Archive for 2009

Is Goldman's Selective Trading Disclosure A Legal Way For Preferred Clients To Front Run The Market?

Courtesy of Tyler Durden

Zero Hedge has long been discussing the impact of selective informational disclosure, be it in the context of trading or research asymmetries, which promote a two-tiered market, where privileged accounts of major broker dealers receive “tips” ahead of “everyone else.” The quid’s pro quo is that these “privileged” few end up executing the bulk of their trades with the broker-dealer, thus ramping up riskless agency revenues. In essence the clients’ capital risk is mitigated, while the return to the “perpetrator” is augmented by collecting a disproportionate share of the bid/offer spread in the given security. Whether this tiering mechanism occurs via Flash orders, SLP provisioning, actionable IOIs, advance selective notice of a large flow order, a phone call, a limited Bloomberg blast, or an Instant Message, the ethics of the practice are undoubtedly shady, and potentially borderline criminal. But no one is the wiser, as both sender and receiver of information know to keep their mouth shut. Until today, when the WSJ blows one aspect of this practice out of the water, by focusing on Goldman’s selective informational disclosure to preferred clients, and is likely to create much more headache for Goldman’s PR department and its staunchest CNBC-based supporter.

In a long-overdue article titled “Goldman’s Trading Tips Reward Its Biggest Clients” author Susanne Craig brings much of the firm’s dirty laundry to the front page. While a must read for anyone interested in how Goldman Sachs “cultivates” its key client relationships, the summary is as follows:

Goldman Sachs Group Inc. research analyst Marc Irizarry’s published rating on mutual-fund manager Janus Capital Group Inc. was a lackluster “neutral” in early April 2008. But at an internal meeting that month, the analyst told dozens of Goldman’s traders the stock was likely to head higher, company documents show.

The next day, research-department employees at Goldman called about 50 favored clients of the big securities firm with the same tip, including hedge-fund companies Citadel Investment Group and SAC Capital Advisors, the documents indicate. Readers of Mr. Irizarry’s research didn’t find out he was bullish until his written report was issued six days later, after Janus shares had jumped 5.8%.

This pretty much summarizes the “magical” performance that many hedge funds generated in Wall Street’s golden age: Goldman (and other firms, many of which however now…
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Boston Fed On The Panic Of 1907 ( Or Is That 2008?)

Courtesy of Tyler Durden

Spot the 10 differences (if any) between this text and the one historians (hopefully not Fed bankers)  will write about our time period in 2109.

Some interesting comparisons, demonstrating that even as one hundred years pass, nothing really changes (except for the Fed Chairman’s printing press, which luckily, did not exist in 1907). Then and now:

  • New York Clearing House Committee -  FDIC
  • New York City’s clergy – CNBC
  • Knickerbocker Trust Company – Lehman Brothers
  • New York bankers – New York bankers
  • J.P. Morgan – J.P. Morgan (of course)
  • Cold – Swine Flu [TBD?]

MONDAY OCTOBER 14: The stock of United Copper Company soars past $62 a share.

WEDNESDAY OCTOBER 16: United Copper closes at $15 a share after bank owner/speculator F.A. Heinze fails in his attempt to corner the company’s shares.

THURSDAY OCTOBER 17: Shortly after midnight, Heinze resigns as president of Mercantile National Bank. Later that morning, prompted by the fear that Heinze’s stock market losses might affect the bank, Mercantile National’s depositors scramble to withdraw their money.

During the day, Heinze’s Butte (Montana) Savings Bank fails as does the brokerage firm of Otto Heinze & Co., which is owned by the brother of F.A. Heinze.

That night, the New York Clearing House Committee declares that Mercantile National is “perfectly solvent and able to meet all its indebtedness.” The Committee’s acting chairman also announces that
the Clearing House will stand by the bank in the event of a run by depositors.

FRIDAY OCTOBER 18: Nine banks form an emergency pool of funds to aid Mercantile National. But depositors at Knickerbocker Trust Company begin to withdraw their money. They are concerned because
Knickerbocker’s president, Charles T. Barney, is an associate of F.A. Heinze.

