by ilene - April 18th, 2014 7:20 am
Courtesy of Larry Doyle.
Most reading this will certainly never forget the tragedy that is forever known as 9-11. However, that fateful day was foreshadowed 8 years prior when another World Trade Center bombing took place. Both attacks were clear-cut indications that terrorist forces were at work to assault American interests by massively disrupting activity on Wall Street. We live with this reality each and every day knowing that these same forces remain at work.
After the attack of 1993, Wall Street firms began implementing significant measures for disaster recovery programs and information systems controls. Against that 20 plus year backdrop, I have to admit I am bewildered if not totally dismayed this morning. Why so? Stick with me here.
I just read a recently released report from the General Accounting Office entitled SEC Needs to Improve Controls Over Financial Systems and Data.
If this report is not a scathing indictment of the leadership of former SEC chair Mary Schapiro specifically and those who preceded her as well (Chris Cox, William Donaldson, Harvey Pitt, and Arthur Levitt), I do not know what is. Recall that on February 4, 2009, Madoff whistleblower Harry Markopolos impugned the SEC as deserving of an A+ in incompetence. After reading this report, I can more fully understand and appreciate Harry’s assessment. Let’s navigate.
What GAO Found
Although the Securities and Exchange Commission (SEC) had implemented and made progress in strengthening information security controls, weaknesses limited their effectiveness in protecting the confidentiality, integrity, and availability of a key financial system. For this system’s network, servers, applications, and databases, weaknesses in several controls were found, as the following examples illustrate:
1. Access controls: SEC did not consistently protect its system boundary from possible intrusions; identify and authenticate users; authorize access to resources; encrypt sensitive data; audit and monitor actions taken on the commission’s networks, systems, and databases; and restrict physical access to sensitive assets.
2. Configuration and patch management: SEC did not securely configure the system at its new data center according to its configuration baseline requirements. In addition, it did not
BP Manager In Charge of Cleaning Up Gulf Oil Spill Dumped $1 Million In BP Stock Before the Spill’s Severity Became Known
by ilene - April 18th, 2014 1:48 am
BP Manager In Charge of Cleaning Up the Gulf Oil Spill – Instead of Actually Cleaning Up – Committed Insider Trading and Sold $1 Million of BP Stock Before the Extent of the Spill Became Public Knowledge
Courtesy of George Washington.
The Securities and Exchange Commission announced today:
The Securities and Exchange Commission today charged a former 20-year employee of BP p.l.c. and a senior responder during the 2010 Deepwater Horizon oil spill with insider trading in BP securities based on confidential information about the magnitude of the disaster. The price of BP securities fell significantly after the April 20, 2010 explosion on the Deepwater Horizon rig, and the subsequent oil spill in the Gulf of Mexico, resulted in an extensive clean-up effort.
According to the SEC’s complaint, filed in U.S. District Court for the Eastern District of Louisiana, BP tasked Keith A. Seilhan with coordinating BP’s oil collection and clean-up operations in the Gulf of Mexico and along the coast. Seilhan, an experienced crisis manager, directed BP’s oil skimming operations and its efforts to contain the expansion of the oil spill.
The complaint alleges that within days, Seilhan received nonpublic information on the extent of the evolving disaster, including oil flow estimates and data on the volume of oil floating on the surface of the Gulf.
“Seilhan sold his family’s BP securities after he received confidential information about the severity of the spill that the public didn’t know,” said Daniel M. Hawke, chief of the Division of Enforcement’s Market Abuse Unit.
The complaint alleges that by April 29, 2010, in filings to the SEC, BP estimated that the flow rate of the spill was up to 5,000 barrels of oil per day (bopd). The company’s public estimate was significantly less than the actual flow rate, which was estimated later to be between 52,700 and 62,200 bopd. The information that Seilhan obtained indicated that the magnitude of the oil spill and thus, BP’s potential liability and financial exposure, was likely to be greater than had been publicly disclosed.
According to the complaint, while in possession of this material, nonpublic information, and in breach of duties owed to BP and its shareholders, Seilhan directed the sale of his family’s entire $1 million portfolio of
by ilene - April 17th, 2014 6:37 pm
Courtesy of Lee Adler of the Wall Street Examiner
Behind the initial claims headline number, the real story was a bit different (nothing new about that).
