Posts Tagged ‘Karl Denninger’

Interview: Chaostheorien

Interview: Chaostheorien

Karl Denninger Courtesy of Karl Denninger at The Market Ticker 

Good reading here, if you’re interested in my views "in a nutshell":

Karl Denninger, the publisher of “The Market Ticker”, in an exclusive interview for chaostheorien.de: “In order to honestly assess what’s going on and what has to be done to fix the problems, we first must admit our mistakes.” Furthermore he says why the financial system is more and more a farce, gives his stance on the prospects of a military dictatorship in the United States, and explains his position with regard to Peak Oil.

Have a read….. but grab a beer first. 

 


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High-Frequency Trading: Something Black?

High-Frequency Trading: Something Black?

Courtesy of Karl Denninger at The Market Ticker 

Now this is interesting, coming from the annual "black hat" conference in Las Vegas (for those not involved in the computer security world, that’s an annual gathering of hackers where various presentations are made that amount to brags and bags that have or can be run on various parts of information technology):

Among the talks conspicuously absent from this year’s schedule: a presentation exposing security vulnerabilities in banks’ high-speed trading systems.

The talk, planned by security researchers Varun Uppal and Gyan Chawdhary, would have dealt with methods for hiding risky unauthorized trades in high-speed trading applications, as well as demonstrating a "sniffing" software tool capable of siphoning trading information to a faraway hacker to allow a high-tech form of real-time insider trading. But Uppal tells us that the talk has been cancelled after concerns were raised by a financial industry client of the security auditing firm he works for, Information Risk Management.

Methods eh?

I suppose we’re supposed to believe that this is all theoretical, right?

Oh, somehow I doubt it.

And why?

Well, it wouldn’t have anything to do with firms intentionally ignoring security capabilities for reasons of SPEED, would it?  (Note that encryption, in particular, is rather slow comparatively.  Plain text is of course very fast.)

While security measures for FIX programs are available, Uppal says he’s audited firms that ignore them for convenience or speed. Uppal says that could allow a hacker to monitor a bank’s trades and make near-simultaneous ones, or even steal a bank’s unique trading algorithm.

Oh, they would do that.  That’s very nice.

New?  Oh no.  It’s not new either

In a 2007 Black Hat presentation, David Goldsmith and Jeremy Rauch of Matasano Security listed systematic problems with the security of high speed trading systems such as the difficulty of encrypting trade data and banks’ reluctance to add any security that might slow down the transactions,

Right.  Speed before security.  Engage in an arms race and if someone else gets unlawful advantage as a consequence of your refusal to follow best practices, well, that’s too damn bad.

Let’s contrast that with what happens in the Interbank (e.g. Visa, MasterCard, Discover, etc) networks.  There if you store unencrypted cardholder data (it’s faster and easier!) or if you use unencrypted transport between…
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I Love 33:1 Leverage – BIS

I Love 33:1 Leverage – BIS

Courtesy of Karl Denninger at The Market Ticker 

Amusing news here out of BIS….

When it comes to the calibration, the Committee is proposing to test a minimum Tier 1 leverage ratio of 3% during the parallel run period.

Ah, now that’s nice.  How do we get that sort of leverage ratio being "allowed"?  I wonder if Germany’s banks might have something to do with that….

I’ve read the entire report; Bloomberg has a "sanitized" version is that is mostly ok in it’s interpretation – the key point being:

July 26 (Bloomberg) — The Basel Committee on Banking Supervision softened some of its proposed capital and liquidity rules …..

Right.

Someone needs to tell these clowns that both Lehman and Bear blew to the sky with leverage ratios around 30:1, and that their "proposal" allows more than double the former legal limit for investment banks in the US (before Hanky Panky Paulson got the SEC to remove the limit, of course.)

I suppose we need another global financial detonation before people start taking the words "leverage" and "reserves" seriously.  Heh, you all know my view on this: One Dollar of Capital.

But if you do that, you have banks that are clearing agents for the economy and utility providers of credit, with each dollar of risk they take being pre-funded by an equity or debt purchaser who stuck THEIR money into the pot, knew they could lose it, and will demand a REASONABLE return.

That is, banks would be stodgy businesses again that paid out most of what they earned in dividends, and that would typically be 5 or 7% a year – and that’s it. 

The common bankster’s salary would be a middle-class wage in the middle of America – a middling-five-figure number.

And the looting of the world’s commerce through finding some way to skim off a piece of each and every transaction, amounting in the totality of the marketplace to a colossal tax of well over a trillion dollars in the United States alone each and every year, would end.


