesman J. Peter Donald and SEC spokeswoman Judy Burns.

 

After any settlement is approved, Mr. Cohen would remain under criminal investigation, though no charges are expected against him barring unexpected developments in the probe, the people said.

And since in the hedge fund world the bulk of “retained earnings” comes not from capital appreciation, manipulated, centrally-planned markets or not, but from charging outside investors the exorbitant privilege of 2 and 20 or, in SAC’s case 3 and 50, the Steve Cohen era is now effectively over.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/OaNw3uiGE2I/story01.htm Tyler Durden

SSDD. Collapsing confidence, check. Housing Recovery meme toast, check. Volume at 2013 lows, check. BTFATH and send Trannies up for 13th of last 15 days (+10.4%), Dow near all-time highs again (thank you IBM buybacks), and S&P to new all-time highs… but don't tell Treasuries (which stand +/-1bps on the week). VIX wasn't drinking the kool-aid but the NASDARK session enabled futures to drag us back to higher before limping lower into the closer. The USD oscilatted around Nowotny comments and POMO ending the day up a rather notable 0.5% from Friday's close and that pressured commodities in general lower (gold hovering at $1345). The last 2 minutes saw stocks scream higher on their own as the world was terrified it would miss out on something (but no other market moved) and all the major indices managed new highs.

 

US Equity markets have only one master… JPY carry levered muppetry…

 

But bonds weren't buying the stock exuberance (or was the post-PMO rally in both bonds and stocks just more of the same Un-Taper hope?)….

 

And credit is absolutely ignoring stocks' exuberance…

 

But the straight line rise to infinity and beyond continues as the entire market finds Birinyi's ruler…

 

Homebuilders rejoin Discretionary stocks at the top of the heap post Debt-ceiling lows… (up 8.5%!)…

 

Volume continues to slump as stock prices rise…

 

VIX remains 'relatively' bid as we head into tomorrow's FOMC decision…

 

Intriguingly, shorts have actually not done so badly in the last week or so (but today saw a late day squeeze)…

 

When the Nasdaq cash indices cat is away, the futures mice will play…

 

Charts: Bloomberg

 

Bonus Chart: Let The Kool Aid Flow… (h/t @Not_Jim_Cramer)

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/No-1fHwn2mk/story01.htm Tyler Durden

Following the humiliation of having a US ambassador summoned so he would explain the spying conducted by the US government, in liberated Paris of all places (because while the NSA spying on your own citizens is an absolute travesty and trampling of basic human rights and smacks of Stalingrad circa 1960, spying abroad is permitted, accepted and largely forgiven by all the developed nations – after all everyone does it) the US has struck back in the most poetic way imaginable: it said that whatever phone records the NSA acquired were passed on to it by the local spy agencies of none other than France and Spain. The implication is simple: the local people understandably furious at the US and screaming blood, have just been given a far more convenient target at which to fume: their own governments.

The WSJ reports how the spy scandal tables have just turned:

The phone records collected by the Europeans—in war zones and other areas outside their borders—then were shared with the NSA, U.S. officials said, as part of efforts to help protect American and allied troops and civilians.

 

The new disclosure upends the version of events as reported in Europe in recent days, and puts a spotlight on the role of European intelligence services that work closely with the NSA, suggesting a greater level of European involvement in global surveillance.

 

The U.S. has so far been silent about the role of European partners in these collection efforts so as to protect relationships. These efforts are separate, however, from the U.S. spying programs that targeted dozens of foreign leaders, including German Chancellor Angela Merkel, whose phones were tapped for years by the NSA.

 

The NSA declined to comment, as did the Spanish foreign ministry and a spokesman for the French Embassy in Washington. A spokesman for Spain’s intelligence service said: “Spanish law impedes us from talking about our procedures, methods and relationships with other intelligence services.”

Of course, this is a lie too:

After publication of the report in Le Monde last week, the U.S. Director of National Intelligence James Clapper said that it contained “inaccurate and misleading information regarding U.S. foreign intelligence activities.”

 

He said the allegation that the NSA collected more than 70 million “recordings of French citizens’ telephone data” is false, but he provided no further explanation of what the data in the documents showed.

However, that doesn’t matter because in the New Normal globalized world everyone else is lying too, and the only prerogative is to keep the sheep happily grazing and not thinking too hard about what really goes on behind the scenes.

Officials privately have said the disclosures in the European press put the U.S. in a difficult bind.

 

The U.S. wants to correct the record about the extent of NSA spying but doing so in this case would require it to expose its allies’ intelligence operations, the officials say, which could compromise cooperation in the future as well as ongoing intelligence efforts.

