Moore Capital Fined $25 Million By CFTC For Platinum And Palladium Price Manipulation
by Zero Hedge - April 30th, 2010 9:37 am
Courtesy of Tyler Durden
The FT reports that “the CFTC fined Moore Capital, the hedge fund led by Louis Bacon, $25m to settle allegations that it attempted to manipulate platinum and palladium prices from November 2007 through to May 2008.” If the suit was settled at this near-record fine, one wonders just how bad it would have been had the CFTC allowed this to go to trial. In other news, the PM markets are perfectly unmanipulated and the LBMA has never done anything illegal.
More from the FT:
The regulator said a Moore portfolio manager engaged in a practice known as “banging the close” in the New York platinum and palladium futures market. The technique involves entering orders in a manner designed to inflate the closing price. The hedge fund was charged with supervisory failures.
Moore said the alleged manipulation involved a trader who left the hedge fund in late 2008. “We are committed to high standards of integrity in our business practices,” the company said in a statement.
Morgan Stanley, was also fined, this time not for PM manipulation unlike before, but for that of oil:
Morgan Stanley, Wall Street’s second largest commodities dealer, agreed to pay a $14m penalty to settle claims that a trader at the bank in February 2009 hid a large trade on the New York Mercantile Exchange crude oil market. Swiss bank UBS was a broker on the transaction and was fined $200,000.
Morgan Stanley and UBS entered into a large trade, buying 33,110 contracts of West Texas Intermediate crude for delivery in March 2009 and selling the same amount simultaneously for April 2009. Each contract equals 1,000 barrels.
The Morgan Stanley trader and a UBS broker agreed not to report the trade until the market closed, breaking exchange rules that require trades to be reported within five minutes of execution, according to the CFTC.
As the saying goes, if you look around the table, and you can’t figure out who is using illegal manipulative mechanisms to push the market higher or lower, you are an idiot: the answer is all of them.
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DiggWith $2 Trillion In 3 Year Funding Needs By the PIIGS, The IMF Is Helpless To Do Anything But Sit Back And Watch
by Zero Hedge - April 30th, 2010 9:12 am
Courtesy of Tyler Durden
Total PIIGS funding needs (defined as the sum of debt maturities and budget deficits) over the next 3 years amount to $2 trillion. Total PIIGS funding needs in 2010 alone amount to $600 billion. Total IMF bail out capacity: around $700 billion. Sorry – it simply does not compute.
Below is a table summarizing the funding needs of just the PIIGS.
On Tuesday all the PIIGS had essentially entered the unfundable zone as each’s cost of funding surged, meaning the IMF would have to guarantee or bail them all out. We will certainly see this contagion again as the PIIGS now commence spending with unprecedented profligacy, knowing full well they will be bailed out when the time comes.
So just how equipped is the IMF to deal with this funding requirement?
From Bank Of America:
The IMF primarily funds itself through payments of quotas from member countries, which is based on the country’s relative size in the world economy. Currently, the amount of quotas totals SDR 217 billion, or $328 billion. The IMF additionally supplements quota subscriptions through two credit arrangements between the IMF and a group of member countries – New Arrangements to Borrow (NAB) and General Arrangements to Borrow (GAB). The NAB totals approximately $550 billion from 38 participants, recently expanded from $50 billion and 26 participants, and is used as a credit facility intended to backstop quota resources. The GAB enables the IMF to borrow from participant countries or their central banks under certain circumstances at market-related interest rates.
In reality, the amount the IMF has readily available for new lending is primarily determined by the one-year forward commitment capacity (though this figure is not a rigid maximum). The amount equals usable resources, including unused amounts under loan and note purchase agreements, plus projected loan repayments over the subsequent twelve months, less the resources that have already been committed under existing lending arrangements, less a prudential balance. Currently, the one-year forward capacity stands at SDR 165 billion, or $248 bilion.
