Archive for 2012

The Four Paths Forward For The Euro Area

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

From what seemed like a very low bar on expectations, last week’s summit headlines surprised modestly on the upside, even if the details remain far from clear – and implementation even murkier. Political talk of wanting to break the link between sovereign and banking risk was well-received by markets – but we remind all that talk-is-cheap with these Euro-pols. As Goldman noted this weekend, “we do not see the outcome as a game changer”, rather can-kicking until one of four possible endgames are realized. The absence of any explicit commitment to plans for fiscal or political integration; the lack of reference to any pan-European deposit insurance; and Ms. Merkel’s limited concessions (to ensure passage of the growth compact) to the terms on which the existing pool of EFSF/ESM resources are offered leaves the underlying issue – the terms on which mutualisation of financial risk is offered by Germany in return for mutualization of control over fiscal decisions throughout the Euro area – remaining inharmonious. German tactical concessions at the summit do not change their basic position on this issue: that discipline, reform and consolidation must be achieved and cemented first before mutualization of financial obligations is possible. Looking to the future Goldman sees four paths for the Euro are from here – and short-term too many crucial issues are left unresolved.

Huw Pill, Goldman Sachs: European Views

Looking to the future, we see four paths (albeit ones that are connected by cross streets) for the Euro area from here, around which scenarios for the market outlook can be developed:

  • The Cultural Revolution. While unlikely, it is possible that European politicians recognize the error of their previous ways and collectively jump to a more constructive approach, exploiting the strengths of the consolidated Euro area in pursuit of a solution, rather than focusing on the weakness in individual countries that represent obstacles to one. In short, the European leadership could start to ‘think continental’ (to use a phrase originated by Alexander Hamilton in not dissimilar circumstances). In principle, this would offer a rapid and effective resolution of the crisis. But the likelihood of this outcome is low. The European authorities are inevitably in thrall to their national political constituencies (which, after all, elect them): thinking national rather than continental is the therefore the most


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The Dark (Pool) Truth About What Really Goes On In The Stock Market: Part 2

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Courtesy of the author, we present to our readers the following excerpt from Dark Pools: High-Speed Traders, AI Bandits, and the Threat to the Global Financial System, by Scott Patterson, author of The Quants. Part 1 can be found here.

Haim Bodek thought practically nonstop for days about what the trade-venue representative had told him that night at the New York party.
The way that the abusive order types worked made him think back to a document he’d been given by a colleague that summer as he researched what was going wrong at Trading Machines. The document was a detailed blueprint of a high-frequency method that was said to be popular in Chicago’s trading circles.

It was called the “0+ Scalping Strategy.”

Bodek suspected that there might be a link between the order types and the strategy.

Riffling through his files, he quickly found it. While the document didn’t say which firm used the strategy, he’d been told by the colleague who’d given it to him that one of the most successful high-speed firms employed it, or something closely akin to it. Due to the sophistication of the strategy, he’d guessed from the start that it was probably written by a Plumber.

There was another giveaway that it had originated in Chicago, where Bodek had worked for several years at Hull Trading: “scalping.” To a trader, scalping didn’t mean the same thing it meant to most people—a suspicious-looking guy peddling tickets for a sporting event or rock concert outside a stadium. In trading, scalping was an age-old strategy of buying low and selling high—very quickly. It was a common practice on the floors of futures exchanges that populated the Midwest—the Kansas City Board of Trade or the Chicago Mercantile Exchange. The 0+ Scalping Strategy was apparently a futures-trading technique that had been transformed into a computer program.

Bodek started reading. Page two of the document laid out the purpose of the 0+ strategy. “Simple Goal: use market depth and our order’s priority in the Q to create scalping opportunities where the loss on any one trade is limited to ‘0’ (exclusive of commissions).”

He paused at that. Essentially, the author of the strategy was saying that its primary goal was to never lose money—the loss on any trade was “0.” In theory,…
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Guest Post: Learning To Laugh At the State

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by James Miller of the Ludwig von Mises Institute of Canada

Guest Post: Learning To Laugh At the State

I’ll be the first to admit the incredible aggravation I feel whenever liberty is trampled upon by the state’s obedient minions.  Everywhere you look, government has its gun cocked back and ready to fire at any deviation from its violently imposed rules of order.  A four year old can’t even open a lemonade stand without first bowing down and receiving a permit from bureaucrats obsessed with micromanaging private life.  The state’s stranglehold on freedom is as horrendous as it is disheartening.

