Tag: finance

In a day full of “shocking” announcements, we just got the latest one. Because it must be truly a shock that none other than Goldman’s Bill Dudley, who also moonlights as head of the New York Fed, is stoically against the break up of America’s systemically critical, massive and 100% untenable FDIC-insured hedge funds, pardon megabanks. Such as Goldman.

From a just released speech ironically titled “Too Big To Fail”

I am not yet convinced that breaking up large, complex firms is the right approach.  In particular, these firms presumably exist, in large part, because there are scale or network effects that allow these firms to offer certain types of services that have value to their global clients.  These benefits might be lost or diminished if such firms were broken up.  In addition, the costs incurred in breaking up such firms need to be considered.  Finally, the breakup of such firms would not necessarily result in a significant reduction in overall systemic risk if the resulting component firms were still, collectively, systemic. 

That is so wrong and frankly moronic, as to border on the grotesque.

These megabanks only exist because the regulatory and financial climate in the US (and the entire world) is one which promotes consolidation to such a point where it is in every bank’s best interest to become as big and as systematically critical as possible in the shortest amount of time, and thus to always get bailed out whenever it is threatened with that other part of the Return equation: Risk.

For Dudley to not even remotely admit this is disingenuous, naive and frankly, idiotic.

The remainder of the Bill “just eat hedonic iPads” Dudley’s drivel can be found here.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/4HN7zWPG6ic/story01.htm Tyler Durden

No one has any good answers but it seems carry is being unwound in a hurry as US momos are hammered. Whether Draghi’s move shocked EURJPY riders enough to spark some major anxiety is unclear but Japanese stocks are now down over 440 points from early highs (to one month lows), US equities at their lows, and USDJPY blown back below 98.00.

 

 

which is odd considering that so many went short last week…

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/PEPo-gRn770/story01.htm Tyler Durden

We previously discussed what happened the last time that IPOs were outperforming the broad market by as much as they are now but thanks to the exuberance of the last month, it seems we have broken another 'record'. Year-over-year absolute gains in Bloomberg's IPO index have only been higher once in history – in 1999; and current levels have been notable resistance for the exuberant spurts of the last 6 years…

 

 

The Bloomberg IPO Index (US) is a capitalization-weighted index which measures the performance of stocks during their first publicly traded year. It includes all companies with a market value of at least $50 million at the initial public offering.

 

(h/t Brad Wishak at NewEdge)

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/x3JFI0V_cc0/story01.htm Tyler Durden

As we reported previously, for the third quarter in a row, Obama’s favorite punching bag bank – JPMorgan – reported a statistically impossible zero trading day losses.

Some suggested that since in the New Normal market in which it is virtually impossible to lose money this was to be expected; either that or just because banks work purely to satisfy client flow and have little principal risk, there is little reason for them to actually lose money trading. Both these ideas got blown out earlier today when Goldman reported that in the third quarter, the FDIC-insured hedge fund’s trading loss days soared to a total of 15 days: a whopping 23.4% of the total 64 trading days in the quarter.

While this may not seem as much, it is a veritable Mt. Everest compared to the 6 days losses in Q2, and orders of magnitude greater than the just 2 loss days in the first quarter of the year.

As a reminder, Goldman’s jump in unprofitability took place in a quarter in which JPM had zero trading losses. In fact in happened in a year in which JPM had zero trading losses. This can be seen on the following chart comparing JPM and Goldman win/loss trading days for the past year.

So what happened? Did Goldman suddenly let itself go and let banks like JPM pocket all the profits? Did Goldman let go all of its best traders and allow JPM to humiliate it where it really counts: trading revenues?

Or was this merely the latest exercise in optics by the wiliest of banks: after all, when you have an administration hell bent on punishing any and every bank that for any reason does something out of the ordinary – even if said “punishment” is merely populism-pleasing wristslaps – the last thing you want to do is add insult to injury and indicate you are absolutely flawless, as JPM continues to do and report quarter after quarter of trading perfection… and soaring litigation reserves.

Maybe this is just one of the reasons why Goldman has so far managed to slip completely untarnished through the DOJ’s punitive cracks?

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/w0xqyegYr6Y/story01.htm Tyler Durden

As we reported previously, for the third quarter in a row, Obama’s favorite punching bag bank – JPMorgan – reported a statistically impossible zero trading day losses.

Some suggested that since in the New Normal market in which it is virtually impossible to lose money this was to be expected; either that or just because banks work purely to satisfy client flow and have little principal risk, there is little reason for them to actually lose money trading. Both these ideas got blown out earlier today when Goldman reported that in the third quarter, the FDIC-insured hedge fund’s trading loss days soared to a total of 15 days: a whopping 23.4% of the total 64 trading days in the quarter.