In case you missed it, the top two countries on the hook to fund the World bailout are the US and Japan, the two countries caught in the greatest deflationary throes since the great depression. Coincidence, or willful dollar(yen)slaughter: you decide. The only solution for world bailout v2: raise the…
The Oxen Report: Homebuilders Looking Up on DR Horton News, Solar Energy Getting Too Hot, Too Fast?
by David Ristau - April 30th, 2010 8:55 am
Yesterday, we got into an Overnight Trade that does not appear to be working out for us. I recommended a play in Chiquita Brands Inc. (CQB). We got involved with the trade at 15.75, and we got hit with a solid 4.5% loss this morning when CQB opened. The company completely missed estimates and actually reported a loss when an expected profit around 0.24 as expected. It was a big miss for us, but we are hoping today’s plays can benefit us a bit more.
Let’s get into today’s plays.
Buy Pick of the Day: Ryland Group Inc. (RYL)
Analysis: We are looking at Ryland Group as our Buy Pick of the Day because of some very solid earnings from DR Horton Inc. (DHI) that were released this morning. RYL released earnings on Tuesday evening that were better than expected, but the company had an order issue that brought the stock down on Wednesday. The stock has been declining over the past few session after breaking its upper bollinger band. In the past week, the stock has dropped near 8%, and it is in a perfect position to make a breakout.
This morning, DHI reported better than expected earnings, hitting an EPS of 0.04 vs. the expected -0.01. The expected loss beat by a profit has helped the company move up in pre-market around 5%. Additionally, it should help the rest of the residential home building market move up along with it. The market is looking at some worse than expected GDP numbers as the GDP came in at growth of 3.2% versus the expected 3.3% for the first quarter, but futures are showing that the market is not being brought down by the news with futures up slightly. Helping that is the fact that the employment cost index came back better than expected.
RYL is in the same sector as DHI and should be benefitting from an industry wide rise. Most of the other residential stocks, however, are already fairly overvalued and looking at some pre-market gains that are making me stray away. RYL, on the other hand, due to its fall over the past week, is looking fairly solid to have a large move to the upside. The company should be able to benefit from its undervaluation coupled with the news from DHI.
The technicals on RYL are very solid, as well. The company is looking at an…
Moody Now Downgrades 9 Greek Banks, World Yawns
by Zero Hedge - April 30th, 2010 8:41 am
Courtesy of Tyler Durden
Moody’s downgrades nine Greek banks
Debt and deposit ratings remain on review for further possible downgrade
Limassol, April 30, 2010 — Moody’s Investors Service has today downgraded the bank financial strength ratings (BFSRs) as well as the deposit and debt ratings of nine Greek banks to reflect their weakening stand-alone financial strength and the anticipated additional pressures stemming from the country’s challenged economic prospects. The banks’ deposit and debt ratings remain on review for possible downgrade and will be concluded at the same time as Moody’s ongoing review of the country’s sovereign rating, which serves as a reference point with which to impute bank rating uplift as a result of possible systemic support.
The banks affected by today’s rating action are: National Bank of Greece, EFG Eurobank Ergasias SA, Alpha Bank AE, Piraeus Bank, Emporiki Bank of Greece, Agricultural Bank of Greece, General Bank of Greece, Marfin Egnatia Bank and Attica Bank. A detailed list of today’s rating actions is provided at the end of this release.
Moody’s says that the acute economic strain facing Greece is materially impacting the banking sector’s financial condition, requiring it to be further supported. “Increasingly challenging economic prospects point to low business growth, increased loan quality problems and continued pressure on margins. Based on the events of the past few weeks, Moody’s expects the Greek banking system to face heightened challenges, thus necessitating a fundamental repositioning of the banks’ ratings”, says Mardig Haladjian, Senior Vice President.
