On the President’s first day in office on January 21, 2009, he issued an Open Government memo promising the American people a new era of transparency. On March 19, 2009, under the President’s orders, the Attorney General’s office issued detailed guidelines on how Federal agencies were to respond going forward to Freedom of Information Act (FOIA) requests. The guidelines instructed the agencies as follows:
“The key frame of reference for this new mind set is the purpose behind the FOIA. The statute is designed to open agency activity to the light of day. As the Supreme Court has declared: ‘FOIA is often explained as a means for citizens to know what their Government is up to.’ NARA v. Favish, 541 U.S. 157, 171 (2004) (quoting U.S. Dep’t of Justice v. Reporters Comm. for Freedom of the Press, 489 U.S. 749, 773 (1989)…The President’s FOIA Memoranda directly links transparency with accountability which, in turn, is a requirement of a democracy. The President recognized the FOIA as ‘the most prominent expression of a profound national commitment to ensuring open Government.’ Agency personnel, therefore, should keep the purpose of the FOIA — ensuring an open Government — foremost in their mind.”
It pains me to inform you, Mr. President, but the Treasury Department, Board of Governors of the Federal Reserve, and Securities and Exchange Commission (the trio that has been variously distracted minting trillions in currency, trading cash for trash with Wall Street, surfing for porn, or mishandling multiple voluminous tips on Bernie Madoff’s Ponzi scheme) have misplaced your memo or, as many suspect, take their marching orders not from you but from Wall Street — perhaps because they perceive that this is where you take your orders too.
On October 6, 2010, I filed three FOIA requests with the Securities and Exchange Commission (SEC). I had come by information that the official government report on the stock market’s “Flash Crash” of May 6, 2010 was materially wrong and I wanted to buttress my investigative report to the public with documents the SEC had obtained or compiled in conducting its investigation.
I followed the SEC’s FOIA instructions and emailed the requests to email@example.com as instructed by the web site, asking for a small amount of very…
In early March I turned quite bullish for the first time in 2009. My reasoning behind the bullishness was relatively simple. The market had overshot the mean to the downside and psychology was far too negative. This created a market that was like a loaded spring. All it needed was a catalyst. That catalyst came in the form of the M2M rumors. In other words, the government was going to directly intervene in the market and stop the bleeding. What resulted over the ensuing months was even larger than I ever could have expected.
At the end of March I began referring to the rally as the “government run rally”. Although the actual underlying fundamentals were not improving, the government had created a series of events and catalysts that forced the shorts out of positions and changed the psychology of the market:
The last of these well crafted maneuvers were the capital raises and the stress tests. This series of events created a foundation for a market bottom and helped form the most important portion of the current rally in stocks. It would sound conspiratorial if it weren’t entirely true. What has ensued since has confounded even the most veteran of traders. The market has continued higher in a nearly straight line.
There is no doubt that the economy has rebounded sharply from the days of ISM 35 and GDP -6%. The overshoot to the downside was extreme to say the least, but what is less clear is why the market has rallied an astounding 60% off its bottom and effectively priced in 20%+ earnings growth and 4% GDP going forward when the real underlying problems that caused this entire mess are still apparent. We have simply implemented the failed Bank of Japan policies of the 90’s combined with the failed bank policies of Maestro Greenspan – crank up the printing press, turn on the liquidity spigot, implement quantitative easing and let the banks earn their way out of their problems. It sounds great in theory, but Greenspan’s policies failed miserably as did the Bank of Japan’s. Neither approach proactively attacked the root of the problems. The results speak for themselves.
Mr. Bernanke has declared an end to the recession, but we continue to…
As Zero Hedge reported previously, Florida bank BankUnited was put on dodecatuple secret probation under a "prompt corrective action directive" on April 18th to find a buyer within 20 days or face imminent shutdown. 20 days came and went, and the bank is still standing "strong," unshutdown, and unpurchased. At first glance it would seem ultimatums by the Office of Thrift Supervision carry markedly less weight than those conveyed by the "three stooges" of the U.S. Treasury Dept, the Fed and the FDIC.
A Dow Jones article sheds some light on the lack of action in this soon to be receivership. Allegedly the three likely emerging bidders for BKUNA include some of the most usual suspects imaginable: one is a consortium of Toronto Dominion Bank and… Goldman Sachs, in which the split would be: branches and deposits go to TD, while GS gets to keep all the juicy distressed assets, that subsequently will experience a miraculous short squeeze and be sold at a "bargain" to investors at just over par (the last bit is some superfluous musing on the part of this author).
The second presumed bidder – no surprise there – it is perma-acquisitive JC Flowers. As to the latter it is unclear whether it is more shocking that the former PE legend has not learned his lesson with investing in "value" financial propositions, or that he still has any capital left at all to invest in the first place.
And the last group is the Keiser Soze of the lot – a triumvirate of Wilbur Ross, Blackstone and NY kickback scandal tainted Carlyle Group.