While this may not seem as much, it is a veritable Mt. Everest compared to the 6 days losses in Q2, and orders of magnitude greater than the just 2 loss days in the first quarter of the year.

As a reminder, Goldman’s jump in unprofitability took place in a quarter in which JPM had zero trading losses. In fact in happened in a year in which JPM had zero trading losses. This can be seen on the following chart comparing JPM and Goldman win/loss trading days for the past year.

So what happened? Did Goldman suddenly let itself go and let banks like JPM pocket all the profits? Did Goldman let go all of its best traders and allow JPM to humiliate it where it really counts: trading revenues?

Or was this merely the latest exercise in optics by the wiliest of banks: after all, when you have an administration hell bent on punishing any and every bank that for any reason does something out of the ordinary – even if said “punishment” is merely populism-pleasing wristslaps – the last thing you want to do is add insult to injury and indicate you are absolutely flawless, as JPM continues to do and report quarter after quarter of trading perfection… and soaring litigation reserves.

Maybe this is just one of the reasons why Goldman has so far managed to slip completely untarnished through the DOJ’s punitive cracks?

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/w0xqyegYr6Y/story01.htm Tyler Durden

A law school professor and former criminal defense attorney explains why you should never agree to be interviewed by the police:

Other criminal defense attorneys agree:

As does police officer George Bruch of the Virginia Beach Police Department:

 

 

We’ve previously documented that there are so many federal and state laws in the United States, that no one can keep track of them all, and everyone violates laws every day without even knowing it.

As such, it is best to avoid law enforcement when possible.

It’s vital to note, however, that the Supreme Court ruled this year that your silence CAN be used against you (the link is to the website of one of America’s top constitutional law professors) … at least until you’re read your Miranda rights.  Therefore, if you remain silent when police are questioning you, it is very important to tell the police that you are exercising your right to remain silent.  As the Atlantic notes:

Basically, if you’re ever in any trouble with police… and want to keep your mouth shut, you will need to announce that you’re invoking your Fifth Amendment right instead of, you know, just keeping your mouth shut. “Petitioner’s Fifth Amendment claim fails because he did not expressly invoke the privilege against self-incrimination in response to the officer’s question,” reads the [Supreme Court] opinion ….

It’s Not Andy Griffith’s America Any More

This is not to say that all law enforcement personnel are bad folks. Many of them are outstanding people.

But our police forces have become so insanely militarized and the fear of terror has become so wildly overblown that many law enforcement personnel have become hair-trigger tense.

People have been severely harassed when they’ve asked for help from law enforcement.  For example, an anti-war website was spied on for 6 years after they asked for help by the FBI.  And the FBI rifled through all of a woman’s electronic communications after she told the FBI that she was being harassed.

Police have recently tasered numerous deaf or retarded people for “failing to follow orders”.

And they’ve shot and killed people who were just looking for help.  See this and this.

Again, we’re not trying to paint with a broad brush; most law enforcement personnel are good folks just trying to do their job.  And police are human, too … sometimes they get scared and overreact.

But it’s not the same ole Andy Griffith show type demeanor among law enforcement today.  So it’s best to be careful.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/ifITQjxnspU/story01.htm George Washington

Presented with no comment…

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/8FFsDC1COiE/story01.htm Tyler Durden

As we noted earlier, today’s Twitter IPO, while pricing without the Facebook associated histrionics or crashing the NASDAQ, has had an impact on markets. A rather profound impact it appears, because as the OTC BB site, the host of pink sheet, OTC and Bulletin Board stocks just reported, the entire OTC market has been shut down by Finra.

From OTCBB:

Market Wide Quotation and Trading Halt for All OTC Equity Securities

 

On Thursday, November 7, 2013, the Financial Industry Regulatory Authority, Inc. (“FINRA”) halted trading in all OTC Equity Securities pursuant to FINRA Rule 6440(a)(3). FINRA determined to impose a temporary halt because of a lack of current quotation information. Therefore, FINRA has determined that halting quoting and trading in all OTC Equity Securities is appropriate to protect investors and ensure a fair and orderly marketplace. The trading and quotation halt began on Thursday, November 7, 2013, at 11:25:00 a.m. E.T. FINRA will notify the market when trading may resume.

 

Contact Information: Questions regarding this notice can be directed to: FINRA Operations at (866) 776-0800.

So to protect investors, Finra is shutting down the entire market. Let’s hope this is not just a test of what is coming to far more liquid exchanges.

