iftttwall – Page 26704

Maryland’s Obamacare Exchange Launch Was Also a Disaster

The botched launch of Obamacare’s federal
exchange system was front and center in the news for the last three
months of 2013. All the attention paid to the federal system, which
covered 36 states, distracted somewhat from the fact that several
of the state-run exchanges were arguably even worse off.

One of those states was Maryland—which, funny enough, was
repeatedly touted as an example of how Obamacare’s exchanges could
work if state officials wanted them to work and were proactive
about implementation. President Obama went to Maryland to deliver a
big health care speech a few days before the October launch of the
exchanges, praising Maryland’s elected officials for their efforts.
The state was even
given a $6.7 million “early innovator” grant by the federal
government, which hoped that the Maryland exchange could serve as a
model for other states.

But state and federal officials working on the exchanges had
known for months that Maryland’s exchange build out had huge
problems, according to a
big Washington Post feature from this weekend on the state’s
disastrous exchange development process.

According to the Post’s report, an outside audit from
the consulting firm BerryDunn warned state officials in a late 2012
presentation that they were underprepared, and that there were big
risks to the project. For example, the report says, “no one
could produce for BerryDunn standard project plans showing a
timeline and checklist for how the main IT contractor…would get the
job done.” Nor was there anyone in charge. Even after the state
finally hired an exchange director to manage the project, BerryDunn
continued to warn that the project lacked a clear plan and timeline
for completion.

In June of 2013, the project team managed to cobble a basic
system together in order to pass a basic test proving that their
system could talk to the federal data hub. But two months later,
when it came time to show the system could do more than that, the
exchange crashed and burned, reports the Post:

On Aug. 26, five weeks before the launch date, Maryland faced
its final major test with federal overseers, a more thorough
demonstration of how each part of its system would work. This one
did not go as well. When the test got to the part of having a
fictitious person choose a health plan, the Web site crashed. It
also could not fully send enrollment data to insurers or e-mail
Marylanders when they successfully selected a plan — something it
still cannot do.

A final prelaunch test the next month wasn’t much better:

… Testers filed their final report on Sept. 13, calling the
last version of the software they could review “extremely
unstable.” Internal testing of one aspect of the site found 449
defects, almost half of which would probably trouble the final
release.

Not surprisingly, launch day was a mess:

More than 24 hours after the launch, there were just four people
who had selected plans and eight more who appeared to have logged
on.

An IT contractor wrote to state officials on Oct. 2
wondering if the four were “legitimate,” since contractors could
not even access the site. She questioned if they might be
fictitious accounts from prior phases of testing.

Maryland’s troubled experience trying to build its own exchange
isn’t unique. Oregon, Minnesota, Vermont, Massachusetts, and Hawaii
have all had (and in some cases still have) serious glitches with
their exchanges, despite
hundreds of millions in federal grants doled out to states
building those systems. (Maryland alone got a total of $171 million
from the federal government.) The widespread launch failures of so
many exchanges, at both the federal and state levels, suggests that
many of the problems were inherent in the basic conception of the
exchanges, and that even if there had been near universal political
support for implementation, failure was at least as likely as
success.

from Hit & Run http://reason.com/blog/2014/01/13/marylands-obamacare-exchange-launch-was
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The Surveillance State, Now at Bargain-Basement Prices

The Conversation If you’re concerned about
fiscal responsibility and personal privacy, there’s mixed
news for you. The super-creepy surveillance techniques in which
government officials increasingly indulge themselves come with a
declining price tag. That’s the good-ish news. The bad news is
that, no friggin’ surprise, government is likely to buy ever-more
on-the-cheap eavesdropping precisely because of those
bargain-basement prices—unless new legal barriers intervene. Legal
scholars examining the phenomenon say that decining costs should be
held against use of new surveillance techniques by the
courts. Well…we can hope.

