Tag: finance

To think all it took to wake up not only the FBI (which generously provided a phone number to all intereste parties so others could do its work for it) but the porn-addicts at the most corrupt, complicit and clueless, not to mention bought and paid for, “regulator” in US history, the SEC from a five year slumber – yes, we started warning about HFT in April of 2009 – was one Michael Lewis book. Moments ago the SEC announced that, with a five year delay, it is has opened several investigations into HFT. From the WSJ:

Ms. White, testifying before a House Appropriations subcommittee, said the SEC currently has “a number” of ongoing investigations regarding “market integrity and structure issues, including high-frequency traders.” She declined to provide specifics about the investigations, but said they have been under way for “quite some time.”

And now, please hold for laughter:

“We’re very much focused on any abuses in that space,” she said.

Ok, now you can laugh. And laugh some more:

The SEC and the Commodity Futures Trading Commission are looking into ties between high-speed traders and major exchanges, examining whether the firms are getting preferential treatment that puts other investors at a disadvantage, people familiar with the probes said Monday.

Since we feel generous, here is a place to start: several hundred articles covering precisely what you should have been investigating 5 years ago! And since we know you are budget strapped, we won’t even ask for our finders fee for having been the first to expose the scam that is HFT – we realize that all those porn subscriptions cost a pretty taxpayer penny.

Then again, not even we are dumb enough to fall for the lie that the SEC is actually going to finally do something about HFT:

Ms. White acknowledged the SEC is in the midst of a policy debate on whether the speed and complexity of trading in stocks and other securities pose risks to markets. She said the SEC’s approach on the issues would be “data-driven and disciplined.” She stopped short of embracing any policy shifts.

 

The review of the guts of the stock market follows a string of market breakdowns, such as last year’s failure of the Securities Information Processor, a computerized link that transmits market orders to the public and is overseen by the Nasdaq Stock Market.

Why? Because since hundreds of current SEC employees can’t wait to quit their job in the glorious tradition of the SEC revolving door just so they can find a much higher paying job doing nothing at the same HFT firms they were supposed to be policing, and because it is the HFT lobby itself that controls the SEC (recall that SEC Uses HFT Firm-Designed Tool To Find That HFT Doesn’t Cause Flash Crashes), only an idiot would fall for the same lie again and again. Especially since Mary Jo White will have to promptly recuse herself from this investigation: after all the bulk of her former clients at Debevoise, especially Morgan Stanley, are some of the most flagrant abusers of HFT.

As for retail investor “confidence” in capital markets, that ship sailed long ago. Because no matter how high the rigged market closes day after day on increasingly worse economic news, they are never coming back, period.

via Zero Hedge http://ift.tt/1gZY6Ku Tyler Durden

No, this is not Tuesday Humor or an April Fool. As the WSJ's China Real-Time blog reports, this is also not a scene from Spaceballs. In the smog-ridden city of Zhengzhou, a Henan-based travel company shipped 20 bright blue bags of fresh mountain air to show oxygen-deprived city residents what they’re missing. Of course, as we have noted previously, the canned-air idea is hardly unique to Henan: Rags-to-riches Chinese tycoon Chen Guangbiao began selling such cans in 2012.

 

 

Smog sufferers reportedly wrung the blu ebags out in order to extract every last bit of fresh air possible…

 

Though the cans seem a little easier to carry…

The cost: $0.80 for a can of fresh air.

 

 

Nope, not a joke!

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

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European leaders may have felt a momentary brief lapse in the wary feeling of disdain that has existed between them for years now, but that was once exacerbated by the financial crisis and the entire PIGS- story that ensued, with the debt crisis. But the moment was fleeting as they sat round tables and spoke via special diplomatic communiqués as to what they should do (or not do, as the case may be) over the arch–enemy to that myth that is called ‘democracy’, Vladimir Putin. But, all of that was fleeting, secondary, peripheral and unlasting. They have greater divisional problems over the horizon and this time it’s the fear of deflation. It won’t be a fleeting moment, but a fleeing moment for them to leave the EU.

Eurozone inflation has now fallen to an all-time low for the past 52 months (March 2014) and this is now increasing the pressure that the European Central Bank will be forced to act to keep deflation at bay. There will be a Monetary Policy Meeting that is going to take place on Thursday April 3rd.

• Consumer prices increased by 0.5% year-on-year in March as shown in figures released today by Eurostat. 
• Core inflation dropped to 0.8%.
• It had previously stood at 1%
• Analysts had expected it to be at 0.6%
• The rise was 0.7% in February.
• As a consequence, the Euro immediately fell this morning against the Dollar; although it did get back the ground that had been lost by early morning.
• It is currently 0.26% up, standing at S1.3788.

