Posts Tagged ‘Barclays’

The Road to World War III – The Global Banking Cartel Has One Card Left to Play

The Road to World War III – The Global Banking Cartel Has One Card Left to Play

By David DeGraw (h/t ZH)

The following is Part I to David DeGraw’s new book, “The Road Through 2012: Revolution or World War III.” This is the second installment to a new seven-part series that we will be posting throughout the next few weeks. You can read the introduction to the book here. To be notified via email of new postings from this series, subscribe here.

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Editor’s Note: The following is Part I to David DeGraw’s new book, “The Road Through 2012: Revolution or World War III.” This is the second installment to a new seven-part series that we will be posting throughout the next few weeks. You can read the introduction to the book here. To be notified via email of new postings from this series, subscribe here.

I: Economic Imperial Operations

The Road to World War III - The Global Banking Cartel Has One Card Left to PlayWhen we analyze our current crisis, focusing on the past few years of economic activity blinds us to the history and context that are vital to understanding the root cause. What we have been experiencing is not the result of an unforeseen economic crash that appeared out of the blue with the collapse of the housing market. It was certainly not brought on by people who bought homes they couldn’t afford. To frame this crisis around a debate on economic theory misses the point entirely. To even blame it on greedy bankers,…
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JPMorgan, RBS, Barclays Charge Fees on ‘Black Box’ Reverse Convertibles that Exceed Maximum Yields

JPMorgan, RBS, Barclays Charge Fees on ‘Black Box’ Reverse Convertibles that Exceed Maximum Yields

Courtesy of Mish 

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Bloomberg reports Fees Exceed Maximum Yields on ‘Black Box’ Reverse Convertibles.

Royal Bank of Scotland Group Plc, JPMorgan Chase & Co. and Barclays Plc are charging fees on some structured notes that equal or exceed the securities’ highest possible yield, as sales of the opaque products draw scrutiny from regulators.

On June 15, RBS gave brokers a 2.75 percent commission to sell a three-month reverse-convertible note with a 2.56 percent potential yield, according to a prospectus. Last month, JPMorgan charged 5.25 percent in fees and commissions on a three-month Citigroup Inc.-linked note that paid 5 percent interest, and Barclays offered brokers a 2 percent commission on a security paying 2 percent interest, according to other prospectuses.

Reverse convertibles generally pay higher interest rates than corporate bonds, with last month’s notes yielding an average of 15.7 percent per year, Bloomberg data show. Their risk lies in so-called down-and-in put options built into the products that allow banks to repay buyers with shares if an underlying stock declines a certain amount. Investors in RBS’s note could lose money if Alcoa Inc. drops by more than 25 percent.

Down-and-in put options aren’t traded on exchanges, making them difficult to value without a computer model. The customized contracts are privately negotiated by banks and their clients in the $615 trillion over-the-counter derivatives market, where trades and prices aren’t reported publicly.

Investors in JPMorgan’s reverse convertibles, which pay 5 percent interest over three months, are exposed to losses if Citigroup declines more than 20 percent. JPMorgan collected a 5.25 percent fee for selling $784,000 of the securities on May 25, according to the prospectus. Barclays’ $1 million offering on May 10 is linked to the stock of Apple Inc., with the option triggered if shares drop more than 25 percent.

Undisclosed costs, such as a profit for the issuer, are generally included in the notes’ sale price, according to Finra. It is “all but impossible” for investors to determine the size of these costs or “whether the reverse convertible represents a good deal,” Finra said on its website.

“It’s pretty easy to build in extra fees because retail investors aren’t in a position to price the embedded options,” said Janet Tavakoli, founder of Chicago-based consulting firm Tavakoli Structured Finance, in a


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Did a Big Bet Help Trigger ‘Black Swan’ Stock Swoon?

I wouldn’t call this a "black swan" event any more than Jon Stewart would call it a "perfect storm." Felix Salmon - it’s a silly theory – Nassim Taleb Didn’t Cause the Crash makes a better argument below. – Ilene  

Did a Big Bet Help Trigger ‘Black Swan’ Stock Swoon?

