Posts Tagged ‘Federal Reserve Bank Of New York’

Draining the Swamp: The Fed’s Tri Party Repo Machine

Draining the Swamp: The Fed’s Tri Party Repo Machine

Courtesy of  Jesse’s Café Américain

In this case as outlined by the New York Fed memo below, a triparty repo transaction is a transaction among three parties: a cash lender acting on behalf of all holders of dollars (the Fed), a borrower that will provide collateral (dodgy debt holder in shaky financial condition), and a clearing bank, most likely a primary dealer like J.P. Morgan, which is only too happy to collect its fees as an agent of the Fed.

The triparty clearing bank provides custody (agency) accounts for parties to the repo deal and collateral management services. These services include ensuring that pledged collateral meets the cash lenders’ requirements, pricing collateral, ensuring collateral sufficiency, and moving cash and collateral between the parties’ accounts. What if any liabilities the clearing bank such as J.P.Morgan or Goldman Sachs might obtain for the mispricing of risk remain undisclosed, but are probably negligible at worst.

This is the method of obtaining toxic assets from the books of non-primary dealers, and providing stability and liquidity from the aggregate value of all dollar holders to cover the misdeeds of diverse financial institutions and other favored parties.

In other words, the Fed is draining the financial debt swamp and toxic waste dumps into your basement, if you hold Federal Reserve Notes. Your IRA’s, your 401k’s, your savings, as long as you hold Federal Reserve Notes, which are claims on their balance sheet loosely backed by the Treasury. When the Fed’s balance sheet contained nothing but Treasuries and explicity backed agencies that relationship was firmer. Now, we are into the realm of make believe and Timmy’s credibility.

The Fed pledges that Goldman and Morgan assure them that there will be no radioactive material in the sludge pond headed your way, and levels of carcinogenic and toxic contamination will be within levels that they believe are adequate based on the non-binding estimates.

In practice the Fed has a defaults account on its book for the shortfalls from fat valuations due to the toxic debt it has already assumed on your behalf.

The source and composition of the sludge will remain a secret among the bankers, without oversight. This seems like taxation without representation, at least for holders of dollars that are US citizens, since the Fed is engaging in the expenditure of public money…
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Geithner Singled Out In TARP Watchdog Neil Barofsky’s Scathing Report On AIG Bailout

The Huffington Post has a couple articles on the highly critical SIGTARP report discussed previously by The Epicurean Dealmaker. - Ilene

Geithner Singled Out In TARP Watchdog Neil Barofsky’s Scathing Report On AIG Bailout

scathingA brutal report issued Monday by a government watchdog holds Timothy Geithner — then the head of the Federal Reserve Bank of New York and now the nation’s Treasury Secretary — responsible for overpayments that put billions of extra tax dollars in the coffers of major Wall Street firms, most notably Goldman Sachs.

The authoritative new narrative describes how, while bailing out insurance giant AIG last fall, a team led by Geithner failed nearly every step of the way.

Instead of bargaining with AIG’s numerous counterparties to resolve its billions of dollars in souring derivatives contracts, Geithner’s team ended up paying top dollar for toxic assets — "an amount far above their market value at the time," the report notes.

"There is no question that the effect of FRBNY’s decisions — indeed, the very design of the federal assistance to AIG — was that tens of billions of dollars of Government money was funneled inexorably and directly to AIG’s counterparties," the Office of the Special Inspector General for the Troubled Asset Relief Program said.

Wall Street firms like Goldman Sachs, Merrill Lynch and Wachovia got full value for their derivatives contracts with AIG, and taxpayers got the bill. In total, $27.1 billion of public money was transferred to companies that did business with AIG…

Read more here.

Goldman Sachs Would Have Been Damaged By AIG Failure: SIGTARP Report

As Goldman Sachs put it in a press release last March, the bank had "no material direct economic exposure" to AIG.

Well, it depends on what you mean by "material direct economic exposure."

In a report issued earlier this week, TARP special inspector general Neil Barofsky took a shot at Goldman’s claim that it was insulated against AIG’s demise. While, the report’s language is arcane, the message is simple: if AIG had gone under, Goldman Sachs would have had significant difficulty trying to collect on the the derivatives bets it placed with other banks in order to offset potential AIG losses.

Full article here.

 


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Chart School

Weekly Gasoline Price Update: Regular and Premium Down for Sixth Consecutive Week

Courtesy of Doug Short's Advisor Perspectives.

It's time again for our weekly gasoline update based on data from the Energy Information Administration (EIA). The price of Regular and Premium five and four cents each, respectively, from last week. According to GasBuddy.com, California has the highest average price for Regular at $2.79 and San Francisco is averaging $2.96. South Carolina has the cheapest at $1.83. The WTIC end of day spot price closed at 43.13, a decrease of 2.81 from this time last week.

How far are we from the interim high prices of 2011 and the all-time highs of 2008? Here's a visual answer.

...



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Zero Hedge

We're Sorry! - DNC Apologizes To Bernie For "Inexcusable Remarks"

Courtesy of ZeroHedge. View original post here.