In a Yale Law Journal article parsing the United
States v. Jones ruling that attaching a GPS device to a
vehicle constitutes a search under the Fourth Amendment, Kevin S.
Bankston and Ashkan Soltani open with a relevant quote by Judge
Richard Posner from a 2007
case: “Technological progress poses a threat to privacy by
enabling an extent of surveillance that in earlier times would have
been prohibitively expensive.”

Posner issued his warning about the growing ease of
technological surveillance even while upholding a conviction in a
case involving electronic tracking. He cautioned that the use of a
tracking device in the case at hand might be justified, but that
mass surveillance was an increasing concern that needed to be
addressed by the courts.

United States v. Jones did that, but not in an
especially satisfactory way. Bankston and Soltani write:

The Jones concurrences, taken together, are potentially
a watershed moment in the Court’s Fourth Amendment jurisprudence.
Prior to Jones, the Court’s precedent on location
tracking—regarding radio “beeper”-based vehicle tracking in the
1980s—indicated that one could have no reasonable expectation of
privacy in one’s public movements. In Jones, five Justices
rejected that proposition, at least with respect to prolonged
government surveillance of one’s public movements. Unfortunately,
those Justices stopped short of clarifying when one does have such
an expectation or when surveillance violates it—other than Justice
Alito’s conclusion that “the line was surely crossed before the
4-week mark.”

George Washington University Professor of Law Orin Kerr offered
what he calls the “equilibrium-adjustment”
theory of the Fourth Amendment (PDF)—basically, that
constitutional privacy protections should be taken as a constant,
with specific restrictions on searches and seizures shifted to
maintain them lative to government officials’ ability to intrude
into our lives.

But how you measure the state’s ability to intrude? Yes, we know
that surveillance is getting easier, but adjusting protections
requires quantifying that ease in some way.

So Bankston and Soltani suggest measuring the cost of tracking
people and using that as a guideline. And the costs they come up
with are interesting. For instance, they estimate the cost of a
foot pursuit of a single suspect at $50 per hour, per agent.
Tailing a car with another car comes in at $105 per hour, using the
Internal Revenue Service’s standard deduction and making
assumptions about speed and time spent in a vehicle. More cops in
cars equals more cost.

“Stingray”
cell phone trackers, surprisingly, aren’t that cheap: Bankston and
Soltani estimate their use at $105 per hour, because of the
personnel-intensive way they’re deployed.

But as the tech gets more advanced, and more remote from the
target, the cost goes down, down, down… Tracking a vehicle with a
GPS device can cost as little as pennies per hour—especially once
you’ve amortized the personnel costs of installation over a few
days.

Getting cell phone location data from a carrier can be even
cheaper. Why wouldn’t it be, since the work is farmed out to a
private company that then shoulders most of whatever costs may be
involved?

Cost of tracking

These plummeting costs, the authors suggest, are an effective
way of monitoring the declining barriers to surveillance by the
government. Those declining barriers should require greater
restrictions on the state in order to maintain privacy
protections.

Relying on the surveillance costs involved in these precedents,
we arrive at a rough rule of thumb: If the cost of the surveillance
using the new technique is an order of magnitude (ten times) less
than the cost of the surveillance without using the new technique,
then the new technique violates a reasonable expectation of
privacy. …

Speaking more generally, any technology used for mass location
surveillance would trigger our rule, because as the number of
targets increases, the cost of tracking each one approaches
zero.

That’s an interesting approach, and one that’s at least worthy
of debate, whether or not the courts take it up.

But it’s also worth seeing, in dollars and cents, just how
dramatically the cost of keeping tabs on us is dropping for
government agencies—and the temptations that must pose for
officials who see their budgets effectively expanding in leaps and
bounds when it comes to exercising their snoopy instincts.

from Hit & Run http://reason.com/blog/2014/01/13/the-surveillance-state-now-at-bargain-ba
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Federal Officials Say NYPD Foreign Meddling is Wasteful and Monstrous

The New York Police
Department’s (NYPD)
12-year-old
International Liaison Program, which posts detectives in
foreign cities for counterterrorism work, is a massive waste of
money, according to federal officials.