Consumer prices have risen therefore at their slowest pace since November 2009. The European Central Bank has a current target of 2%. The figures are now fuelling fears that deflation is only round the corner and whatever happens the European Central Bank will not be able to change the onset of that pressure on the economy. There have been warnings now that the EU risks deflationary pressure in its economies for months now.

Is the EU drifting towards deflation (Japanese –style)? Probably. At least, it looks like that. Just a few days ago, figures announced showed that Spain had falls in its prices and inflation was edging down in Germany. 10-year government bonds in Portugal (moving inversely with prices) dropped under 4% and that was the first time in four years.

Even before the figures that have just been released the pressure was on at the ECB with radical action to counter the problem needed. It is doubtful if the ECB will unveil any plans however immediately regarding a bond-buying program. But, there is increasing likelihood that quantitative easing is in sight right now. Economists are now saying that the ECB will have no other choice than to go down the long and lonely path of easy money. What the US did, Europe does and follows suit…later, but they end up doing it all the same. Get the printing presses rolling!

If Spain, which seems to be the most worrying case at the moment, has a high risk of deflation while it is trying to gain some competitiveness through maintaining lower wages, then procrastination by the ECB will not be the perfect answer to the problem. The country as all of Europe is laboring under heavy debt and public sector debt there is about 200% of GDP. Spain also has until 2016 to get its deficit under 3% (as imposed by Brussels). Figures released show that it has already missed the target of 6.5% today (standing at 6.6%). Deflation can only make things worse.

If they don’t do anything and Draghi turns into Dragh-ing on with the decision-making over deflation, then people will stop buying hoping that prices will decrease even further, which is what will happen…and so the circle, vicious as it is, continues its cycle. Unemployment figures will be published tomorrow and that may influence the ECB too.

Europe is sleepwalking into catastrophe and neither the European Central Bank or the Merkels and the Hollandes and certainly not the Camerons of this struck Union will be able to get themselves out of the predicament that they have gotten themselves into. Goodbye Europe and hello deflation. But the UK is still rejoicing that the minimum-wage increases will outstrip inflation for the next few years, “provided the economy continues to improve” (to use the words of the UK’s Low Pay Commission chairman, David Norgrove). Not certain that we have the same definition of “continues to improve” and secondly it’s hardly difficult to outstrip inflation when it turns into deflation. But bring on the deflation, rejoice, and come all ye faithful. Quantitative Easing is on its way. The markets will be rejoicing.

Originally posted: European Fears: Deflation

 

via Zero Hedge http://ift.tt/1pJOov2 Pivotfarm

Submitted by Mark St.Cyr via Mark St.Cyr blog,

Suddenly the world is a buzz with the revelations that High Frequency Trading (HFT) may be doing more than actually harming the markets, it might be destroying the illusion they still are markets.

This past Sunday the world at large was introduced that maybe, just maybe, something was amiss in the financial markets. However, anyone with more than a passing interest in business, finance, and a little common sense could feel in their gut that something just wasn’t copacetic.

Between the Federal Reserve's massive QE experiment amplified by the arms race of algorithmic technologies (aka HFT) to shave off a piece of that pie for themselves, the last few years have been nothing less than breathtaking.

Currently I am staggered as I watch or read many in the so-called “smart crowd” taking to the financial media outlets professing their ire at (wait for it….) Michael Lewis’ assertion that: “the markets are rigged.”  This is where they have an issue? Really? I mean…Really?

Let’s put a few things into its proper perspective. HFT is currently a catch-all phrase or moniker. At one time when it was first introduced it could be (and was) argued it had a legitimate use in making markets more efficient. However that was some 10 years ago. Today’s HFT seems to have been on an evolution of exploitation and adulterated well past the point of resembling the good idea it once was hailed to be.

Efficient markets are when: real buyers, and real sellers meet, agree, and exchange with the least amount of friction to transact. Note the emphasis on real, it’s not there for style, real means an actual buyer or seller. Period. (Just so we’re clear and not falling down the black hole of what “is” is.)

This point is one of the underlying problems in the markets today. It’s not the only one HFT has adulterated, but it just might be the most important to this discussion. For what everyone seems to be missing as they defend HFT as the great market liquidity engine, that so-called “liquidity” more often than not is fake. So I ask: Is fake now acceptable in the financial markets? For if that’s true: Bernie Madoff might be looking for his get out of jail card.