Although additional measures taken to address fiscal imbalances at the national level are positive for the sovereign’s creditworthiness, they may come at a cost of depressing economic growth over the short to medium term. Negative growth will in turn give rise to unemployment, lower consumer disposable income and reduced profitability in the small- and medium-sized enterprise (SME) and corporate sectors. Mr. Haladjian added that “Moody’s expects the upward trend in non-performing loans, which began in 2008, to continue in 2010 and 2011. Taken together, these factors will place significant additional pressure on the banking sector’s already weakened asset quality and profitability.”
The banks’ funding franchises have also weakened over the past few months. The erosion of market confidence caused by the country’s fiscal problems has curtailed the banks’ access to the interbank and bond markets. As a result, the banks have had to rely increasingly on the ECB to manage their…
Daily Highlights: 4.30.09
by Zero Hedge - April 30th, 2010 8:34 am
Courtesy of Tyler Durden
- Asian stocks advance as earnings improve, Greek debt crisis eases.
- Greece has agreed with the IMF and the EU to take additional austerity measures.
- Japan Household Spending, Wages rise as consumer prices tumble for the 13th month.
- Steel futures in Shanghai heading for biggest monthly drop since January on demand woes.
- UK consumer confidence falls to three-month low as election approaches.
- Yen weakens as Greece aid talks, economic outlook revive demand for yields.
- Barclays’ Q1 net rises 29% to $1.7B, helped by growth at its investment banking operations.
- Brazil’s Embraer posts Q1 net profit of $35.3M vs. year-ago loss of $23.4M.
- Bristol-Myers’ Q1 profit rises 16%, but outlook slips on reform costs.
- China Construction Bank plans to raise $11B in Asia’s biggest-ever rights offer.
- Dr Horton’s March results: $108M loss last year, $11M gain this year.
- Exxon posts 38% jump in Q1 profits, to $6.3B, on higher crude oil prices.
- Fiserv’s Q1 earnings rose 17% to $121M on fewer charges and lower expenses.
- Goldman Sachs under scrutiny of Federal prosecutors reviewing suit by SEC.
- Kodak posts profit of $119M in Q1, helped by patent settlement proceeds. Revs up 31%.
- L’Occitane is said to raise $707M in first French IPO in Hong Kong.
- Metlife swings to $805M profit, reversing $574M loss year ago, on higher revs, invt returns.
- Motorola swung to Q1 profit of $69M on better performance at its networks, enterprise divisions. Total phone shipments fell 43% to 8.M.
- Regal Ent Q1 profit slides 23% to $21.3M on higher costs. Revs up 8.1% at $719.8M.
- Samsung Electronics’ Q1 profit grew more than six fold to $3.6B on 21% rise in revs.
- Sunoco swings to Q1 loss of $63M on charges related to sale of chemical biz; but beats view.
- Symantec to buy two privately held email- and data-encryption companies for $370M cash.
- Takefuji Corp. sues Merrill Lynch for $309M, claiming failure to provide sufficient explanation of a financial transaction.
- Total SA’s Q1 profit rose 14% to €2.61B as sales increased 25% to €37.6B.
Economic Calendar: Data on Employment Cost Index, Chicago PMI, Mich Sentiment to be released.
Earnings Calendar: AGN, AGP, AON, AXL, B, BYD, CEG, CVX, DHI, DISCK, JOUT, LPNT, NDAQ, NWL, SWIR, TOT, UNS, VFC.
RECENT RATING ACTIONS
STARWOOD HOTELS & RESORTS (HOT)
TEREX CORP (TEX)
ETHAN ALLEN INTERIORS INC (ETH)
MANITOWOC CO INC/THE (MTW)
FORTUNE BRANDS INC (FO)
DOW…
GDWheee Friday – Could be a Wild Ride!
by Phil - April 30th, 2010 8:30 am
Attention ladies and gentlemen:
The stock market will soon be leaving the station, please secure all personal items, pull down the safety bar (our Disaster Hedges) and keep all body parts inside ride at all times. Well you know you can follow all of the safety instructions and STILL get smacked in the face with a black swan (like our friend Fabio, pictured here) which is why we elected to get back to cash ahead of this report. The markets were just too insane this week and who the heck knows if Europe will still be a Union on Monday or what the GDP number is going to be (but I do think it’s a miss).