SATURDAY OCTOBER 19: Charles W. Morse, a banker and speculator who was involved with Heinze in the disastrous copper corner, announces he will resign official positions at nine banks and trust companies.

MONDAY OCTOBER 21: Charles T. Barney resigns as president of Knickerbocker Trust Company. Depositors withdraw $8 million in less than four hours before Knickerbocker suspends operations.

TUESDAY OCTOBER 22: J.P. Morgan refuses to aid Knickerbocker Trust, wtiich does not reopen for business. A headline in the Neap York Times announces that Morgan will organize support for Trust Company of America, which is deemed to be in much better condition than Knickerbocker.

WEDNESDAY OCTOBER…
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THE CONTAINER CRISIS

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MUST READ: THE CONTAINER CRISIS

shipping - Salem, Mass shipping in the 1770sCourtesy of The Pragmatic Capitalist

Excellent article here on the shipping industry and the problems that the recession has caused and continues to cause:

The global economic crisis is wreaking havoc on shipping: Demand and prices have collapsed and ports are filling up with fleets of empty freighters. The crisis has fueled cut-throat competition and not all companies will survive. Germany’s Hapag-Lloyd alone needs 1.75 billion euros to stay afloat.

the global financial and economic crisis has stifled the boom in container shipping, and it has happened almost overnight. For the first time in its history, the industry has stopped growing and, in fact, is shrinking. In the first six months of this year alone, the shipping industry declined by close to 16 percent.

ships MUST READ: THE CONTAINER CRISIS

The new giant ships are now much too big for the cargos they transport by sea, and often they sail half-empty — if at all. Billions are being spent to expand ports to handle a boom that no longer exists. Leading shipping line operators are on the verge of bankruptcy, as are shipping banks and charter shipping companies. The industry, once one of the biggest beneficiaries of globalization, now threatens to turn into one of its chief casualties.”There has never been a crisis like this before,” says Reinhard Lange, the CEO of Kühne + Nagel, the world’s largest sea-freight forwarder. Shipping line operators alone are expected to suffer combined losses of $20 billion in 2009.

Drewry Shipping Consultants, the world’s top consultant to the industry, warns: “The industry is looking at the edge of a deep abyss.” And industry publication Lloyds List writes: “Container shipping was thrown into a full-scale panic.”

This sense of panic is more palpable in Hamburg than almost anywhere else in the world.

Read the fully story here

 


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Larry Flynt: Obama Can’t Stand Up To The Bankers

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Larry Flynt: Obama Can’t Stand Up To The Bankers 

Courtesy of John Carney at Clusterstock


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Joe Saluzzi On The Stock Market And The Broader Economy

Courtesy of Tyler Durden

And no, no discussion of HFT, predatory algos or flash orders. Tune in for a broader, comprehensive market analysis.





Guest Post: The Spirits Are About To Speak. Are They Friendly?

Courtesy of Tyler Durden

Submitted by Contrary Investor. A highly recommended read.

The Spirits Are About To Speak. Are They Friendly?...And of course we are referring to “animal spirits” as you might have guessed. Time for a little compare and contrast with current cycle margin debt trends relative to past meaningful cycle equity lift off periods. You may remember that in the past we have looked at margin debt at stock cycle inflection points very much being a corroborative indicator at the birth of many a historical equity bull market. History tells us that margin debt balances bottom literally within a month or so of past major market low points. And sure enough, we saw margin debt bottom for the current cycle (so far) in February of this year – right on schedule! So, yes, at least at this point, a bottom in margin debt balances confirmed the bottom in equities. The chart below will give you a feel for exactly what we are talking about in terms of this directional synchronicity between equity market and margin debt rhythm.