We have laws on the books to protect the markets from people trading on inside information, fraud, and more. People get arrested and perp walked in front of the media as to make examples to show, “This can happen too you!” Yet, if machines are doing the same in an equivalent manner, that’s OK. For this is technology we’re talking here, and we all know without technology, the markets are nothing more than the pits. (pun intended)

Sometimes complicated issues have to be reduced to their smallest form to get an indication on whether or not something is good, bad, or indifferent. And once one reduces this all down to just basic common sense, you don’t need a supercomputer spinning algorithms near the speed of light to come up with the obvious answer of – Duh!

When someone within the financial markets comes across information that is deemed “confidential” then uses that information as to front run said information and profit by it, we throw them in jail for insider trading.

If a machine can detect you placing an order then within nanoseconds execute buy and sell orders throughout the exchanges as to skim a piece or to push markets in a beneficial direction to enrich itself. That’s fine. Are you kidding me?

Since when is it “legal” to insert oneself into a transaction they had no business being involved in? That is not “facilitating” that’s fraudulent skimming, for that “inserted freeloader” was not needed to transact. That’s front running pure and simple. And like I said earlier we perp walk people for that. But an HFT? Nope, that’s now looked upon as “improving liquidity” by the so-called “smart crowd.” Simply jaw dropping in my view.

Add to this the insane notion that these HFT outlets are providing, “deep markets.” Again, I’ll ask, what are we talking about here? Real buyers? Or, the illusion of real buyers? For if anyone remembers, the “Flash Crash” showed everyone just how real and deep the markets were.

All those quotes of illusive bids and ask were anything but illusive: they were illusions. The term “quote stuffing” and its consequences were first highlighted there. Now, it’s as if it never happened or better yet, is defended in an “ancient history” type dismissal.

Ancient history or not, if someone were to set up shop selling land deals at bargain prices touting that the demand was high and pointed to the surrounding landscape pointing out the row upon row of newly constructed facades as proof, you might think or find comfort in the notion, “Well if I need to sell there’s a chance I might find a buyer.”

Then you walked over unbeknownst to find all those freshly constructed home facades were just that – facades resembling a Hollywood movie set. Then what would you think? I know what one should be thinking: “How do I contact the authorities? These people need to be put in jail!”

But if it’s a machine rendering a “virtual reality” showing demands of large bids or asks in any given instrument that’s OK, they’re providing a valuable service to the community showing what it could be like if there were real buyers and sellers I guess. Just don’t think of ever trying to sell or buy one of them, for they disappear faster than a snake-oil salesman can close up shop.

The only good thing that has come out lately on this whole issue of HFT is maybe for the first time in years the cover has been thrown off exposing the parasitic beast that’s been living just beneath the surface passing itself off as a symbiotic entity, rather than the pernicious monster its grown to be.

Now the only question left to ask is: Can they invoke the death penalty for this creature…

Without killing the patient?

via Zero Hedge http://ift.tt/1dP6lIG Tyler Durden

Just last week we asked “Is college waste of time and money?” It appears, based on the latest data from the BLS, that for all too many, it absolutely is. As CNN Money reports, about 260,000 people who had a college or professional degree made at or below the federal minimum wage of $7.25 last year.

 

 

Via CNN Money,

Experts point to shifts in the post-recession labor market as the reason for so many college graduates in low-paying jobs.

 

“The only jobs that we’re growing are low-wage jobs, and at the same time, wages across occupations, especially in low-wage jobs, are declining,” said Tsedeye Gebreselassie, a staff attorney at the worker advocacy group National Employment Law Project.

 

…

 

Some 58% of the jobs created during the recent economic recovery have been low-wage positions like retail and food prep workers, according to a 2012 NELP report. These low-wage jobs had a median hourly wage of $13.83 or less.

Perhaps the following sums it all up perfectly…

“My family told me, ‘just get your degree and it will be fine,'” Bingham told CNNMoney. “A degree looks very nice, but I don’t have a job to show for it.”

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

With Goldman’s Thomas Stolper having gone the way of JPMorgan’s Tom Lee, we thought it worth tracking the performance of the other market “seer” that reared his ugly head recently. Since the Crimea Referendum, Russian stocks are up over 16% (greatly outperforming US) but as investors began their great rotation back into EM, The White House’s Jay Carney issued a “strong sell” recommendation on Russian stocks… since his suggestion, Russian stocks have risen over 6%…

 

 

Chart: Bloomberg

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

The whole “recovery” in Europe never made much sense to us.