Recently-retired Chief of Police Raymond Kelly began the program
after 9/11. Also recently-retired David Cohen, formerly of the CIA,
acted as his deputy commissioner of intelligence. Kelly and Cohen,
believing they
couldn’t rely on federal agencies for information, established an
arm of the department that sends personnel to at least 11
international locations, including Canada, Israel, and India, with
the hope that they can trace terrorist threats before they reach
New York.

The problem is, the NYPD has no jurisdiction in these places. As
The American Conservative has previously
addressed, “None of the NYPD liaison officers has any legal
standing for dealing with the local authorities. The detectives
travel on tourist passports, stay in hotels, and do not report to
the U.S. ambassador, nor to the CIA Chief of Station.”

DNAinfo, which covers New York City affairs, spoke to unnamed
federal officials. DNAinfo suggests
that the expensive ($120,000 salaries) and less-than-official
presence of the city police have caused more harm than good:

NYPD detectives are ineffective, often angering and confusing
the foreign law enforcement officials they are trying to work with,
and are usually relegated to the sidelines because they lack
national security clearance.

For example, when bombs exploded at resorts in Bali in 2005,
killing 20 and injuring hundreds, the Indonesian National Police
“were astonished and irritated that the NYPD showed up,” a federal
source explained.

[..]

In the end, a source said, there was “absolutely no nexus”
between the bombing and New York. The attack was the work of the
Indonesia-based organization Jemaah Islamiyah. And any information
obtained by the feds in Bali was transmitted to the Los Angeles and
New York FBI offices and to the FBI-NYPD Joint Terrorism Task
Force, which has roughly 120 NYPD detectives along with top police
brass.

Another source said that NYPD detectives showed up at the
funerals of victims of the Madrid rail bombings in 2004, angering
local officials and victims’ families.

“Ray Kelly and David Cohen created a monster,” the source said.
“The NYPD Intelligence Division has absolutely no place in overseas
counter-terrorism — lack of security clearances and diplomatic
immunity, confusion for host country law enforcement and security
services, conflicts with U.S. agencies such as the CIA, FBI, DEA,
U.S. Embassy RSO, etc.”

CBS New York
lauds the fact that Kelly’s “12-year tenure ends Wednesday
without a major successful terror attack on his watch.” The new
NYPD commissioner, William Bratton,
considers the department to have the “foremost counterterrorism
capability in the world.”

Tim Cushing of Techdirt takes a more skeptical view of the
police force. He
jabs that the NYPD’s International Liaison “casually stomp[s]
on civil liberties and civilian sensibilities in order to chalk up
another zero in the ‘plots prevented’ column.”

from Hit & Run http://reason.com/blog/2014/01/13/federal-officials-say-nypd-foreign-meddl
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Bill Yields Turn Negative On Safe-Haven Un-Rotation

As stocks have vascillated in a worryingly not-straight-up manner for the last few days with today's weakness taking the Dow and S&P 500 pre-holiday lows (with th ebiggest drop in a month), it would appear more than a few 'investors' are greatly unrotating into the very shortest-term Treasuries as a safe-haven from the turbulence. The last few days have seen Treasury-Bill yields swing negative in the less-than-1-month maturity indicating anythng but risk appetite as a scramble for safety is strong enough to warrant paying (albeit marginally) for it. As we noted previously, the driver of Bill Gross' 'bet' on the short-end will not be based on always wrong expectations of what Fed monetary policy does to prices, but the exodus of speculative money from equities into safe havens, call it the Great Unrotation.