Red Bull Air Race Perth - Training Day

By SCOTT PATTERSON And TOM LAURICELLAWSJ

Shortly after 2:15 p.m. Eastern time on Thursday, hedge fund Universa Investments LP placed a big bet in the Chicago options trading pits that stocks would continue their sharp declines.

On any other day, this $7.5 million trade for 50,000 options contracts might have briefly hurt stock prices, though not caused much of a ripple. But coming on a day when all varieties of financial markets were deeply unsettled, the trade may have played a key role in the stock-market collapse just 20 minutes later.

The trade by Universa, a hedge fund advised by Nassim Taleb, author of "Black Swan: The Impact of the Highly Improbable," led traders on the other side of the transaction—including Barclays Capital, the brokerage arm of British bank Barclays PLC—to do their own selling to offset some of the risk, according to traders in Chicago.

Then, as the market fell, those declines are likely to have forced even more "hedging" sales, creating a tsunami of pressure that spread to nearly all parts of the market.

The tidal wave of selling fed into a market already on edge about the economy in Europe. As the selling spread, a blast of orders appears to have jarred the flow of data going into brokerage firms, such as Barclays Capital, according to people familiar with the matter…

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Nassim Taleb Didn’t Cause the Crash

By Felix Salmon

Of all the silly theories about the cause of Thursday’s stock-market plunge, I’m not entirely sure why the WSJ has decided to give particular credence to the idea that it can all be traced back to a single $7.5 million trade for 50,000 options contracts. Lots of options trades of that size take place every day, and just because this one happened just before the market fell doesn’t mean it was the cause of the crash.

It’s becoming increasingly clear that the crash was fundamentally the fault of weak market structures, especially in the smaller electronic exchanges. It wasn’t a fat finger, it wasn’t cyberterrorism, it wasn’t the sale of 16 billion


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PIMCO Versus Barclays: Economic Pessimist – Economic Optimist

PIMCO Versus Barclays: Economic Pessimist – Economic Optimist

Courtesy of Tom Lindmark at But Then What

You couldn’t find a more divergent view of the future of the US economy than those offered up today by Bill Gross of Pimco and Tim Bond from Barclays. Gross is not deviating from his persistent call of chronic low growth while Bond says we have it all wrong, a boom is coming.

Gross spends an interesting first couple of paragraphs in his monthly newsletter castigating other investment managers for the fees they charge. It’s not revolutionary stuff and it’s a bit self-serving, nevertheless he makes a good point about fees.

He then gets into the meat of his presentation which is an argument that we have for decades the country has operated on an assumption that nominal GDP would grow at around 5%. This is in fact what hat has happened and accordingly the structure is geared towards that sort of growth. Now we have slipped below that number and he sees constraints in getting back there.

Gross argues that the economy can not get back to the 5% level on its own due to overcapacity and is destined to wander in either a recessionary spiral or some sort of stagflationary environment. The remedy for this is for government to substitute for the private sector. Gross contends that government this time is limited in its responses. Government leverage, in his view, is less robust than private leverage and thus will not contribute as much to recovery. Additionally, he believes that both domestic and international political constraints exist that prevent government from doing much stimulus over and above what it has already committed to. The bottom line is his expectation for nominal GDP growth of around 3% once a recovery takes hold.

Here is his concluding paragraph:

Investment conclusions? A 3% nominal GDP “new normal” means lower profit growth, permanently higher unemployment, capped consumer spending growth rates and an increasing involvement of the government sector, which substantially changes the character of the American capitalistic model. High risk bonds, commercial real estate, and even lower quality municipal bonds may suffer more than cyclical defaults if not government supported. Stock P/Es will rest at lower historical norms, and higher


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They’re At It Again – Securitization

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They’re At It Again – Securitization

Explosions, Bear and Lehman blow upCourtesy of Karl Denninger at The Market Ticker


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Zero Hedge

Citigroup Shutters Retail Options Market-Making After Losing War Against HFTs

Courtesy of ZeroHedge View original post here.

Anyone following market dynamics in recent months would have been left with the impression that whereas other securities may have had a rather somnolent third quarter, option market makers would be printing cash hand over fist, thanks mostly to the recent boom in retail call option buying, which as shown in the chart below, has seen nearly a doubling in option trading volumes in the past few months and hitting a record 18.4 million in August.