Bloomberg was frothing at the mouth with this headline…
… while amazingly failing to note that that was the year the economy began to collapse from the weight of the massive credit and housing bubbles that preceded. Today, in fact, initial claims as a percent of the eligible employed have been at peak bubble fake jobs levels since last September (which I have dutifully been pointing out in these semi regular reports). While the media was just noticing this stale fact, this week the data actually began to come off that extreme. Bloomberg, along with all the other Wall Street propaganda organs and the Street conomist shills are seven months behind the curve, possibly just as things may be starting to go the other way.
The trend is still heading down, so it’s too soon to make that call. But every major trend starts with one step. I’m looking for that first step. Noticing a fact seven months late when a market is turning is about as useless as information can get.
Bloomberg reported, “Jobless claims increased by 2,000 to 304,000 in the week ended April 12 from a revised 302,000 the prior period that was the lowest since September 2007.” The median guess of conomists surveyed by Bloomberg was for a headline number of 315,000. Woohoo. They missed on the high side. The market’s knee-jerk reaction to this “better than expected” news was to rally.
The headline number is seasonally adjusted silliness for people who don’t want to be bothered with looking at the actual data. The Department of Labor (DoL) dutifully provides that in detail on page two of the weekly updates.
The DoL reported the actual number of claims reported by the 50 states:
“The advance number of actual initial claims under state programs, unadjusted, totaled 317,701 in the week ending April 12, an increase of 17,512 (or 5.8 percent) from the previous week. The seasonal factors had expected an increase of 16,022 (or 5.3 percent) from the previous week. There were 359,415 initial claims in the comparable
by ilene - April 17th, 2014 4:30 pm
Courtesy of Joshua M Brown, The Reformed Broker
This week I’m in Disney World with the family, our first proper vacation all together in years. As such, I’m off the grid and away from computers of any kind (I’m trying to stay married, you guys). But while I’m gone, I’ve left you some stuff to catch up on…
These were the biggest posts – as read and shared by you – during the first quarter of this year. The theme of today’s collection is good investing and understanding the psychological forces at work when we commit capital. No matter how long I’m doing this for a living, I will always consider myself to be a student of this stuff. I don’t think anyone should be ashamed to admit that they’re still learning to become better investors everyday, even while being proud of how far they’ve come. Namaste. – JB
by ilene - April 17th, 2014 3:04 pm
Courtesy of David Stockman of Contra Corner
The Fed’s financial repression policies destroy price discovery and honest capital markets. In the process these deformations turn financial markets into casinos and corporate executives into prevaricating gamblers. To be specific, most CEOs of the Fortune 500 are no longer running commercial businesses; they are in the stock-rigging game, harvesting a mother lode of stock option winnings as the go along.
Those munificently rising stock prices and options cash-outs owe much to the Fed’s campaign to suppress interest rates and fuel stock market based ”wealth effects”, but the CEOs are doing their part, too. They have become full-time financial engineers who use the Fed’s flood of liquidity, cheap debt and soaring stock prices to perform a giant strip-mining operation on their own companies. That is, through endless stock buybacks and M&A maneuvers they create the appearance of “growth” while actually liquidating the balance sheet equity and future asset base on which legitimate earnings growth depends.
The poster boy for this deformation is IBM which for all intents and purposes has become a stock buyback machine on steroids. It had a bad hair day yesterday, reporting still another year/year decline in sales, but that goes right to the heart of the matter. During the last seven years IBM has been a stock traders dream, climbing an almost picture perfect chart from $94 per share in March 2007 to a recent peak of $212.