The mid-Feb bills are so aggressively bid as to push the yield negative…

Of course, what is also problematic for those seeking safety is the wall of doubt starting in early March over the debt-ceiling debacle…

Charts: Bloomberg

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

Greenspan Warned Of Housing Bubble… In His PhD Dissertation

Submitted by Robert Murphy via the Ludwig von Mises Institute of Canada,

Sometimes you run across bits of trivia that are too funny to be made up. It is common knowledge that Ben Bernanke’s academic work, before becoming Fed chair, involved studies of the banking crises during the Great Depression. This is somewhat ironic, since many of us blame Bernanke’s policies for perpetuating the financial crisis and contributing to the second Great Depression (through which the world is still suffering).

However, what is not as well known – and which only recently came to my attention–is that Alan Greenspan had an ironic element to his own scholarship. Now many readers might assume that I’m referring to Greenspan’s 1966 essay–written when he was an acolyte of Ayn Rand–in which he sang the praises of the gold standard. Obviously, that early work would later prove awkward for Greenspan, as he held the reins of the fiat money engine known as the Federal Reserve.

But that’s not what I’m talking about. Rather, I’m referring to Greenspan’s NYU doctoral dissertation, which he took great pains to bury. Apparently, a reporter for Barron’s was the only person to unearth a copy. Here are excerpts from the April 28, 2008 Barron’s article by Jim McTague, entitled, “Looking at Greenspan’s Long-Lost Thesis”:

The dissertation, written in 1977 when Greenspan received his coveted degree from New York University, had been tucked away on a professor’s sagging bookshelf for 31 years.

…There are only two known copies: the Maestro’s own and the one we viewed. As far as we can tell, Barron’s is the only news organization ever to have seen the thesis since a third and now missing copy was removed from the public shelves of NYU’s Bobst library at Greenspan’s request in 1987, the year that Ronald Reagan appointed him chairman of the Federal Reserve Board. Glancing at the document, we momentarily felt like Indiana Jones at the dramatic moment in which he discovers the Lost Ark of the Covenant.

…We were tickled to find that the work’s introduction includes a discussion of soaring housing prices and their effect on consumer spending; it even anticipates a bursting housing bubble. Writes Greenspan: “There is no perpetual motion machine which generates an ever-rising path for the prices of homes.”

Greenspan, however, didn’t foresee a housing mania spilling into the general economy, toppling banks and brokerage houses and paralyzing key portions of the credit system. The worst he could anticipate was that a sharp “break in prices of existing homes would pull down the prices of new homes to the level of construction costs or below, inducing a sharp contraction in building.” Back then, there were no home-equity lines of credit, derivatives or subprime mortgages. Mortgages were largely concentrated at savings and loans. Credit was harder to come by, too, because conventional mortgage rates were about 8.5% and headed significantly higher. Still, the thesis shows that the former Fed boss was focused on housing very early in his career. Thus, it casts doubt on his recent assertions about being surprised by the Mesozoic-era-size impact of this decade’s housing mania.

Thus it seems that Alan Greenspan, when his professional ambition wasn’t involved, could understand perfectly well (a) the virtues of a commodity money and (b) the dangers of a housing bubble. If the Austrians are right in laying the blame for the housing bubble on Greenspan’s loose monetary policy following the dot-com crash, then Greenspan can’t plead ignorance: He knew what he was doing.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/gJO1gT8zYOw/story01.htm Tyler Durden

Check out the IRS’s stunning admission of its own mafia tactics

January 13, 2014
Santiago, Chile

In the 3^rd century AD, Emperor Caracalla famously remarked of Rome’s tax policy:

“For as long as we have this,” pointing to his sword, “we shall not run out of money.” (Of course, Rome did run out of money. )

At the time, Roman taxation was so extractive that it drove people into poverty and desperation. Yet the government continued to forcibly plunder wealth at the point of a sword.

Not much has changed.

The Taxpayer Advocate Service, which is an independent office within the IRS, has just released a two-volume report describing the mafia tactics that are being employed by the tax collectors in the Land of the Free.

The Executive Summary alone is 76 pages. And believe it or not, it’s a real page turner.

On page 37, for example, the report states that the IRS largely assesses tax penalties improperly.