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Oil Spew Update: Where’s The Doom?

Karl Denninger separates fact and fiction in the Gulf Oil Spill story. 

Oil Spew Update: Where’s The Doom?

RACCOON ISLAND, LA - JULY 15: Pelicans are seen atop a piece of a destroyed boat July 15, 2010 at Raccoon Island, Louisiana. Biologists say at least 300 pelicans have been smeared with oil on the island, which is the largest nesting area for seabirds on the coast of Louisiana. BP is testing a new oil cap, and is temporarily allowing oil to leak from a second pipe as part of preparations for closing the valves to see if the cap can withstand the pressure and stop the flow of oil into the gulf. (Photo by Mario Tama/Getty Images)

I was promised an earth-shattering ka-doom!

Well, not really.

And the spew is not, in fact, funny.

But what’s even less funny is the number of people who have come completely unhinged with their "imminent death of everything and everyone" nonsense.

Let’s go down the list of the some of the better ones:

Everyone who worked on the Exxon Valdez spill is dead (or alternatively, that across the entire population of those who worked on the Valdez spill, the average age of death is 51.)

Really? Can you source that? I’ve been trying. Yeah, I’ve found the claim – 10 seconds with Google finds it. It’s been repeated everywhere. CNN had an alleged "expert" on who made the 51 year life expectancy claim – "almost all who worked on the Exxon Valdez cleanup are now dead."

Can I find an actual documented source for the claim? Nope. And I’ve tried to find it. No luck.

The same interviewee claimed that the components of the dispersent, Corexit, were not disclosed.  This we know to be false; there are two formulations and we know what’s in them.  The nastiest component is called "Butyl Cellusolve", and is indeed a nasty chemical solvent.  The question is concentration; incidentally, you can buy cleaning solutions containing butyl cellusolve at Home Depot, among other places.  I don’t recommend drinking it.

All of these claims appear to be traceable to one so-called self-identified "expert."  If she has actual evidence, such as a roster of all the people who worked on the Exxon Valdez, their ages, and the disposition of their health (and death, as she alleges) then let’s have it.  This sort of extreme claim requires strict proof.  Period.

There is a second well that BP (and/or Diamond Offshore) is hiding that is the real leak that is five (or alternatively seven) miles away; this is a sideshow and they can’t plug either.  The pressures are off the charts, never encountered before.

Really?  Then how come they just did plug the well?  Off the charts?  About two weeks ago there was a pressure gauge on one of the downhole lines, and it read 7,000 psi.  The water at that depth exerts ~2,000 psi.  If this was an absolute gauge (probably true) then the in-bore relative pressure (relative to the sea floor) was…
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Apple Needs Some RF Design Engineers

Apple Needs Some RF Design Engineers

A Chinese man walks past a authorized Apple retailer in Beijing on July 12, 2010. Despite a new flagship showroom that just opened in Shanghai, Apple is striving to overcome price disadvantages and an underground market. Most fans of its Apple products here have been buying their iPhones, iPods and Mac computers from smugglers who operate through underground electronics markets.  UPI/Stephen Shaver Photo via Newscom

Courtesy of Karl Denninger at The Market Ticker 

Yep, as I suspected….

It’s official. Consumer Reports’ engineers have just completed testing the iPhone 4, and have confirmed that there is a problem with its reception. When your finger or hand touches a spot on the phone’s lower left side—an easy thing, especially for lefties—the signal can significantly degrade enough to cause you to lose your connection altogether if you’re in an area with a weak signal. Due to this problem, we can’t recommend the iPhone 4.

That’s Consumer Reports, incidentally, which put the phone in an RF-isolated room to perform their tests along with a base-station emulator.

Oops – that’s about as close to proof as you’re going to find.  In an RF-quiet environment it’s pretty easy to prove your case, and it appears that CR did so.

The tests also indicate that AT&T’s network might not be the primary suspect in the iPhone 4′s much-reported signal woes.

"Might" not?  

I have never been impressed with the iPhone (any generation) in terms of RF.  Ever. It has always been a "form before function" device from my perspective, all the way back to the original units.  Then again I’m spoiled – the best RF-performing GSM phone I’ve ever used was a Nokia 3395.  I may still have one laying around here somewhere, and all of my old Nokias (including a 6610 which was nearly as good) still work just fine.  Old, yes, but one thing Nokia does know how to do is design and build an RF section.

Incidentally, buying devices that work before selecting them for "sex appeal" may be why I’ve never had a material problem with the "can you hear me?" BS that so many suffer with when it comes to cellphones.  I guess my view is that a cellphone is for communicating rather than trying to shag some hot chick at the local bar by flashing my "bling."