Ok, trying to corroborate equity market bottoms by watching the rhythm of margin debt is fine. But what happens next? By that we mean what has been the character of margin debt growth as equity markets have continued on their historical bull market journeys? We’ve put a table of numbers together below to help give us some perspective. You know the financial media simply cannot stop trumpeting the fact that equities in general are up 40%+ from the March lows of this year. Just the kind of media taunting to make folks feel as if they are idiots for having potentially missed it. Of course the headline financial media has absolutely no recollection at all that they had been screaming buy all the way down while the equity markets dropped over 50% in the first place. Selective memory works every time, right? Anyway, to compare and contrast current circumstances to prior cycles, we went back and looked at the first 40% move of each major post recession equity bull market since the early 1970’s. We looked at just how much margin debt had already increased by the time the S&P had risen 40% from cycle lows. Have a look.

Notice anything funny? Of course you do. The current…
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The Statistical Recovery, Part Three

The Statistical Recovery, Part Three

green shoots, statistical recoveryCourtesy of John Mauldin at Thoughts from the Frontline

The Statistical Recovery, Part Three
Capacity Utilization Set to Rise
A Real Estate Green Shoot?
The Deleveraging Society
Some Thoughts on Secular Bear Markets
Weddings and Ten Years of Thoughts From the Frontline

This week we further explore why this recovery will be a Statistical Recovery, or one that, as someone said, is a recovery only a statistician could love. We look at capacity utilization, more on housing, some thoughts on debt and deflation, and some intriguing charts on volatility in the last secular bear-market cycle. This letter will print a little longer, but there are lots of charts. I have written this during the week, and I finish it here in Tulsa, where Amanda gets married tomorrow. (There is no deflation in weddings costs!)

Thanks to so many of you for your enthusiastic feedback about my latest Accredited Investor Newsletter, in which I undertook to examine the impact of last year’s dramatic increase in volatility on the performance of hedge funds and to ascertain those elements that led to success in the industry, such as select Global Macro and Managed Futures strategies, as well as the challenges. If you are an accredited investor (basically anywhere in the world, as I have partners in Europe, Canada, Africa, and Latin America) and haven’t yet read my analysis, I invite you to sign up here: www.accreditedinvestor.ws

For those of you who seek to take advantage of these themes and the developments I write about each week, let me again mention my good friend Jon Sundt at Altegris Investments, who is my US partner. Jon and his team have recently added some of the more successful names in the industry to their dedicated platform of alternative investments, including commodity pools, hedge funds, and managed futures accounts. Certain products that Altegris makes available on its platform access award-winning managers, and are designed to facilitate access for qualified and suitable readers at sometimes lower investment minimums than is normally required (though the net-worth requirements are still the same).

If you haven’t spoken with them in a while, it’s worth checking out their new lineup of world-class managers. Jon also tells me they just added yet more brilliant minds to their research team, making it,…
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Sprott On Beyond The Stimulus

Courtesy of Tyler Durden

Beyond the Stimulus by Sprott Asset Management

 

h/t Joel

Attachment Size
Sprott comment August 2009.pdf 44.74 KB




On Blogging Brawls and Bragging Rights

Courtesy of Leo Kolivakis


A couple of days ago Yves Smith of Naked Capitalism posted a comment, Who Is Tyler Durden? The post generated over 187 comments (and still counting), most of which were infantile swipes from morons claiming that one blog is better than the other one.

I got carried away too and used language that I shouldn’t have, but after sleeping on it, I want to offer you some of my thoughts on these blogging brawls and bragging rights.

First, while I defended Yves from the vitriolic attacks in the comments, her post was stupid and probably done to stir up shit in the blogosphere. As I stated in the comments, who cares who Tyler Durden is? Whether it is one person or a group of people posting anonymously, is irrelevant. As long as Zero Hedge keeps delivering interesting comments, people will read it and make up their own minds as to accuracy of what they are reporting.

That brings up my second point. Everyone has an agenda, including yours truly, and so does Yves Smith of Naked Capitalism. Everyone has their “schtick” and they want to be heard. The thing that gets me is that some people are a lot more transparent than others in their agenda. I use my real name, you can read all about me on my profile, I tell you my agenda right at the top of my blog. I say this because I just found out yesterday that Yves Smith is Susan Webber of Aurora Advisors.