Since our biggest weekend fear is financial panic in Europe, our cash US dollars will become more valuable in a crisis and if the market drops, all the better as we can ride back in and do some bargain hunting. If the market takes off on good GDP and Greece is "fixed" and Spain is "fixed" and Portugal and Ireland are not really a problem (especially for MS and JPM) and the CRIMINAL charges against Goldman look beatable and and the Financial Reform Bill doesn’t disrupt the market with a disorderly breakup of the big banks and the Bank of International Settlements Report continues to be ignored and the run on the Greek banks doesn’t spread to other STUPID counties – well, then we can BUYBUYBUY because, if all this doesn’t matter, then it’s very likely that the entire planet Earth could explode but Wall Street will keep ticking higher.
Yep, I can’t wait to ride this baby mindlessly higher! After all, what can go wrong? BIDU is ONLY $710 a share, BLK is $190, CMP is $76, GOLD is $84, BUCY is $65, FAST is $56, MMM is $90, FOSL $40, F $13.50, DECK $149, SHOO $55, TPX $35, LZB $14, CTB $22, NOG $16, CEO $176, FTI $75, CLB $150, CIB $46, BBD $19, TD $75, BCA $45, BAP $87, ITUB $22, EDU $94, WYNN $93, FFIV $72, CY $14, CREE $77, UPS $70, UNP $78…
These were stocks I was looking at last week, when I told members I thought it was easier to construct a Sell List than our usual Buy List for this market but, if we’re heading…
Did Paulson Have A $2 Billion Bear Stearns CDS Short In Late 2006? Novel Observations On Abacusgate
by Zero Hedge - April 30th, 2010 7:58 am
Courtesy of Tyler Durden
Reading a 901 page Goldman document production (cover to cover) at 36,000 feet has proven to be both relaxing and quite productive. Among the plethora of emails, documents and memoranda, we may have stumbled upon something that could prove to be an even “bigger short” for John Paulson than RMBS: a $2 billion postion in Bear CDS initiated prior to January 2007, as well as all other financial firms. Additionally, we discover that arguably the world’s richest hedge fund manager (for a reason) was prophetically putting on bank counterparty hedges as early late 2006, up to and including Goldman Sachs itself. Most relevantly, in what could be damaging disclosure by Fabrice Tourre, the Frenchman notes that as a result of Paulson’s mistrust of Goldman’s counterparty risk, the Abacus AC1 deal was structured in a novel way in which “they would be acting as protection buyer, facing the ABACUS SPV (as opposed to a structure where Goldman is protection buyer as is usually the case).” This little legalistic variation could make a world of difference in an Attorney General’s hands. It may be time to very carefully read the indenture of AC1 and compare it with those of 2006 and earlier “Abaci.”
An email thread from January 6, 2007, which features all the usual suspects (Tourre, Sparks, Swenson, Lehman, Rosenblum and Ostrem), located on page 755 of 901, has proven to be a cornucopia of information into the Goldman, and Paulson, thought process.
Starting at the bottom:
From: Tourre, Fabrice
To: Sparks, Daniel; Swenson, Michael; Lehman, David A; Rosenblum, David J; Ostrem,Peter L
Cc: ficc-mtqcorr-desk
Sent: Sat Jan 06 19 : 06 :41 2007
Subject: Post on PaulsonDavid Gerst, Cactus Razzi and I had a meeting with John Paulson and his team last Friday. The meeting was attended by [redacted] and [redacted] at [redacted]. The purpose of the meeting was for the Paulson team to meet [redacted] and understand whether [redacted] could be a good candidate for acting as portfolio selection agent for an ABACUS COO trade where all the risk would be provided by Paulson.