And for the “greater good” this can’t possibly happen, as who knows what level of theft and criminality within the governments would be exposed. So the best option is merely to scapegoat, who else, Snowden himself, and to suggest that whatever the documents showed is not accurate and the NSA knows best.

U.S. officials said the Snowden-provided documents had been misinterpreted and actually show phone records that were collected by French and Spanish intelligence agencies, and then shared with the NSA, according to officials briefed on those discussions.

 

U.S. intelligence officials studied the document published by Le Monde earlier this month and have determined that it wasn’t assembled by the NSA.

 

Rather, the document appears to be a slide that was assembled based on NSA data received from French intelligence, a U.S. official said.

Based on an analysis of the document, the U.S. concluded that the phone records the French had collected were actually from outside of France, and then were shared with the U.S. The data don’t show that the French spied on their own people inside France.

 

U.S. intelligence officials haven’t seen the documents cited by El Mundo but the data appear to come from similar information the NSA obtained from Spanish intelligence agencies documenting their collection efforts abroad, officials said.

And because the NSA never lies, everyone must believe them…. must believe them…. must believe them…

In conclusion: “Public disclosure of European complicity in the collection efforts would likely spark domestic outrage in those countries against their own governments, and could threaten cooperation with the U.S.”

Great – more domestic outrage in countries that have 60% youth unemployment is just what the European recovery doctor ordered.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/mx6pTkmAg10/story01.htm Tyler Durden

There is a fear stalking the corridors of European politics. It is not the surging unemployment in France, or record delinquencies in Spain, or all-time low credit creation across the region; it is the growing concern that the powers that be have from the rise of Euroskepticism. As UKIP’s Nigel Farage exclaims to Barroso and his brood, “years ago, you were less worried… but now we are “evil”, “populists”, we are “dangerous” and are going to bring down Western Civilization.” As the outspoken Brit implores in this brief clip, there is nothing extreme in his views. “The real European debate is about identity,” he notes, “what we are saying, large numbers of us from every single EU member state is: we don’t want that flag, we don’t want the anthem that you all stood so ram-rod straight for yesterday, we don’t want EU passports, we don’t want political union.” As Greece faces down its 3rd bailout and deflationary threats loom across the region, we suspect top-down and bottom-up angst will bubble back to the surface soon enough.

 

 

 

And here, from El Pais, is a very enlightening graphic showing the considerable growth in “Extreme Right” parties across the entire European region:

 

Whether, as Farage has warned in the past, we remain on the verge of social unrest is unclear but for sure this is not the poltical union that Barroso pitches it to have become…

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/dW5UBgYLZsI/story01.htm Tyler Durden

There is a fear stalking the corridors of European politics. It is not the surging unemployment in France, or record delinquencies in Spain, or all-time low credit creation across the region; it is the growing concern that the powers that be have from the rise of Euroskepticism. As UKIP’s Nigel Farage exclaims to Barroso and his brood, “years ago, you were less worried… but now we are “evil”, “populists”, we are “dangerous” and are going to bring down Western Civilization.” As the outspoken Brit implores in this brief clip, there is nothing extreme in his views. “The real European debate is about identity,” he notes, “what we are saying, large numbers of us from every single EU member state is: we don’t want that flag, we don’t want the anthem that you all stood so ram-rod straight for yesterday, we don’t want EU passports, we don’t want political union.” As Greece faces down its 3rd bailout and deflationary threats loom across the region, we suspect top-down and bottom-up angst will bubble back to the surface soon enough.

 

 

 

And here, from El Pais, is a very enlightening graphic showing the considerable growth in “Extreme Right” parties across the entire European region:

 

Whether, as Farage has warned in the past, we remain on the verge of social unrest is unclear but for sure this is not the poltical union that Barroso pitches it to have become…

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/dW5UBgYLZsI/story01.htm Tyler Durden

Submitted by Simon Black of Sovereign Man blog,

You know the old rule of thumb about laws–

The more high-sounding the legislation, the more destructive its consequences.

Case in point, HR 3293– the recently introduced Debt Limit Reform Act. Sounds great, right? After all, reforming the debt seems like a terrific idea.

Except that’s not what the bill really does. They’re not reforming anything. HR 3293′s real purpose is to authorize the government to simply stop counting a massive portion of the US national debt.

You see, one of the biggest chunks of the debt is money owed to ‘intragovernmental agencies’.

For example, Medicare and Social Security hold their massive trust funds in US Treasuries. This is the money that’s owed to retirees.

In fact, nearly $5 trillion of the $17 trillion debt (almost 30%) is owed to intragovernmental agencies like Social Security and Medicare.