[Note: Admittedly, I am an idiot because when I first started reading Naked Capitalism, I thought Yves was a guy. She then sent me an outline of her new book and I still couldn't figure out who she is. She even emailed me once or twice as Susan Webber and I never put two and two together because at that time, I thought it was someone else. You have to scroll all the way down to the bottom of her blog to see Aurora Advisors. No problem, I wish she told me right off the bat in clear English or posted it on her blog clearly so I can add her company to my list of advisors on my blog, which I gladly did last night.]

Third, your credibility is only as good as what you…
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Beating a Dead Horse

Beating a Dead Horse

Courtesy of Vitaliy Katsenelson’s ContrarianEdge and Active Value Investing 

“'Beauty Samba' is by my father Naum Katsenelson" - VitaliyI know, I may sound like I’m beating a dead horse – how much printer cartridge can one spill over China?  – but I have a very high burden of proof to overcome.  Let me demonstrate it by this analogy:  Let’s rewind 20 years.  It is 1989 and I am writing that the Japanese economy is on the verge of severe decline.  I’m facing a lot of skepticism.  Most people are calling me crazy and throwing heavy objects at me.  After all, the Japanese are on top of the world.  Their economy has been a consistent grower for decades, with a rate of growth that trumps that of the US and Europe.  Japan has the manufacturing thing nailed – they are simply better and more efficient at it than us. 

Magazines and newspapers swarm with stories about Japan, how hard working they are, how unique their culture is (we of course, feel inferior, as lazy Americans).  Japanese exports significantly exceed their imports, generating huge capital-account surpluses – they are swimming in dollars and buying up America. Every other restaurant in Hawaii serves sushi and menus are in English and Japanese (not Spanish).  I may be exaggerating with the last part, a little, but not much.
 
So, in 1989, who am I to poke holes in Japanese grandness and predict their malaise.  Japan could do no wrong.  Of course, we know how that story played out: a bust of a major banking/real estate bubble, a contracting economy for almost two decades, accompanied by deflation, ballooning debt, etc. 
 
Fast-forward, and China today is where Japan was in the late ’80s, except with the greater political instability that comes with a semi-controlled economy and the lack of a social safety net (read: jobless, hungry people don’t write angry letters, they riot). 
 
china olympics opening ceremonySince China can do nothing wrong, everything I write about it is met with skepticism.  Today China projects to the world a similar image as Japan did in the 1980s.  My personal favorite is the incredible spectacle of the Chinese Summer Olympics opening ceremony: the elegant, wonderfully choreographed performance by fifteen thousand people, the marvels of modern technology (the 500-foot LCD screen comes to mind here), the…
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Zero Hedge

Americans' Economic Hope Has Collapsed

Courtesy of ZeroHedge. View original post here.

Which came first, the confidence or the stock market rally?

One thing is for sure, the crash in stocks in December has crushed the hope of Americans that their economic future is going to be better under President Trump.

Overall confidence dipped to 58.1 - a 4-month low, but, U.S. consumers this month were the most downbeat on the economy since November 2016, a third straight drop after expectations reached a 16-year high just three months earlier, as the partial government shutdown wears on toward a fourth week.

...



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Kimble Charting Solutions

Triple Breakout Test In Play For S&P 500!

Courtesy of Chris Kimble.

Is the rally of late about to run out of steam or is a major breakout about to take place in the S&P 500? What happens at current prices should go a long way in determining this question.

This chart looks at the equal weight S&P 500 ETF (RSP) on a daily basis over the past 15-months.

The rally from the lows on Christmas Eve has RSP testing the top of a newly formed falling channel while testing the underneath side of the 2018 trading range and its falling 50-day moving average at (1).

At this time RPS is facing a triple resistance test. Wil...



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Phil's Favorites

Brexit deal flops, Theresa May survives -- so what happens now?

 

Brexit deal flops, Theresa May survives -- so what happens now?