Specifically, the Office of the Chief Counsel admonished the IRS that it was not legally authorized to impose accuracy related penalties on certain taxpayers, and that the service should abate those penalties already imposed.

Yet the IRS declined to follow its own Chief Counsel’s legal advice, and it has refused to abate penalties for nearly 90,000 taxpayers.

In the words of the agency’s own Taxpayer Advocate Service, “The IRS’s failure to abate inapplicable penalties signals disrespect for the law and a disregard for taxpayer rights.”

Page 34 discusses how the IRS has abandoned its own checks and balances.

When a taxpayer is deemed to owe the US government money, the IRS is supposed to have a “collection due process (CDP) hearing” to verify that the IRS agent followed the law and consider whether the intrusion on the taxpayer was warranted.

Yet the report states that this has become nothing more than a rubber stamp formality, and that current practices “do not provide the taxpayer a fair and impartial hearing.”

In fact, among the most litigated issues at the IRS, the report states that “taxpayers fully prevailed only about two percent of the time.”

Two percent. If you go up against the IRS, you have a 2% chance of winning. Give me a break. You have more than a 2% chance fighting against the mafia.

Moreover, the byzantine US income tax code, which runs to an incredible 72,000+ pages, “disproportionately burdens those who [make] honest mistakes”, especially as it relates to offshore disclosures.

In fact, the report acknowledges that “tax requirements have become so confusing and the compliance burden so great that taxpayers are giving up their U.S. citizenship in record numbers.”

It’s not exactly Emperor Caracalla pointing to his sword… but IRS’s policies and tactics are not so far off from a police agency.

They disregard the law and the advice of their own counsel. They disproportionately burden honest individuals. They flout due process. And they push people to abandon their citizenship.

These are mafia tactics, plain and simple. And like the Romans, Ottoman Empire, and French monarchy before, the tax system in the Land of the Free has become a desperate farce marked by fear and intimidation.

This is one of history’s obvious marks of a nation that has reached its terminal decline. We cannot seriously expect this time to be any different.

from SOVErEIGN MAN http://www.sovereignman.com/tax/check-out-the-irss-stunning-admission-of-its-own-mafia-tactics-13381/
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Spot The Idiotic Central Banker Statement

With the wild world of central bankers full of double-speak, counter-factuals and well-chosen anecdotes, statements of questionable sanity are not difficult to find. However, Dennis Lockhart, who has already done his optimistic economic damage to stocks this morning just outdid himself. Speaking in his home town, the Atlanta Fed President stated confidently in the Q&A after his speech:

“One of the stupidest things a central banker could do is comment on the stock market.”

Then added:

The stock market is not “a bubble in any way”

“Stupid” indeed, Mr Lockhart…

Fed Lockhart: “One of the stupidest things a central banker could do is comment on the stock market.” But adds, he doesn’t see a bubble.

— Michael S. Derby (@michaelsderby) January 13, 2014

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

Merger Monday – Suntory Buys Beam for 25% Premium ($16Bn)

By Phil of Phil’s Stock World

Mergers are great market boosters.

They make investors think everything is undervalued in a sector when one company gets bought for high cash premiums and BEAM (Jim Beam) is one of those companies many of us know and love but not, apparently, as much as the Japanese who will be taking over this 110 year-old American Icon. BEAM did not rise 30% last year, making it “cheap” vs other S&P choices and, of couse, the only thing in the World more plentiful than Free Dollars is Free Yen – so why not gobble up some assets while the gobbling’s good?

The company’s combined portfolio of brands will include Beam’s Jim Beam, Maker’s Mark and Knob Creek bourbons; Courvoisier cognac and Sauza tequila; plus Suntory’s Japanese whiskies Yamazaki, Hakushu, Hibiki and Kakubin; Bowmore Scotch whisky; and Midori liqueur and, if you went from “yeah, I know those” to “who?” while reading that list, then you can see why Suntory values Beam’s distribution network and brand recognition as much as they do the product.