So now they basically want to stop counting this debt. Poof. Overnight, they’ll make $5 trillion disappear from the debt.

On paper, this looks great. But in reality, they’re setting the stage to default on Social Security beneficiaries without causing a single ripple in the financial system.

Remember, when governments get this deep in debt, someone is going to get screwed.

They may default on their obligations to their creditors, causing a crisis across the entire financial system. Or perhaps to the central bank, causing a currency crisis.

But most likely, and first, they will default on their obligations to their citizens. Whatever promises they made, including Social Security, will be abandoned.

And if you read between the lines, this new bill says it all.

Not to be outdone by the United States Congress, though, the International Monetary Fund recently proposed a continental-wide ‘one off’ wealth tax in Europe.

Buried in an extensive report about Europe’s troubled economies, the IMF stated:

“The appeal is that such a tax, if it is implemented before avoidance is possible and there is a belief that it will never be repeated, does not distort behavior (and may be seen by some as fair).”

In other words, first they want to implement capital controls to ensure that everyone’s money is trapped. Then they want to make a grab for people’s bank accounts, just like they did in Cyprus.

The warning signs couldn’t be more clear. I’ve been writing about this for years. It’s now happening. This is no longer theory.

Over the last few weeks I’ve been having my staff revise a free report we put together two years ago about globalizing your gold holdings.

In the report I mentioned that capital controls are coming. And that some governments may even ban cash transactions over a certain level.

These things have happened. Cyprus has capital controls, France and Italy have limits on cash transactions. And given this new evidence, it’s clear there’s more on the way.

Every rational, thinking person out there has a decision to make.

You can choose to trust these politicians and central bankers to do the right thing.

Or you can choose to acknowledge the overwhelming evidence and reduce your exposure to these bankrupt western countries that will make every effort to lie, cheat, and steal whatever they can from you… just to keep the party going a little while longer.

It’s time for people to wake up to this reality. You only have yourself to rely on. Not the system. Not the government. And certainly not the bankers.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/0WJr-vFUED8/story01.htm Tyler Durden

We recently noted that, despite all the hot money flows and self-congratulatory extrapolation, European macro data is collapsing (as opposed to supporting ideas of recovery). In fact, it is falling at the fastest pace in over a year as the prospect of the euro area falling into deflation may be increasing; as Bloomberg’s Niraj Shah notes the single currency rises, growth loses momentum, money-supply expansion slows and bank lending stagnates. As Shah fears, that may push the region into a debt spiral as the real value of debt increases, marking a new phase in the crisis.

Inflation May Turn to Deflation

The pace of inflation has almost halved since the start of the year to a three-and-a-half year low of 1.1 percent in September. Core prices are near a record low of 0.8 percent at 1 percent. Greece is already experiencing deflation as prices fell at an annual rate of 1 percent in September. Spain’s 0.5 percent CPI rate may already be negative once the increase in the 3 percentage point rise in VAT is excluded.

Weak Credit Extension

The three-month average M3 money-supply growth stands well below the ECB’s reference rate of 4.5 percent. It slowed to 2.1 percent in September from 2.3 percent in the prior month. Credit extension is likely to remain weak as banks deleverage their balance sheets in preparation for next year’s Asset Quality Review and stress tests.

Deflation Risks Increase as Euro Strengthens

The strength of the euro will place downward pressure on prices. The Bank of International Settlements measure of the real effective exchange rate, which is deflated by the consumer price index, rose to 98.8 last month, the highest this year. The euro has risen 4.4 percent against the dollar this year.

Real Cost of Debt Servicing to Swell

Countries’ real debt will increase as they fall into deflation. The euro-area debt ratio already stood at 93.4 percent of GDP in the second quarter of 2003 versus 89.9 percent in the same quarter in 2012. Greece had a debt ratio of 169.1 percent in the second quarter. That is only surpassed by Japan and Zimbabwe. Belgium, Ireland, Italy, Portugal have debt ratios exceeding 100 percent.

Source: Niraj Shah (@economistniraj)

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/AtfnjVKp2LU/story01.htm Tyler Durden

We recently noted that, despite all the hot money flows and self-congratulatory extrapolation, European macro data is collapsing (as opposed to supporting ideas of recovery). In fact, it is falling at the fastest pace in over a year as the prospect of the euro area falling into deflation may be increasing; as Bloomberg’s Niraj Shah notes the single currency rises, growth loses momentum, money-supply expansion slows and bank lending stagnates. As Shah fears, that may push the region into a debt spiral as the real value of debt increases, marking a new phase in the crisis.

