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With JPM having stolen the spotlight for every possible instance of fraud and market manipulation in the past year, it was easy to forget there are other prominent banks that engage in precisely the same deceptive practices as, well, everyone else. One such prominent bank is none other than everyone’s old favorite bloodthirsty mollusc, Goldman Sachs, which in a filing reported that “currencies and commodities were added to a list of financial products and related activities that are subject to investigation. The filing also added options trading and technology systems and controls to the list.” So, pretty much everything is being investigated.

Bloomberg reports that “Investigators are looking at the firm’s “trading activities and communications in connection with the establishment of benchmark rates,” Goldman Sachs said in the filing. The company “is cooperating with all such regulatory investigations and reviews.”

As noted above, Goldman is merely the latest bank to join pretty much everyone else, who is now under investigation.

At least eight banks including Citigroup Inc. (C) and JPMorgan Chase & Co. (JPM) have said they are being investigated by authorities examining the $5.3 trillion-a-day foreign-exchange market and are co-operating. Citigroup, JPMorgan and Barclays Plc (BARC) have suspended or put on leave some of their most senior currency traders amid the inquiry. No one has been accused of wrongdoing.

 

The U.S. Federal Reserve is examining legal and regulatory exemptions that have allowed banks including Goldman Sachs to trade and own raw materials such as oil, coal and metals, a person with knowledge of the matter said last month.

None of this should be surprising. What should, however, come as a big shock is that while JPM reported it has not had one trading loss either in Q3 or all of 2013 to date, Goldman just announced it lost money on a far more realistic 23% of all trading days, or 15 of 64, in the quarter.

It seems that unlike JPM, Goldman is taking the government’s fraud investigations seriously.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/VAWuuDer0JU/story01.htm Tyler Durden

With everyone’s attention focused on TWTR’s release and following this morning’s insta-lift from Draghi’s surprise, US equity markets are falling fast (led by Nasdaq weakness on moar momo failures) – reverting all the gains and some. While we fully expect more “self-help” declarations as the day wears on, IB has already released a statement that Pink Sheet stock market data will be unavailable until further notice… and that NASDAQ has disable direct routing for TWTR… what a mess…

 

 

 

Pink Sheets Break

 

NASDAQ Breaks

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What inventory boosts give in the current quarter, inventory lack of boosts take in future quarters. At least that is what Goldman’s Jan Hatzius just stated in his note summarizing not only the just released Q3 GDP, but his first Q4 tracking forecast, which he cut from 2.0% to 1.5%.

To wit:

BOTTOM LINE: GDP grew more quickly than expected in Q3, but the surprise came mainly from a larger-than-expected inventory contribution and a smaller-than-expected decline in government spending. Consumer spending and business fixed investment were less strong. Initial jobless claims declined as expected with no special distortions noted by the Labor Department. We started our Q4 GDP tracking estimate at 1.5%.

• GDP grew at a faster-than-expected 2.8% rate in Q3 (vs. consensus +2.0%). Personal consumption expenditures?the largest component of GDP?rose a modest 1.5% (vs consensus +1.6%), with strong growth in goods consumption offset by meager growth in services consumption. Business fixed investment increased at a disappointing 1.6% rate, with a 3.7% decline in equipment investment. Offsetting slightly disappointing PCE growth and sluggish business fixed investment, inventory accumulation contributed eight-tenths to headline growth, while federal government spending posted a smaller-than-expected 1.7% decline. (Federal spending has tended to show some degree of residual seasonality in recent years, with stronger growth in Q2 and Q3, and weaker growth in Q1 and Q4.) In addition, residential investment – which reflects new construction with a lag – rose a solid 14.6%. Stripping out the contribution from inventory investment, real final sales increased at a moderate 2.0% pace.
• In light of the composition of Q3 growth?driven by a substantial boost from inventories and a smaller-than-expected decline in government spending, we started our Q4 tracking at 1.5%, five-tenths below our prior assumption of 2.0%. Inventory investment tends to subtract from growth following quarters showing a positive contribution, while we expect the smaller-than-expected decline in Q3 government spending to result in even weaker Q4 spending than we had anticipated.