The worst part is that the trend shows no signs of slowing down, let alone reversing.  Politicians are always developing some harebrained scheme to mold society in such a way to circumvent the individual in favor of total dictation.  If it isn’t politicians, then it’s an army of unelected bureaucrats acting as mini-dictators.  As the late Swedish economist Gustav Cassel once lectured:

The leadership of the state in economic affairs which advocates of Planned Economy want to establish is, as we have seen, necessarily connected with a bewildering mass of governmental interferences of a steadily cumulative nature. The arbitrariness, the mistakes and the inevitable contradictions of such policy will, as daily experience shows, only strengthen the demand for a more rational coordination of the different measures and, therefore, for unified leadership. For this reason Planned Economy will always tend to develop into Dictatorship

Government interference into economic affairs almost never alleviates the problem it set out to solve.  The unintended, and perhaps intended, consequences only rally more calls for further intervention.  Because of its countless edicts, the majority of people who reside in Western economies have no concept of how and why markets function as they do.  They have mistaken crony capitalism or socialism for genuine capitalism.  While mistaken, this distrust of the market has been the lifeblood of the parasitic state.

What the welfare state, with the help of compulsory public schooling, has effectively done is embedded a generation of people with the idea that government is a cornucopia so there is no need to think realistically about the future.  Suppressed interest rates, food stamps, unemployment benefits, public housing and the like are presented as cost-free.  Their purpose…
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Weekly Market Commentary: Middling Breadth

Courtesy of Declan Fallon

Last week’s strong finish left markets nicely positioned on the bullish side, but with room to maneuver before things get too hot. The Percentage of Nasdaq Stocks above the 50-day MA turned net bullish as it climbed above the 50% level.

The slower moving Nasdaq Summation Index hasn’t yet turned net bullish, but is in the process of creating a swing low.

The only concern is the Bullish Percents, which have been slow to turn.

However, the Nasdaq is back threatening the bull trap, but there is still 200 points of ground to make up before it can put this bearish supply behind.

The S&P is still toying with former channel support turned resistance, but is at least heading in the right direction. However, it’s only on the verge of channeling its ‘bull trap’; big week ahead for the index.

The Russell 2000 is also in the process of challenging prior supply from the head-and-shoulder pattern with new multi-year highs in range. If the bull market from 2009 is to continue it will be necessary for Small Caps to lead out – can 850 be broken?

With the holiday week ahead markets are unlikely to find an answer this week, but it will be important the bulk of Friday’s gains hold.

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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com. I offer a range of stock trading strategies for global markets which can be Previewed for Free with delayed trade signals. You can also view the top-10 best trading strategies for the US, UK, Europe and Rest-of-the-World in the Trading Strategy Marketplace Leaderboard. The Leaderboard also supports advanced search capability so you can tailor your strategies to suit your individual requirements.

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The MK2 Grenade: Mike Krieger And Max Keiser Take On The World Of Financial Crime

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

There is a reason why WWII legendary “pineapple” grenade bore the initials MK2. Those who enjoy the works of Mike Krieger and Max Keiser are in for a treat, with this 2 for the price of 1 (technically for the price of zero) interview of Krieger by Keiser, as the MKs of the world unite, and take on financial fraud.

From Mike Krieger of Libertyblitzkrieg:

In case you missed it, Josh Brown recently published a list via the Huffington Post of what he believes are the 25 most dangerous people in financial media.  He definitely got the first two slots correct.  At the very top are Max Keiser and Stacy Herbert, who unrelentingly publish their “Financial War Reports” daily here.  At the number two position, is Zerohedge, the best financial site on the web.  I have been fortunate enough to have collaborated with Max, Stacy and Zerohedge for the past two years and it has been an extremely rewarding experience.  To get to the point, below is my just released latest interview on the Keiser Report.  I think it’s the best one we’ve done in a while.  Enjoy!





Government by the Banks, for the Banks: The ESM Coup D’Etat in Europe

Government by the Banks, for the Banks: The ESM Coup D’Etat in Europe

Courtesy of Ellen BrownTruthout

German Chancellor Angela Merkel (pictured at the 2007 World Economic Forum in Davos, Switzerland) capitulated to changes to a permanent Eurozone bailout fund on Friday, June 29.German Chancellor Angela Merkel (pictured at the 2007 World Economic Forum in Davos, Switzerland) capitulated to changes to a permanent Eurozone bailout fund on Friday, June 29. (Photo: Severin Nowacki / World Economic Forum)

On Friday, June 29th, German Chancellor Angela Merkel acquiesced to changes to a permanent Eurozone bailout fund—"before the ink was dry," as critics complained. Besides easing the conditions under which bailouts would be given, the concessions included an agreement that funds intended for indebted governments could be funneled directly to stressed banks.

According to Gavin Hewitt, Europe editor for BBC News, the concessions mean that:

[T]he eurozone's bailout fund (backed by taxpayers' money) will be taking a stake in failed banks.