Facing an already rambunctious crowd - chanting 'Bernie' at every mention of Clinton - The DNC has been forced to issue a formal apology to Bernie Sanders (and presumably his supporters).... "the inexcusable remarks... do not reflect the value of the DNC or our steadfast commitment to neutrality during the nominating process."

So... we assume this means Vladimir Putin's crack team of Kremlin hackers did not "make them up" then.

What is "them"? Here, co...



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Phil's Favorites

Did Merkel's Misguided Pragmatism Wreck the EU? Eurozone?

Courtesy of Mish.

Financial Times columnist Wolfgang Münchau points a finger squarely at chancellor Angela Merkel in his article High Price of Europe’s Misguided Pragmatism.

As is typically the case, Münchau gets some things right while missing the big picture.

As for solutions, Münchau is nearly always wrong.

Sustainability is what this is all about. This is the main lesson from the Brexit vote. Britain will leave the EU not because David Cameron , the former prime minister, made a tactical error. He did, of course. But UK membership is ending because it was unsustainable. The EU has always been a project of political integration. The Remain campaign was...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

G20 growth promise keeps global shares near nine-month high (Reuters)

World shares held near nine-month highs on Monday after G20 finance chiefs said over the weekend they would use "all policy tools" to lift global growth.

Stocks That Ignore Defaults Are Cruising for a Bruising (Bloomberg View)

A worrying trend is developing in the corporate bond market: Even with borrowing costs at or near their lowest ever, companies are increasingly unable to pay their debts. There have already been enough defaults around the world this year to suggest that the record set in 2009 migh...



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OpTrader

Swing trading portfolio - week of July 25th, 2016

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Kimble Charting Solutions

Silver; Dangerous price point to slip from

Courtesy of Chris Kimble.

Below looks at a chart of Silver prices over the past 8-years. After declining sharply, Silver hit its 38% Fibonacci retracement level twice at (1). After failing to break above Fibonacci retracement resistance, selling pressure picked up and Silver fell hard.

CLICK ON CHART TO ENLARGE

Silver is now testing its 23% Fibonacci retracement level and falling resistance at (2), inside of a short-term rising wedge pattern.

...

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ValueWalk

Relypsa Inc (RLYP) Soars On Galenica Bid

By Jacob Wolinsky. Originally published at ValueWalk.

Relypsa Inc (NDAQ:RLYP) — to be acquired by Galenica AG (VTX:GALN) for $32 per share in cash is soaring this morning up about 58 percent at the time of this writing in early morning. On the other hand shares of Galenica are down on the announcement by about 8 percent. What are the details of the deal? Here is what the sell side analysts are saying about the pharma news.

Relypsa Inc (NDAQ:RLYP) bid – analysts react

Cantor Fitzgerald

Relypsa will be acquired by Galenica for $32 per share, a 59% premium over the last closing price. We have thought that Relypsa would likely be acquired at some point, given the opportunity to grow Veltassa to be a significant commercial brand, ...



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Digital Currencies

Demystifying the blockchain: a basic user guide

 

Demystifying the blockchain: a basic user guide

By Philippa Ryan, University of Technology Sydney

Companies around the world are exploring blockchain, the technology underpinning digital currency bitcoin. In this Blockchain unleashed series, we investigate the many possible use cases for the blockchain, from the novel to the transformative.

Most people agree we do not need to know how a television works to enjoy using one. This is true of many existing and emerging technologies. Most of us happily drive cars, use mobile phones and send emails without knowing how they work. With this in mind, here is a tech-free user guide to the blockchain - the technology infrastructure behind bitcoin...



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Mapping The Market

No wonder Saudis are selling as much as they can!

Courtesy of Jean-Luc

We are getting much more energy efficient – no wonder Saudis are selling as much as they can! Who wants to be the one with trillions of dollars of oil in the ground unwanted:

http://arstechnica.com/science/2016/07/the-amount-of-energy-needed-to-run-the-worlds-economy-is-decreasing-on-average/#p3

...

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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Biotech

This Is Why Biotech Stocks May Explode Again

Reminder: Pharmboy and Ilene are available to chat with Members.

Here's an interesting article from Investor's Business Daily arguing that biotech stocks are beginning to recover from their recent declines, notwithstanding current weakness.

This Is Why Biotech Stocks May Explode Again

By 

Excerpt:

After a three-year bull run that more than quadrupled its value by its peak last July, IBD’s Medical-Biomed/Biotech Industry Group plunged 50% by early February, hurt by backlashes against high drug prices and mergers that seek to lower corporate taxes.

...



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Promotions

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We know you love coming here for our Stocks & Options education, strategy and trade ideas, and for Phil's daily commentary which you can't live without, but there's more!

PhilStockWorld.com features the most important and most interesting news items from around the web, all day, every day!

News: If you missed it, you can probably find it in our Market News section. We sift through piles of news so you don't have to.   

If you are looking for non-mainstream, provocatively-narrated news and opinion pieces which promise to make you think -- we feature Zero Hedge, ...



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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




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