 

We are told repeatedly that Europe has passed through the storm, that the EU economy and financial system are on the mend, and that Europe is now the place to be investing.

 

However, the fact of the matter is that economic data can be fudged for political reasons (e.g. Angela Merkel’s re-election bid in Germany), riots/ protests can be ignored or marginalized by the media, and the real state of bank balance sheets can be hidden as long as you avoid major margin calls or funding stressors.

 

Indeed, considering that Europe’s problems took years to unfold, despite the clear evidence that its banking system was virtually insolvent, the fact that things appear calm in Europe today doesn’t really say much about the true state of affairs over there.

 

So what truly has improved in Europe?

 

Bonds yields have fallen… but when you’ve got sovereign governments (via social security funds), the ECB, and bank of international settlements all buying your bonds… odds are they’ll fall in yield.

 

What about corporate earnings and revenues? Well if you are comparing your results to 2012 when the entire EU banking system almost imploded, chances are they’ll look pretty good. If you compare your physique to a dead guy, you’ll look healthy no matter how out of shape you are.

 

And then of course there are European stocks, which have been roaring higher ever since ECB President Mario Draghi stated he would do “whatever it takes” to keep the EU financial system afloat (somehow this claim is more relevant than the actual monetary or banking laws of the EU).

 

 

 

Indeed, EU financials have not only more than doubled since the dark days of 2012… they’ve in fact exceeded their pre-crisis 2011 highs!

 

But then again, when your Central Bank gives banks access to unlimited capital in exchange for totally garbage collateral priced at 100 cents on the Euro (despite it being worth at most half of that), you’re likely going to see a lot of liquidity move into stocks.

 

At the end of the day, all of the data points used to claim that things have improved are largely accounting gimmicks. The people claiming that all is well are the same folks who denied there was a problem to begin with… and who, not coincidentally, draw the vast majority of their political and social capital from perpetuating this claim.

 

So here are some rather staggering data points Europe needs to confront before stating “all clear.”

 

1. As of 2012, an incredible 25% of the total EU population (120 MILLION people) was living in poverty or social exclusion (the number has since increased by four million more… so much for things improving).
2. In 2011, child poverty in Spain was an incredible 30%. That was before things got ugly in 2012.
3. Youth unemployment in Europe is an amazing 22% with troubled countries like Spain and Greece showing levels more than twice that.

 

The solution to these problems? Continue to claim that the crisis is over… and put into place various schemes to steal citizens’ money if things get worse again (Cyprus snatched over 40% of all deposits over €100,000 during its recent banking issues).

 

When you are actively promoting plans to snatch deposits to prop your banking system up (see the recent IMF proposal), you are not in “recovery.”

 

We don’t know if things will erupt tomorrow, next week or next year. But we do know that the “recovery” is largely a work of fiction… and that the crisis will erupt again at some point.

 

Swing by http://ift.tt/RQfggo for a number of FREE investment reports including Protect Your Portfolio, How to Buy Gold at $273 per Ounce, and What Europe’s Crisis Means For You and Your Savings.

 

Best Regards

 

Phoenix Capital Research

 

via Zero Hedge http://ift.tt/1dOW1Ao Phoenix Capital Research

Many are scratching their heads wondering how it is possible that with all of today’s economic data misses the stock market not only ignored all the relentless bad data, as it has for the past 5 years (yes, yes, the weather, we know) but managed to surge to a new all time high. Not us: we forecast precisely what would happen yesterday when we brought our readers’ attention to what was a record Fed-assisted window dressing operation in the form of some $242 billion in revere repoed Treasurys being provided to dealer banks in order to make their books look attractive for quarter end. Specifically we noted yesterday that “one should consider that tomorrow – with their books well padded for the March 31 daily security “holdings” – the banks will almost certainly unwind over $100 billion if not more of today’s reverse repo, an amount that is now equal to nearly two full months of QE. Where that money will go, only the (NY) Fed and a few bank CEOs know.”

Today we know not only where that money went as was implied, it went in risky assets i.e., the S&P500, but more importantly we also got the number right: today’s reverse repo was amounted to just $113 billion, a $130 billion liquidity release from the Fed’s reverse repo operation in one day!

So while QE may have tapered to a “measly” 55 billion per month, on just the first day of April risk assets experienced the additional benefit of over two full months of QE injected into the stock market in one single day!

And now you know where today’s buying deluge came from.

The flipside, the easy money for the month of April, which as we also noted previously has historically been the best performing month of the year, has now been used up.

via Zero Hedge http://ift.tt/Oc2glE Tyler Durden