Which is great news for stocks: even more economic deterioration means even more BTFATH.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/hWYmheG8an8/story01.htm Tyler Durden

It just gets better and better: TRADING RANGE: TWTR (NYSE): 42.0000-46.0000

As a reminder, at $44/share, Twitter’s valuation rises to $31 billion!

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Another day, another collapse in a measure of the 'peoples' confidence. Despite the animal spirits of euphoric dot-com bubble betting that is the new-normal US equity markets, it seems both rich and poor are not loving it. Bloomberg's consumer comfort index dropped to -37.9 – its lowest since October 2012 having dropped for the 6th week in a row. The last time we saw a collapse of this size, the Fed saved us all with QE3… what this time?

 

 

"they" better hope confidence comes back soon…

Via Citi,

Is consumer confidence set to turn?

Consumer Confidence is once again following a dynamic where we see it move higher for 4 years and 4 months before beginning to collapse

• Moves higher from 1996-2000 with a smaller dip halfway through in October 1998
• Moves higher from 2003-2007 with a smaller dip hallway through in October 2005
• Moves higher and so far tops out in June 2013. Also sees a small dip halfway through in October 2011.

 

Higher yields do not help confidence…

 

A sharp rise in mortgage rates has a negative feedback loop to consumer confidence. For those families and individuals that were now looking/able to enter the housing market, the recent spike in rates acts as a headwind.

 

In addition to the economic backdrop, there is plenty of tail risk as we head into the end of the year. Oil prices have been rising since the summer began (and in reality since the Summer of 2012), partially due to geopolitical risks which are very much “top of mind.” A bigger spike due to a supply shock would choke the economic recovery.(In our view)

In the US, the appointment of a new Fed Chairman and the upcoming budget/debt ceiling debates are likely to bring added volatility. Tapering itself can also induce concern as the “Bernanke put” is being removed from markets.

In Europe, many of the structural problems related to the single currency union have not actually been addressed and the peripheral countries could still create turmoil going forward (see Fixed Income section focusing on Italy in particular for more on this). There has also been little concern with both the German elections and the German Court decision on the constitutionality of the OMT program. A surprise in either of these could be cause for concern.

Emerging Markets are still not out of the woods yet as growth has been weak relative to expectations and countries with current account deficits are beginning to feel pressure in their FX and Bond markets. This is an issue we believe is only starting to develop which we will continue to expand on at later dates.(We have also looked at this in our EM FX section this week)

Overall, the weak economic backdrop, poor housing recovery and potential for tail risk events over the next few months suggest that we have topped out in Consumer Confidence, a warning sign for equity markets.

 

The relationship between Consumer Confidence is clear, and IF June did mark the high and Confidence continues to decline, then we would expect to see that translate to weakness in the equity markets. The removal of the “Bernanke put” only adds to this concern.

A major turn has taken place in equity markets on average four months after Consumer Confidence turns, which would point to a decline beginning around September-October. As we have previously expressed, we remain of the bias that a correction in equity markets on the order of 20%+ is likely this year/ into 2014 and the current dynamics support such a move.

Should we see a decline of that magnitude, it is almost certain that yields would move lower in a rush to safe assets.

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This is what client-facing desks are seeing at various banks across Wall Street right now. One example below:

PLEASE DO NOT ENTER ANY MARKET ORDERS FOR TWTR UNTIL AFTER THE STOCK STARTS TRADING. THESE ORDERS ARE CAUSING A LARGE NUMBER OF REJECTS WHICH MAY DELAY ENTRY OF YOUR ORDER.

 

THANK YOU FOR YOUR CO-OPERATION

Translation: slow down damn it, there will be more than enough shares sold to satsify all demand. Why is there a scramble? Because of this: TRADING RANGE: TWTR (NYSE): 40.0000-44.0000

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“I’m buying coz everyone is talking about it…”

 

 

We note that, according to Reuters, the IPO is 30x oversubscribed, and bear in mind that banks have advised internally to cancel all limit orders that are over 15% below the NBBO. Which means keep a trailing limit order at 14.99% or less below the NBBO in case of ‘market events’.

We are sure, given all these ‘extra’ rules that greed will take a back seat, that the machines will cross their arms and wait patiently, and that TWTR will open just as CNBC’s Bob Pisani hoped – higher with a gentle drift higher all day… </sarc>

 

(h/t @MWellerFX)

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