At the end of the meeting, the Paulson team told us that they were happy to have met [redacted] and assuming that (1) [redacted] could get comfortable with a sufficient number of obligations that Paulson is looking to buy protection on
…
Criminal Probe Launched Into Goldman Sachs
by Zero Hedge - April 30th, 2010 5:47 am
Courtesy of Tyler Durden
Time for the media circus to go nuts. The AP reports that the Feds have just opened a criminal probe into Goldman: now it is getting interesting. And everyone was thinking that Eric Holder is a toothless puppet (well, that still has to be refuted).
As the AP reports, “The investigation by the U.S. attorney’s office in Manhattan stems from a criminal referral by the Securities and Exchange Commission, a knowledgeable person said Thursday. The person spoke on condition of anonymity because the inquiry is in a preliminary phase.”
Word of the Justice Department action came a day after a group of 62 House lawmakers, including Judiciary Committee Chairman John Conyers, D-Mich., asked Justice to conduct a criminal probe of Goldman. “On the face of the SEC filing, criminal fraud on a historic scale seems to have occurred in this instance,” the lawmakers, mostly Democrats, said in a letter to Attorney General Eric Holder.
SEC spokesman John Nester declined any comment on the matter, as did Yusill Scribner, a spokeswoman for the U.S. attorney’s office in Manhattan.
Goldman spokesman Lucas van Praag said, “Given the recent focus on the firm, we’re not surprised by the report of an inquiry. We would cooperate fully with any request for information.”
The Justice Department move was the latest in a dramatic series of turns in the Goldman saga, which has pitted the culture of Wall Street against angry lawmakers in an election year, in the wake of the financial crisis that plunged the country into the most severe recession since the Great Depression of the 1930s.
Is a long overdue Pecora next?
RANsquawk European Morning Briefing – Stocks, Bonds, FX etc. – 30/04/10
by Zero Hedge - April 30th, 2010 5:29 am
Courtesy of RANSquawk Video
When You Lie Down With Them Dept: Morgan Stanley Has 69% Tier 1 Capital Exposure to the PIIGS
by ilene - April 30th, 2010 1:38 am
When You Lie Down With Them Dept: Morgan Stanley Has 69% Tier 1 Capital Exposure to the PIIGS
Courtesy of JESSE’S CAFÉ AMÉRICAIN
That statistic about Morgan Stanley was an eye opener in terms of percent of capital exposure. No wonder Angie Merkel is playing hard to get, holding out for more than another back rub. Morgan Stanley looks like it done slipped in the pig wallow.
Gentlemen, start your presses.
Bloomberg
JPMorgan Has Biggest Exposure to Debt Risks in Europe
By Gavin FinchApril 29 (Bloomberg) -- JPMorgan Chase & Co., the second- biggest U.S. bank by assets, has a larger exposure than any of its peers to Portugal, Italy, Ireland, Greece and Spain, according to Wells Fargo & Co.
JPMorgan’s exposure to the five so-called PIIGS countries is $36.3 billion, equating to 28 percent of the firm’s Tier-1 capital, a measure of financial strength, Wells Fargo analysts including Matthew Burnell wrote today. Morgan Stanley holds $32.4 billion of debt in the region, which equates to 69 percent of its Tier 1 capital, Burnell wrote.
“Regulatory data suggests JPMorgan’s exposure is largest in aggregate, but Morgan Stanley held the largest aggregate exposure to the PIIGS relative to Tier 1 capital,” the analysts wrote. Overall U.S. bank “exposure to Greece is lower than exposure to
Ireland, Italy and Spain.”Bonds and stocks plunged across Europe in the past week on concern the Greek debt crisis is spreading across the euro area. Standard & Poor’s this week cut Greece, Portugal and Spain’s credit ratings as concern the nations may fail to meet their debt commitments increased.
U.S. banks held a total of $236.8 billion of exposure to the five nations, including $18.1 billion to Greece, Wells Fargo said. European banks have claims totaling $193.1 billion on Greece, according to the Bank for International Settlements, with another $832.2 billion of claims on Spain.
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