Suntory is a 1 TRILLION Yen Company and a steady, 4% dividend payer in Japan. A move like this is another bullish signal for the markets as this is the proverbial money coming off the sidelines, when foreign companies begin buying up US companies and Japan is a prime candidate as the Nikkei was up 45% last year – making the S&P look pretty cheap to them.

If you want to find other companies that look cheap, I suggest the S&P’s 20 Most Concentrated Hedge Fund Holdings, where BEAM was number 7. These are the companies most favored by hedge funds and it’s not the usual suspects:

The Free Money is still out there, as long as you can service a 10-year loan at 3%, any of these companies can be yours and refinancing a decade from now is the next CEOs job – especially if you are a CEO already over 55 and looking to put your stamp on your company with a big move.

STZ, for example, is a $15Bn company at $80 a share (expect it to move higher on this news) and a series of acquisitions has run it up 110% in the last 12 months. AN is another roll-up story and JCP may seem an odd choice there but, like SHLD, their 1,104 stores are probably worth more than their $2.2Bn market cap (I still prefer SHLD, which is 50% owned by a hedge fund!).

Following table by Baker Street Capital Management.

SHLD is making the cut for one of my top 3 picks of 2014, now that it dropped almost 50% since Thanksgiving. Valued at $3.9Bn at $36.71 per share, if we give a $2M valuation to the companies 4,000 stores, we have $8Bn right there along with $2.5Bn worth of brands, a home service business worth $2Bn, Land’s End is a standalone at $1.4Bn, Sears Online is new and worth about $1Bn, Sears Canada and Sears Auto are good for another $1Bn and Inventory alone argues for a few Billion on the Retail side (see excellent Baker Street Report).

At $8Bn, I was hesitant to call Sears a buy but, at $3.9Bn, a Japanese department store could make them an offer next week. We’re having a special Live Webinar today at 1pm, where we will discuss my top 3 Trade Ideas for 2014. With SHLD, our intent is going to be playing for a buyout at $6Bn or more ($48+ per share) and it has already been placed in our Income Portfolio (from PSW Member Chat) last Friday at $36.71 with 10 of the Jan 2015 $30/45 bull call spreads at net $6. Our intention is to add short puts (IF) they fall further but, if not, then we’re already $6.71 in the money on our $6 spread with a potential gain of $9 more (150%) at $45.

Source: Zero Hedge

Overall, we’re still “Cashy and Cautious” as the Macros are NOT matching up to the markets’ performance. Mean reversion can be a real bitch, so there’s no harm in us keeping the bulk of our cash on the sidelines, while we wait to see if this discrepancy can hold up through earnings or not (we’re betting not).

Long-term, you can’t fight the Fed(s) but we’re not really sure how much longer the Fed, the BOJ, the ECB, the PBOC, etc. can keep playing this game. The Financial Times points out this weekend that peer to peer lending in China rose from $940M in 2012 to over $4Bn last year and is expected to hit $7.8Bn in 2015 and 6% of the P2P companies in China went bust last year, with many more in distress.

“The main reasons are the intense competition in the P2P industry, the liquidity squeeze at the end of the year and a loss of faith by investors,” said Xu Hongwei, chief executive of Online Lending House. He estimated that 80 or 90 per cent of the country’s P2P companies might go bust.

The WSJ reports that “China’s government is gearing up for a spike in nonperforming loans, endorsing a range of options to clean up the banks and experimenting with ways for lenders to squeeze value from debts gone bad.”

Write-offs have multiplied in recent months. Over-the-counter asset exchanges have sprung up as a way for banks to find buyers for collateral seized from defaulting borrowers and for bad loans they want to spin off. Provinces have started setting up their own “bad banks,” state-owned institutions that can take over nonperforming loans that threaten banks’ ability to continue lending.