Risk has been increased. German taxpayers have increased their liabilities. In future a bank crash will no longer fall on the shoulders of national treasuries but on the European Stability Mechanism (ESM), a fund to which Germany contributes the most.

In the short term, these measures will ease pressure in the markets. However there is currently only 500bn euros assigned to the ESM. That may get swallowed up quickly and the markets may demand more. It is still unclear just how deep the holes in the eurozone's banks are.

The ESM is now a permanent bailout fund for private banks, a sort of permanent "welfare for the rich." There is no ceiling set on the obligations to be underwritten by the taxpayers, no room to negotiate, and no recourse in court. Its daunting provisions were summarized in a December 2011 youtube video originally posted in German, titled "The shocking truth of the pending EU collapse!":

The treaty establishes a new intergovernmental organization to which we are required to transfer unlimited assets within seven days if it so requests, an organization that can sue us but is immune from all forms of prosecution and whose managers enjoy the same immunity. There are no independent reviewers and no existing laws apply. Governments cannot take action against it. Europe's national budgets [are] in the hands of one single unelected intergovernmental organization.

Here are some of the ESM's key provisions:

[Article 8] "The authorised capital stock shall be EUR 700


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Guest Post: The Origin Of Money

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Submitted by John Aziz of Azizonomics

The Origin Of Money

Markets are true democracies. The allocation of resources, capital and labour is achieved through the mechanism of spending, and so based on spending preferences. As money flows through the economy the popular grows and the unpopular shrinks.  Producers receive a signal to produce more or less based on spending preferences. Markets distribute power according to demand and productivity; the more you earn, the more power you accumulate to allocate resources, capital and labour. As the power to allocate resources (i.e. money) is widely desired, markets encourage the development of skills, talents and ideas.

Planned economies have a track record of failure, in my view because they do not have this democratic dimension. The state may claim to be “scientific”, but as Hayek conclusively illustrated, the lack of any real feedback mechanism has always led planned economies into hideous misallocations of resources, the most egregious example being the collectivisation of agriculture in both Maoist China and Soviet Russia that led to mass starvation and millions of deaths. The market’s resource allocation system is a complex, multi-dimensional process that blends together the skills, knowledge, and ideas of society, and for which there is no substitute. Socialism might claim to represent the wider interests of society, but in adopting a system based on economic planning, the wider interests and desires of society and the democratic market process are ignored.

This complex process begins with the designation of money, which is why the choice of the monetary medium is critical.

Like all democracies, markets can be corrupted.

Whoever creates the money holds a position of great power — the choice of how to allocate resources is in their hands. They choose who gets the money, and for what, and when. And they do this again and again and again. 

Who should create the monetary medium? Today, money is designated in the ivory towers of central banks and allocated through the banking system. Historically, in the days of commodity-money, money was initially allocated by digging it up out of the ground. Anyone with a shovel or a gold pan could create money. In the days of barter, a monetary medium was created even more simply, through producing things others were happy to swap or credit.

While central banks might claim that they…
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Barclays Chairman Is Lie-borgate’s First Victim

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Three weeks ago we mocked, rightfully so, the utter joke that is Liebor, which had been unchanged for just over 3 months. Nobody cared, certainly not the British Banker Association. This was not the first time: our first allegations of Liebor fraud and manipulation started over three years ago. There were others too. Nobody certainly cared back then. Now, in the aftermath of the Barclays lawsuit, and "those" e-mails, everyone suddenly cares. And a few days after the first public exposure of Lie-borgate, the first victim has been claimed: as numerous sources report, Barclays' Chairman Marcus Agius wil step down immediately. From the WSJ: "Political and investor pressure has mounted on the management of U.K.-based Barclays since the settlement was announced Wednesday. The announcement of Mr. Agius's departure could come as soon as Monday, said one of the people. Mr. Agius, 65 years old, a British-Maltese banker who formerly worked at Lazard Ltd., has led the bank since 2007, steering Barclays through the 2008 financial crisis and avoiding the direct state bailouts that were needed by many of its global peers." While the sacrifice of a scapegoat is expected, what we don't get is why the Chairman: after all by the time Agius became Chair of the British bank, the bulk of the Libor fixing alleged in the FSA lawsuit had already happened. And of course, with Bob Diamond having succeeded John Varley as CEO in 2010, one can easily claim that in this first (of many) confirmed Liebor transgression there really is nobody at fault who can be held accountable. Of course, Barclays is merely the first of many. We fully expect Lieborgate to spread not only to other British BBA member banks, but soon to jump across the Atlantic, where CEOs who have been with their banks for the duration of the entire Libor-fixing term will soon find themselves under the same microscope.

From WSJ:

 
 

Over the weekend, the U.K. government ordered an independent review of how Libor is set that is expected to be completed by the end of the summer.