Inflation May Turn to Deflation

The pace of inflation has almost halved since the start of the year to a three-and-a-half year low of 1.1 percent in September. Core prices are near a record low of 0.8 percent at 1 percent. Greece is already experiencing deflation as prices fell at an annual rate of 1 percent in September. Spain’s 0.5 percent CPI rate may already be negative once the increase in the 3 percentage point rise in VAT is excluded.

Weak Credit Extension

The three-month average M3 money-supply growth stands well below the ECB’s reference rate of 4.5 percent. It slowed to 2.1 percent in September from 2.3 percent in the prior month. Credit extension is likely to remain weak as banks deleverage their balance sheets in preparation for next year’s Asset Quality Review and stress tests.

Deflation Risks Increase as Euro Strengthens

The strength of the euro will place downward pressure on prices. The Bank of International Settlements measure of the real effective exchange rate, which is deflated by the consumer price index, rose to 98.8 last month, the highest this year. The euro has risen 4.4 percent against the dollar this year.

Real Cost of Debt Servicing to Swell

Countries’ real debt will increase as they fall into deflation. The euro-area debt ratio already stood at 93.4 percent of GDP in the second quarter of 2003 versus 89.9 percent in the same quarter in 2012. Greece had a debt ratio of 169.1 percent in the second quarter. That is only surpassed by Japan and Zimbabwe. Belgium, Ireland, Italy, Portugal have debt ratios exceeding 100 percent.

Source: Niraj Shah (@economistniraj)

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/AtfnjVKp2LU/story01.htm Tyler Durden

 

 

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“I didn’t know the NSA tapped your Handyüberwachung Fraulein…”

 

.

 

 

.
This doctor claims he didn’t know

That payments from patients would grow

The truth is he did

And just kept it hid

Protecting the old status quo

The Limerick King

 

 

.

.

 

 

Didn’t know about the security clusterfuck in Libya.

Didn’t know about the IRS scandal.

Didn’t know his government spies on journalists.

Didn’t know the NSA engages in a domestic spy program aimed at Americans.

Didn’t know the NSA tapped Merkel’s Handyüberwachung.

Didn’t know the NSA spies on every other leader in the so called free world.

Didn’t know about the Obamacare snafu.

Didn’t know Americans would lose their existing medical coverage or see their premiums skyrocket under Obozocare.

Let’s play a game: Didn’t know _______________.

 

Three things he most definitely knows:

This week’s  televised sports schedule.

Saturday morning’s tee off time.

Days to go…

 

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/c2kg_TUBmy4/story01.htm williambanzai7

As the Detroit bankruptcy hearing heats up following news that the city’s unsecured creditors, among them pensioners, are set to recover pennies on the dollar, 16 to be precise, the question of which are the next cities to follow in the footsteps of bankrupt Motown, becomes relevant once again. Courtesy of the WSJ, and the second part of its series on “U.S. Cities Grapple With Finances“, here is a list of the US cities that when push comes to shove metaphorically, and when the money runs out literally, will have no choice but to knock on the door of the local regional bankruptcy court and submit that long-prepared bankruptcy petition. Specifically, here are the cities that have 10 days or less in cash on hand available. Because, unless one is the Fed, cash and lack thereof is all that matters.

The list below ranks the top 10 cities in terms of days cash on hand. Needless to say, a city with a low number in this category (such as 0.0) may have trouble paying bills, bribes, lap dances and other core municipal outlays.

 

Shifting away from the stock, and looking at the flow, as Detroit showed the world the very hard way, cities mired in pension costs will ultimately default and lead to massive haircuts to the retirees. The following 10 cities have the greatest percentage of pension costs as a percentage of the city’s general fund.

 

Of course, cash on hand while perhaps the most important factor, especially if a city becomes a net cash burner, is hardly the only indicator to keep an eye on. Additional consideration must be given to amount of reserves, or the ratio of a city’s total fund balance to expenditures, because if this is negative it means the city spends more than is available.

 

Another relevant factor: taxable real estate per capita – the lower the number here, the weaker the real-estate market, which also means the lower the city’s overall wealth and its ability to raise property-tax revenue.

 

Debt interest costs may not be a factor under the Fed’s centrally-planned ZIRP world, but when rates once again go up, there will be blood. The following 10 cities have the highest amount of debt per capita: it may not be a problem now, but it will be sooner or later.

 

Last but not least is the most subjective indicator, yet perhaps the most forward looking one: population growth. Because if anyone knows the reality behind a city’s numbers, it is the people who live there. If people see no long-term opportunities they move somewhere else – simple as that. And the less population a city has, as anyone who has played the SimCity series knows, the less property, income and sales tax can be collected, and the more costs have to be squeezed, resulting in the dreaded evil “austerity” and, ultimately, default.

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