China’s banks reported 563.6 billion yuan ($93.15 billion) of nonperforming loans at the end of September. That is up 38% from 407.8 billion yuan, the low point in recent years, two years earlier

India Consumer Price Index (CPI)

Fed-fueled inflation in India is likely to cost Prime Minister Singh his job as prices rose 11% in November and 9.87% in December, fueling voter anger in the World’s largest Democracy. Despite the big boost from rising prices, GDP in India expanded just 5% last year, the slowest rate since 2003, and will probably grow at that pace in the fiscal year ending March 31, according to central bank estimates.

Our own GDP was boosted in July by a clever recalculation of the value of existing intellectual property, mostly TV and Film assets that added $560Bn to our GDP last year (3.6%). $560Bn is the GDP of Switzerland, ranked 20th in the World. Seinfeld alone added Billions to our GDP under the new rules and much of this fancy new math was predicated on companies like NFLX paying Billions of recurring Dollars for old TV shows. So, as long as NFLX itself, with their p/e of 277, isn’t in a bubble – what can go wrong?

Have I mentioned we’re Cashy and Cautious?

Click on this link to try Phil’s Stock World FREE!

via Zero Hedge http://ift.tt/1ahSuGU ilene

Japanese Stocks Lose All Post-Taper Gains As USDJPY Dives

The Nikkei 225 is at its ‘cheapest’ relative to the Dow Industrials in the last two months as the behcmark Japanese stock index has now lost all of its gains post the US Taper decision in mid-December. With USDJPY breaking back below 103 and the correlation between it and stocks as high as it has ever been, if BAML is right with its sub-100 target for the FX pair, then the Nikkei could be looking at 14,500 (or an 11% tumble from the highs).

Japanese stocks are back below pre-Taper levels… (leaving the NKY the cheapest to the Dow in 2 months)

as the correlation between Japanese stocks and the Yen remains as high as ever…

Charts: Bloomberg

via Zero Hedge http://ift.tt/1ahSu9I Tyler Durden

How A High Freak Algo Halted Bond Trading For 5 Seconds During Friday's Payrolls Release

It’s just sad now: with every passing day bringing new (and previously unseen) cases of high frequency trading algo-generated market halts or crashes, that none of the regulators are willing to take a stand against this market scourge that we have written about for nearly 5 years now, is a clear indication that the HFT lobby is firmly in control of what were once “capital markets” and that the retail investor is once again, the sacrificial lamb. But while it was one thing for the high freak thugs to control marginal price action through momentum ignition, quote stuffing, hide not slide, flash trades, and all the other well-known manipulative techniques which seemingly are too complicated for the SEC to figure out, in equities where things get really bad is when HFTs start crashing, or at least halting, the bond market at key market inflection points such as during the most important monthly data release, the payrolls release. This is precisely what happened on Friday, when as Nanex clearly shows, a momentum ignition algo sent the ZF (5 Year T-Note future) soaring and resulting in a 5 second – an eternity in today’s nanosecond age – trading halt during the actual release of the BLS report.

How this kind of manipulation continues without penalty, and how this same party can keep getting away with this – recall from June, “Here Is Today’s 482 Millisecond NFP Leak, The Subsequent Gold Slam And Trading Halts In Treasurys And ES” – is just too mind-numbing to consider any more.

Here is the criminal action from Friday, in pretty charts, courtesy of Nanex:

On January 10, 2013, about 8/10ths of a second before the Labor Department released the widely anticipated Employment Situation Report, trading activity exploded in Treasury futures, sending the prices much higher in less than 1/10th of a second. The buying activity overwhelmed the 5-Year T-Note market causing a stop logic circuit breaker to trip and shut down trading for 5 seconds. During the halt in 5-Year T-Note futures, the news was officially released in Washington, D.C. – meaning that anyone wanting to trade on that news, would have to wait until the halt was lifted almost 4 seconds later (4,000,000 microseconds in high frequency trading lingo).

This isn’t the first time that Treasury futures have been halted (see also 08-Nov-2013 and 07-Jun-2013); however, before June 2013, this was an extremely rare event.