 

"It's very important [the review] takes all of the actions necessary, holding bankers accountable… making sure there's proper transparency, making sure


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77% of JP Morgan’s Net Income Comes from Government Subsidies

Courtesy of ZeroHedge. View original post here.

Submitted by George Washington.

JP Morgan’s credit rating would be much lower without government backing.

As Bloomberg noted last week:

JPMorgan benefited from the assumption that there’s a “very high likelihood” the U.S. government would back the bank’s bondholders and creditors if it defaulted on its debt, according to the statement. Without the implied federal backing, JPMorgan’s long-term deposit rating would have been three levels lower and its senior debt would have dropped two more steps, Moody’s said.

And as the editors of Bloomberg pointed out a couple of weeks ago:

JPMorgan receives a government subsidy worth about $14 billion a year, according to research published by the International Monetary Fundand our own analysis of bank balance sheets. The money helps the bank pay big salaries and bonuses. More important, it distorts markets, fueling crises such as the recent subprime-lending disaster and the sovereign-debt debacle that is now threatening to destroy the euro and sink the global economy.

 

***

 

With each new banking crisis, the value of the implicit subsidy grows. In a recent paper, two economists — Kenichi Ueda of the IMF and Beatrice Weder Di Mauro of the University of Mainz — estimated that as of 2009 the expectation of government support was shaving about 0.8 percentage point off large banks’ borrowing costs. That’s up from 0.6 percentage point in 2007, before the financial crisis prompted a global round of bank bailouts.

To estimate the dollar value of the subsidy in the U.S., we multiplied it by the debt and deposits of 18 of the country’s largest banks, including JPMorgan, Bank of America Corp. and Citigroup Inc. The result: about $76 billion a year. The number is roughly equivalent to the banks’ total profits over the past 12 months, or more than the federal government spends every year on education.

 

JPMorgan’s share of the subsidy is $14 billion a year, or about 77 percent of its net income for the past four quarters. In other words, U.S. taxpayers helped foot the bill for the multibillion-dollar trading loss that is the focus of today’s hearing. They’ve also provided more direct support: Dimon noted in a recent conference call that the Home Affordable Refinancing


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Zero Hedge

Enemy Of The People?

Courtesy of ZeroHedge. View original post here.

Via The Zman blog,

There has never been a time when normal people did not know the media was biased and biased in a predictable direction. For every non-liberal in the media, there were at least ten liberals. The ratio was probably higher, but then, as now, some lefties liked to pretend they were independents or some third option.

The media used to invest a lot of time denying they had a bias and an agenda, but the only people who believed them were on the Left, which had the odd effect of confirming they had a bias and an agenda.

...



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Phil's Favorites

A 2019 Earnings Recession?

 

A 2019 Earnings Recession?

Courtesy of 

Shout to Leigh!

On the new Talk Your Book – Josh Brown is joined by Leigh Drogen of Estimize, one of the leading providers of crowdsourced financial and economic data to talk about the trend in corporate profits that could potentially lead to an earnings recession later this year.

What is the thing that Leigh is seeing in the data that Wall Street isn’t yet picking up on? What segment of the stock market is most at risk? Why is the crowd smarter than the narrow consensus of Wall Street analysts?

Check out Estimize ...



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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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Kimble Charting Solutions

Gold & Silver Testing Important Breakout Levels!

Courtesy of Chris Kimble.

Gold and Silver from a long-term perspective have created a series of lower highs over the past 8-years. Will 2019 bring a change to this trend? A big test is in play!

Gold since the lows in 2016 has created a series of higher lows, while Silver may have created a double bottom.

Gold & Silver are currently facing break attempts a (1) and (2). These falling resistance lines have disappointed metals bulls for the past few years.

The direction of Gold and Silver weeks and months from now should be highly influenced by what each does as they are attempting to break above important resistance levels.

To become a member of Kimbl...



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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

Digital Currencies

Russia Prepares To Buy Up To $10 Billion In Bitcoin To Evade US Sanctions

Courtesy of Zero Hedge

While the market has been increasingly focused on the rising headwinds in the global economy in general, and China's economic slowdown in particular, while the media is obsessing over daily revelations that Trump may or may not have colluded with Russia to get elected, a far more critical, if underreported, shift has been taking place over the past year.

As we reported in June, whether due to concerns over draconian western sanctions and asset confiscations following the poisoning of former Russian military officer Sergei Skripal, or simply because it wanted to diversify away from the dollar, Russia liquidated virtually all of its Treasury holdings in the late spri...



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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 failure based on his personality, which was evident years ago. This article, written in 2017, references a prescient article Bill wrote before Trump became president, in July, 2016, 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

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Here's a free ebook for you to check out! 

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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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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