But as shown below, those gains had nothing to do with what has been a historic ingredient of stock appreciation—-namely, expansion of its asset base and revenues. In fact, sales revenues in Q1 2014 clocked in at virtually the same number as Q1 2007:
So how has IBM and its ilk achieved revenue-less earnings growth? After all, reported EPS has gone from about $7 per share to $15 during the period. The short answer is that its executives and board have utilized every accounting and financial engineering short-cut in the book to disguise an equity liquidation campaign as a splendid strategy for “growth”.
by ilene - April 17th, 2014 2:58 pm
What have we got here? There's KFC's Double Down (calorie-wise, the "Double Up"); The McRib (the McPigParts, a restructured meat product shaped into ribs); Specialty Chicken (it's a pizza crust, no really); the Waffle Taco, because anything can be breakfast, or a taco; Dunkin Donut's Doughnut Bacon Sandwich; the Doritos Locos Taco (Taco Bell's most successful menu item of all time!); the 773-calorie Bacon Milkshake; the Bacon Sundae; the Drumstick Corsage (for prom night, strap one of these lovely things to your wrist to make you smell good); and the Hot Dog Stuffed Crust Pizza (available at Pizza Hut in the UK, thankfully not in the US).
It was incredible, really, that no one ever thought to do it before: a chicken sandwich in which the bread is replaced with chicken. A “stunt food“? Sure. A “new low“? Almost definitely. It was all those things and more, which is why KFC managed to sell 10 million in about one month’s time when the Double Down first appeared in 2010.
Now it’s back, according to an “exclusive” from USA Today. Starting April 21, the Double Down is once again appearing for a limited run on KFC’s menus. And it’s in good — or, if you’d prefer, atrocious — company.
Despite the claims they occasionally make about striving for health, we all know fast food companies aren’t really looking for approval. Let’s face it, getting called out for their disgusting innovations is exactly the reaction they’re hoping for when they introduce a gimmick. Then, they’re hoping people try it, usually just “as a dare,” and they know plenty of people are going to like it.
But looked at as a whole, the very worst fast food has to offer is almost too much to handle:
McDonald's iconic contribution to fast food gimmickry: a patty of pig parts molded into the shape of ribs and presented in the form of a sandwich. The only mystery more enticing than what, exactly, the McRib is made of is the eternal question of when and where it's going to reappear. This ugly photo of an (alleged) raw McRib may have ruined the magic for some, but for plenty of others, it only confirmed that they were
by ilene - April 17th, 2014 2:22 pm
Courtesy of Mish.
Bloomberg reports Treasuries Fall Most in a Month as Ukraine Talks End in Accord
Treasuries fell, pushing 10-year note yields up the most in a month, as talks on the crisis in Ukraine ended with an accord aimed at de-escalating the conflict, damping haven demand.
Talks in Geneva between Russian Foreign Minister Sergei Lavrov, his Ukrainian counterpart, Andriy Deshchytsia, U.S. Secretary of State John Kerry and Catherine Ashton, the European Union’s foreign-policy chief, went on for more than six hours, longer than scheduled.
“The Geneva meeting on the situation in Ukraine agreed on initial concrete steps to de-escalate tensions and restore security for all citizens,” the four said in a joint statement. “All sides must refrain from any violence, intimidation or provocative actions.”
Text of the Joint Statement
Here is the complete Text of Joint Statement on Ukraine
The Geneva meeting on the situation in Ukraine agreed on initial concrete steps to de-escalate tensions and restore security for all citizens.
All sides must refrain from any violence, intimidation or provocative actions. The participants strongly condemned and rejected all expressions of extremism, racism and religious intolerance, including anti-semitism.
All illegal armed groups must be disarmed; all illegally seized buildings must be returned to legitimate owners; all illegally occupied streets, squares and other public places in Ukrainian cities and towns must be vacated.
Amnesty will be granted to protesters and to those who have left buildings and other public places and surrendered weapons, with the exception of those found guilty of capital crimes.
It was agreed that the OSCE Special Monitoring Mission should play a leading role in assisting Ukrainian authorities and local communities in the immediate implementation of these de-escalation measures wherever they are needed most, beginning in the coming days. The U.S., E.U. and Russia commit to support this mission, including by providing monitors.
The announced constitutional process will be inclusive, transparent and accountable. It will include the immediate establishment of a broad national dialogue, with outreach to all of Ukraine’s regions and political constituencies, and allow for the consideration of public comments and proposed amendments.
The participants underlined the importance of economic and financial stability in Ukraine and would be ready to discuss additional support as the above steps are implemented.