Courtesy of Victoria Honeyman, University of Leeds

As the clock ticks down to March 29 2019, all of the political manoeuvring, negotiating, arguing and fighting is coming to a peak. In the two and a half years since the 2016 EU referendum, views on both sides have hardened and agreement still seems as far away as it was the day after the referendum.

With Theresa May’s withdrawal agreement disliked by all sides, and voted down by an unprecedented majority in the House of Commons, everyone is wondering what can and should be done next?

...



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Digital Currencies

Crypto-Bubble: Will Bitcoin Bottom In February Or Has It Already?

Courtesy of Michelle Jones via ValueWalk.com

The new year has been relatively good for the price of bitcoin after a spectacular collapse of the cryptocurrency bubble in 2018. It’s up notably since the middle of December and traded around the psychological level of $4,000... so is this a sign that the crypto market is about to recover?

Of course, it depends on who you ask, but one analyst discovered a pattern which might point to a bottom next month.

A year after the cryptocurrency bubble popped

CCN...



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ValueWalk

D.E. Shaw Investment Calls For Leadership Change At EQT

By ActivistInsight. Originally published at ValueWalk.

Elliott Management has offered to acquire QEP Resources for approximately $2.1 billion, contending the oil and gas explorer’s turnaround efforts have done little to lift the company’s share price. The company responded and said that a thorough review of the proposition is imperative in order to properly act in the best interests of shareholders, “taking into account the company’s other alternatives and current market conditions.” The news came only a month after Travelport Worldwide agreed to sell itself to Siris Capital Group and Elliott’s private equity arm Evergreen Coast Capital for $4.4 billion in cash and two months after Athenahealth was bought by Veritas and Evergreen for $5.7 bi...



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Insider Scoop

UBS Says Disney's Streaming Ambition Gives It A 'New Hope'

Courtesy of Benzinga.

Related DIS Despite Some Risks, Analysts Still Expecting Double Digit Growth From Communications Services In Q4 ...

http://www.insidercow.com/ more from Insider

Chart School

Weekly Market Recap Jan 13, 2019

Courtesy of Blain.

In last week’s recap we asked:  “Has the Fed solved all the market’s problems in 1 speech?”

Thus far the market says yes!  As Guns n Roses preached – all we need is a little “patience”.  Four up days followed by a nominal down day Friday had the market following it’s normal pattern the past nearly 30 years – jumping whenever the Federal Reserve hints (or essentially says outright) it is here for the markets.   And in case you missed it the prior Friday, Chairman Powell came back out Thursday to reiterate the news – so…so… so… patient!

Fed Chairman Jerome Powell reinforced that message Thursday during a discussion at the Economic Club of Washington where he said that the central bank will be “fle...



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Members' Corner

Why Trump Can't Learn

 

Bill Eddy (lawyer, therapist, author) predicted Trump's chaotic presidency based on his high-conflict personality, which was evident years ago. This post, written in 2017, references a prescient article Bill wrote before Trump even became president, 5 Reasons Trump Can’t Learn. ~ Ilene 

Why Trump Can’t Learn

Donald Trump by Gage Skidmore (...



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Biotech

Opening Pandora's Box: Gene editing and its consequences

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

 

Opening Pandora's Box: Gene editing and its consequences

Bacteriophage viruses infecting bacterial cells , Bacterial viruses. from www.shutterstock.com

Courtesy of John Bergeron, McGill University

Today, the scientific community is aghast at the prospect of gene editing to create “designer” humans. Gene editing may be of greater consequence than climate change, or even the consequences of unleashing the energy of the atom.

...

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Mapping The Market

Trump: "I Won't Be Here" When It Blows Up

By Jean-Luc

Maybe we should simply try him for treason right now:

Trump on Coming Debt Crisis: ‘I Won’t Be Here’ When It Blows Up

The president thinks the balancing of the nation’s books is going to, ultimately, be a future president’s problem.

By Asawin Suebsaeng and Lachlan Markay, Daily Beast

The friction came to a head in early 2017 when senior officials offered Trump charts and graphics laying out the numbers and showing a “hockey stick” spike in the nationa...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

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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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

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Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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