As the new bid deadline has been extended until next Tuesday, although it seems like that day will also come and go with no fireworks. Another propagating rumor is that neither of the bidders is inclined to see the economic green shoots or mustard seeds, and would rather have the bank be put into receivership first (read: GSE woodshedding approach) before any formal action is taken. While this is bad news for any existing equity holders in the "not too big to fail" Florida bank, receivership for the roughly $14 billion company will be fabulous news for any of the three potential bidders who, in a WaMuesque, FDIC-orchestrated…
Judicial Watch, which lucked out majorly on a FOIA request to the Treasury, has received several hundred pages of stunning revelations, among which are that Hank Paulson essentially used the same tactics that he used on Ken Lewis on a group of nine bankers at the October 13 meeting which apportioned government investments to the various "critical" banking institutions. The major disclosure was captured in a memo called CEO Talking Points, which delineates the continuous use of strongarming tactics by not just Paulson, but by Tim Geithner, and Sheila Bair, who were also present at the meetings. According to one of the Talking Points:
“If a capital infusion is not appealing, you should be aware that your regulator will require it in any circumstance. We don’t believe it is tenable to opt out because doing so would leave you vulnerable and exposed.”
Among the banking CEOs who were forced into a pre-envisioned arrangement were:
Ken Lewis (BofA)
Vik Pandit (Citi)
Lloyd Blankfein (GS)
Jamie Dimon (JPM)
John Thain (ML)
Robert Kelley (BONY)
Ronald Logue (SS)
John Mack (MS)
Richard Kovacevich (WFC)
Among the key disclosures obtained by Judicial Watch are:
"CEO Talking Points" used by former Treasury Secretary Hank Paulson confirming that the nine bank CEOs present at the October 13 meeting had no choice but to accede to the government’s demands for equity stakes and the resulting government control. The talking points emphasize that "if a capital infusion is not appealing, you should be aware your regulator will require it in any circumstance." Suggested edits of the "talking points" by Tim Geithner, then-New York Fed President, were withheld by the Obama Treasury Department.
Email documenting that, on the very day of the meeting, the Chief of Staff to the Treasury Secretary and other top Treasury staff did not know the names of any of the banks that would be in attendance.
Email showing Treasury officials wanted to use the Secret Service to help keep the press away from the CEOs arriving at the meeting.
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 firstname.lastname@example.org 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.
The S&P 500 oscillated a bit during its opening hour, hitting its -0.23% intraday low in the first 30 minutes of trading. The index then rose in a couple of waves to its 0.71% closing gain, fractionally off its 0.74% intraday high. This was a big week for the 500, surging 4.12% and nearly erasing its October loss, which now stands at -0.39%. It is now only 2.33% from its record close on September 18th.
The yield on the 10-year Note closed at 2.29%, unchanged from yesterday's close and up 7 bps from last Friday's close.
Here is a 15-minute chart of the week.
On the daily chart below we see that volume was relatively light -- the first daily gain with volume below its 50-day moving average since September 26th. Today's closing price is just a hair below its 50-day day moving average.
Over the last few weeks, the markets have seen wild vacillations as stocks plunged and then surged on a massive short-squeeze in the most beaten up sectors of energy and small-mid capitalization companies. While "Ebola" fears filled mainstream headlines the other driver behind the sell-off, and then marked recovery, was a variety of rhetoric surrounding the last vestiges of the current quantitative easing program by the Fed. As I have shown many times in the past, there is a high degree of correlation between the Fed's liquidity programs and the advance in the markets.
If you're following Valeant's proposed takeover (or merger) of Allergan and the lawsuit by Allergan against Valeant and notorious hedge fund manager William Ackman, for insider trading this is a must-read article.
Linette Lopez describes the roles played by key Wall Street hedge fund owners--Jim Chanos, John Paulson, and Mason Morfit, a major shareholder in Valeant. Linette goes through the con...
There is lots of action in Southwest Airlines Co. November expiry call options today ahead of the air carrier’s third-quarter earnings report prior to the opening bell on Thursday. Among the large block trades initiated throughout the trading session, there appears to be at least one options market participant establishing a call spread in far out of the money options. It looks like the trader purchased a 4,000-lot Nov 37/39 call spread at a net premium of $0.40 apiece. The trade makes money if shares in Southwest rally 9.0% over the current price of $34.32 to exceed the effective breakeven point at $37.40, with maximum potential profits of $1.60 per contract available in the event that shares jump more than 13% to $39.00 by expiration. In September, the stock tou...
Last week brought even more stock market weakness and volatility as the selloff became self-perpetuating, with nobody mid-day on Wednesday wanting to be the last guy left holding equities. Hedge funds and other weak holders exacerbated the situation. But the extreme volatility and panic selling finally led some bulls (along with many corporate insiders) to summon a little backbone and buy into weakness, and the market finished the week on a high note, with continued momentum likely into the first part of this week.
Despite concerns about global economic growth and a persistent lack of inflation, especially given all the global quantitative easing, fundamentals for U.S. stocks still look good, and I believe this overdue correction ultimately will shape up to be a great buying opportunity -- i.e., th...
Now that bitcoin has subsided from speculative bubble to functioning currency (see the price chart below), it’s safe for non-speculators to explore the whole “cryptocurrency” thing. So…is bitcoin or one of its growing list of competitors a useful addition to the average person’s array of bank accounts and credit cards — or is it a replacement for most of those things? And how does one make this transition?
With his usual excellent timing, London-based financial writer/actor/stand-up comic Dominic Frisby has just released Bitcoin: The Future of Money? in which he explains all this in terms most readers will have no tr...
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Well PSW Subscribers....I am still here, barely. From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.
First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices. Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment. Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer. For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...
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