Defusing the Conflict
by ilene - April 17th, 2014 1:42 pm
Back on April 9, I posted a short tutorial on how to momentum trade gold along with my short term gold forecast.
I received great feedback from gold market traders taking advantage of my insights last week, so I created a follow-up video.
- shows how and why our strategy works better with gold stocks and silver stocks, and
- provides my short term gold forecast so we can stay on the right side of the market next week.
[Be sure to watch my major long term Gold Forecast also.]
Get My Gold Forecast & Gold Trade Alerts: www.TheGoldAndOilGuy.com
Sincerely, Chris Vermeulen Founder of Technical Traders Ltd. – Partnership Program
by ilene - April 17th, 2014 1:29 pm
There are many creative ways to screw up your retirement. Let me show you how it’s done.
Supporting adult children. My wife Jo and I have friends with an unmarried, unemployed daughter who had a child. Our friends adopted their grandchild and are now in their late sixties raising a kid in grade school. The same daughter had a second child, and they adopted that one too. When she announced she was pregnant a third time, they finally said, “Enough! It’s time for a third-party adoption.”
Last time I spoke with them, their unemployed daughter and her boyfriend were living in their basement, neither contributing financially nor lifting a finger around the house. What began as a temporary bandage had become a permanent crutch. Our friends love their grandchildren; however, they’ve become bitter.
Jo and I also know of retirees who make their adult children’s car payments. I’m not talking about college-age kids; some of these “children” are close to 50. What’s their justification? “If we don’t make the payments, they won’t be able to go to work.” What I can’t grasp is how these adult children have iPads and iPhones, go on vacations, and do other cool things, but can’t seem to make their car payments.
You are not the family bank. There is generally a brief window of opportunity between children leaving the nest and retirement. Use it to stash away enough money to retire comfortably!
Ignore your health. I served on the reunion committee for my 50th high-school class reunion. We diligently tried to track down our classmates, but many had not lived long enough to RSVP to the party. The number of deaths from lung cancer and liver cancer were shocking. Many of those six feet under had been morbidly obese or simply never went to the doctor for checkups.
I know this sounds obvious, but your health choices really do affect how long and how well you live. Retiring only to become homebound because of health problems won’t be much fun.
by ilene - April 17th, 2014 1:07 pm
Courtesy of Nomi Prins
(This excerpt first appeared on Zero Hedge courtesy of Nation Books. A fascinating, relevant piece of Cold War, Financial Globalization history. From Nomi Prins's book, All the Presidents' Bankers: The Hidden Alliances that Drive American Power)
The World Bank and the IMF: Expanding Wall Street’s Reach Worldwide
Just after the United States entered World War II, two simultaneous initiatives unfolded that would dictate elements of financing after the war, through the joint initiatives of foreign policy measures and private banking whims. Plans were already being formulated to navigate the postwar peace, especially its international power implications for finance and politics, in the background. American political leaders and scholars began considering the concept of “one world” from an economic perspective, void of divisions and imbalances. Or so the theory went.
The original plans to create a set of multinational entities that would finance one-world reconstruction and development (and ostensibly balance the world’s various economies) were conceived by two academics: John Maynard Keynes, an adviser for the British Treasury, and Harry Dexter White, an economist in the Division of Monetary Research of the US Treasury under Treasury Secretary Henry Morgenthau.
By the spring of 1942, White had drafted plans for a “stabilization fund” and a “Bank for Reconstruction and Development.” His concept for the fund became the seed for the International Monetary Fund. The other idea became the World Bank. But before those entities would come to life through the Bretton Woods conferences, many arguments about their makeup would take place, and millions of lives would be lost.
Keynes, White, and Power Transfer to the United States
By early 1944, nearly two-thirds of the European GNP had been devoted to war; millions of people had been slaughtered. But six months after the complete liberation of Leningrad, it was the international financial aspects of the coming peace that exercised the imagination of the policy elites. In July 1944, 730 delegates representing the forty-four Allied nations convened at the Mount Washington Hotel in Bretton Woods, New Hampshire. Amid picturesque mountains, hiking trails, and oppressive heat, they sat to determine the postwar economic system.
For three weeks, they debated the charter for the International Monetary