...



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Phil's Favorites

SPACs are still bulls***

 

SPACs are still bulls***

Courtesy of 

I almost slipped and bought into the SPAC Renaissance. Almost.

Draftkings looks legit. But Draftkings could have been a true IPO. The SPAC wrapper was beside the point. Chamath and Ackman will probably do something legit, those guys usually find a way to win. Maybe a few others. The rest are / will be garbage. My first impression was right.

Nikola’s stock has now fallen from near 100 down into the 20’s as the guy’s whole story has unraveled. Then the guy stepped down and ran away. None of this had to happen. But Nikola arrived on the markets as the quarry of a Special Purpose Acquisit...



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ValueWalk

FDA's New Moves Can't Allay Coronavirus Vaccine Fears

By JOHN F. BANZHAF. Originally published at ValueWalk.

FDA’s New Moves Can’t Allay Vaccine Fears; Weaker Standards and Political Pressures Worry Many Experts

Q2 2020 hedge fund letters, conferences and more

FDA's New Standards On Coronavirus Vaccine

WASHINGTON, D.C. (September 23, 2020) -  In an effort to repair its badly damaged reputation, and convince the public that they should take any vaccine it authorizes, the FDA is issuing new standards, but they probably will not convince either experts nor the public that it will be safe and effective, says public interest law professor ...



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Kimble Charting Solutions

Is Gold/US Dollar Ratio Sending Bearish Signal To Precious Metals?

Courtesy of Chris Kimble

Last month, I featured this Gold / US Dollar ratio chart in an article warning of the potential for a trend reversal.

While the broader bullish trend is still intact (higher lows since 2015), it could be time for Gold to take a breather.

Looking at today’s “updated” chart, we can see that the ratio formed a “doji star” candle last month with momentum running at peak levels (concerning). And this month we are seeing follow through to the downside (in the form of a red candle).

As well, this bearish reversal pa...



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Politics

'Colossal Backdoor Bailout': Outrage as Pentagon Funnels Hundreds of Millions Meant for Covid Supplies to Private Defense Contractors

 

'Colossal Backdoor Bailout': Outrage as Pentagon Funnels Hundreds of Millions Meant for Covid Supplies to Private Defense Contractors

"If you can't get a Covid test or find an N95, it’s because these contractors stole from the American people to make faster jets and fancy uniforms."

By Jake Johnson

Secretary of Defense Mark Esper and Chairman of the Joint Chiefs of Staff Army Gen. Mark Milley hold an end of year press conference at the Pentagon on December 20, 2019 in Arlington, Virginia. (Photo: Drew Angerer/Getty Images)

Instead of adhering to congressional inten...



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Biotech/COVID-19

How and when will we know that a COVID-19 vaccine is safe and effective?

 

How and when will we know that a COVID-19 vaccine is safe and effective?

How much longer must society wait for a vaccine? ANDRZEJ WOJCICKI/Getty Images

By William Petri, University of Virginia

With COVID-19 vaccines currently in the final phase of study, you’ve probably been wondering how the FDA will decide if a vaccine is safe and effective.

Based on the status of the Phase 3 trials currently underway, it i...



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Chart School

Stocks are not done yet - Update

Courtesy of Read the Ticker

There are a few times in history when a third party said this US paper (stocks, funds or bonds) is worthless.

Here is two.

1) 1965 Nixon Shock - The French said to US we do not want your paper dollars please pay us in gold. This of course led to the US going off the gold standard.

2) 2007 Bear Stern Fund Collapse - Investors said their funds collateral was worth much less than stated. This of course was the beginning of the great america housing bust of 2008.


In both cases it was stated .."look the Emperor is naked!"... (The Empe...

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Digital Currencies

Cryptocurrencies Rarely Used To Launder Money, Fiat Preferred

Courtesy of ZeroHedge View original post here.

Authored by Shaurya Malwa via Decrypt.io,

Traditional channels continue to dominate the estimated $2 trillion global money laundering racket instead of cryptocurrencies, a report says.

In brief
  • Money laundering via cryptocurrencies is not a preferred tool for criminals, a report said...



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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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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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