As to why the entire OTC BB market just break? Who knows, or cares. As long as the NYSE, and more importantly Twitter, is fine all is well.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/8dELsR1Z9Og/story01.htm Tyler Durden

For a few brief minutes this morning, the world celebrated Mario Draghi’s ‘surprise’ rate cut as just the medicine that an all-time high stock market needs to go even higher. European stocks popped champagne-like (with Italy and Spain jumping 2 to 2.5% on the news), EUR collapsing, and peripheral bond spreads dropping notably. However, as he began to speak and it was clear that growth is not there, deflation is a real risk, and – most importantly – there will be no LTRO anytime soon, market reversed and did not look back. It seems, as JPM warns, an LTRO is no longer likely early next year, and the market appears to be disappointed by that. Of course a few more down 2% days (4% drop from highs) and we are sure Draghi will find a way to unleash more…

 

 

And EURUSD retraced Fob 61.8% of its Draghi losses…

 

As JPMorgan notes,

We also think that an LTRO is no longer likely early next year, given that the full allotment has been extended to mid-2015. More likely is that the ECB will, at some point, enhance this by offering a few 6-9 month LTROs to ease the transition from the three-year operations.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/HZLWhhdmD8E/story01.htm Tyler Durden

Having now tripled since August, Bitcoin's break above $300 ($324 highs) raises an important thought experiment – can a digital currency act as a global reserve currency?

 

 

It seems yesterday's CNBC discussion that Bitcoin is nothing but a beanie-baby fad just served to feed the beast… on heavy volume after Draghi's comments…

 

Charles Hugh-Smith, from OfTwoMinds blog, attempts an answer of just that question:

Could a non-state issued digital currency like Bitcoin become a global reserve currency? The idea came up in my recent conversation with Max Keiser on the Keiser Report during our discussion of reserve currencies.

The idea is intriguing on a number of levels. In terms of retaining value though thick and thin, the ultimate reserve currency cannot be printed (and thus devalued) with abandon by a government. Gold and silver have served as the ultimate reserve currency, as precious metals can be traded for commodities and services, provide collateral for debt and serve as reliable stores of value.

While many observers believe gold is still the only reliable reserve currency (or if you prefer, the only reliable backing for government-issued paper money), it's a worthy thought experiment to ask if a digital currency could also act as a reserve currency.

Since there is no real-world commodity backing the digital currency, its value must be based on scarcity and its ubiquity as money. The two ideas are self-reinforcing: there must be demand for the digital money to create scarcity, and the source of demand is the digital currency's acceptance as money that can be used to buy commodities, goods, services and (the ultimate test) gold.

It follows that the first step in a non-state issued digital currency becoming a reserve currency is that it isn't created in quantities that dwarf demand. If the digital currency is issued with abandon, it cannot be scarce enough to gain any value. If I own one quatloo (our hypothetical digital currency) and a trillion new quatloos are issued tomorrow, the value of my one quatloo will decline to near-zero.

The second step is its widespread acceptance globally as money, i.e. a store of value and something which can be traded for goods and services.

There is a bit of a built-in conflict in these two requirements. To be useful in the $60 trillion global economy, the quatloo must be issued in size: there must be enough of it around to grease transactions large and small in all sorts of markets. Using the U.S. dollar as a guide (since the USD is the primary reserve currency), we can estimate that a minimum of $1 trillion in quatloos would be needed to become a practical global currency.

To act as a reserve currency, another trillion or two would be needed, as nations would hold these quatloos as reserves. (Nations hold an estimated $7 trillion in USD reserves, about $3 trillion euros and $1 trillion or so in yen, pounds and other currencies.)

But issuing quatloos in these quantities would remove any scarcity value. Thus the issuer of the quatloo would have to carefully issue more quatloos only when demand justified the need for more monetary "grease" for the global economy.

If on the other hand skyrocketing demand/scarcity drove the value to the stratosphere, holders of the quatloo would rejoice, but this volatility would present its own set of risks for those seeking to use the quatloo as a reserve against currency volatility in the home-country currency. If a digital currency can leap ten-fold in a short time, then might it not drop with equal volatility?

Volatility is the enemy of reserves; the holder of reserves needs a liquid (meaning it can easily be sold or traded in size) currency that predictably retains its value. A volatile currency poses risks, as do currencies that cannot be traded in size without drastically influencing the market value of the currency.

These conditions pose a steep challenge for any digital currency, but they are not insurmountable. Even as a niche currency, non-state issued digital currencies could play a role in the global economy, especially if government-issued fiat currencies destabilize/ devalue due to massive money creation by desperate central banks and state treasuries.

Is scarcity enough to back a non-state issued currency? Bitcoin offers a real-world experiment.

* * *

Meanwhile, in Russia if you pay with Bitcoin, you get a 10% discount:

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/odkaNXFL148/story01.htm Tyler Durden