This is a common flaw for consumer devices – be sexy rather than be smart – or good.  Of course sex sells, and so the more "sexy" you can make something look the better it sells, and as long as you remain within the "acceptable" functionality envelope you don’t get hurt – too badly.  Witness Motorola, which had the "hot" phone for a long time…
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Market Manipulation On Display

Market Manipulation On Display

Courtesy of Karl Denninger at The Market Ticker 

Rarely does it get this blatant….. this sort of crap goes on every day, but once in a while it’s just "in your face." 

Tonight was one of those examples.

 


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Whistling Past The Graveyard?

Whistling Past The Graveyard?

Courtesy of Karl Denninger, The Market Ticker 

In less than two minutes, here it is…. 

 


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Has Alan Grayson Lost His Mind?

Karl Denninger on Alan Grayson’s proposal:

Has Alan Grayson Lost His Mind?

I generally like Alan so I was stunned to see this bit of pandering - although perhaps I shouldn’t be, given that it’s election season and every one of the critters in Congress is trying desperately to justify their salaries.

5 minutes of worthwhile video, but….. (you knew there would be a "but", right?)

Yes, we could cut the separate funding for Afghanistan and Iraq.  Of course we would then have the troops here, which still results in them being paid salaries, right?

The cost of a war isn’t just fuel for planes, bombs to drop and bullets to shoot.  It is also salaries for our soldiers, salaries for the development of weapons, salaries for places like Eglin and other bases.  If the total spent goes down that support to the economy goes down too.

You won’t see me argue for greater federal spending in the general sense.  But I will argue that until and unless you deal with the energy situation and our 40 years of stupidity in that regard walking away from the sources of our nation’s energy isn’t exactly smart.

Worse, however, Alan Grayson wants to give 90% of the money he would "save" through this move to "the people", thereby not actually withdrawing the deficit spending (which we should do), but instead shifting it.

$16 billion of "deficit reduction", so he claims.  But he’s not mentioning the $1.6 trillion in deficit that we have.

Cutting $160 billion wouldn’t be all that bad of an idea – that would be 10% of the deficit, and might actually matter.  Indeed, it would be what I’d call "a good start."

But 1%? 

That’s pissing into a hurricane.

Nice try at populism draped in a false cloak of "fiscal responsibility" Alan.

It’s unfortunate that "on the numbers" your bill displays an IQ smaller than your shoe size.


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To Greece: Nut Up Or Shut Up

Karl Denninger’s advice…

To Greece: Nut Up Or Shut Up

Time to call the bluff:

The euro fell from the session high against the dollar and Swiss franc on Wednesday after Greece categorically denied market rumors which said it was considering leaving the European Union or the euro zone.

Of course that didn’t take long to be "officially denied":

"We categorically deny any thought of leaving the European Union, or the euro zone," said government spokesman George Petalotis.

Then you have no chance.

Let’s be clear: The only way to do this is by surprise.  Unilaterally, without any discussion with anyone else.  Just like Germany did.

And Greece should do it right here, right now, today.

Nail those European Banks that played "too cute by half" and bought Greek debt expecting an intervention and "sticksave", then effectively extorted the Eurozone nations into providing it, exactly as happened here in the US with Fannie and Freddie paper.

Note that Spain was unable to make its debt auction yesterday; they are thus going to be unable to fund the alleged bailout.  As such the promises Greece was made are in fact empty, and intended to screw the Greek people and their government.

It is time for someone to stand up and say in return "screw you!" to such tactics.  Germany has laid the groundwork, now Greece needs to deliver the "coup de grace" to Sarcozy and his butt-buddies in Brussels.

Depart the Euro and at the same time declare by fiat all Euro-denominated Greek debt held…
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FOMC Analysis 4/28

FOMC Analysis 4/28

Courtesy of Karl Denninger 

Tickerguy’s translation:

Information received since the Federal Open Market Committee met in March suggests that economic activity has continued to strengthen and that the labor market is beginning to improve.

Borrowing and spending 10% of GDP makes it appear the economy is doing reasonably well and has improved.  We continue to accumulate GDP distortions, however, and now are up to about 52%, or twice what we were going into 1931.

Growth in household spending has picked up recently but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit.

That 52% distortion comes out of private demand, of course, and that shows up directly in unemployment, lack of real income growth (it’s negative when one removes transfer payments and handouts) and house prices.  No banker in their right mind will lend to someone without a job or assets, ergo, credit remains tight.

Business spending on equipment and software has risen significantly; however, investment in nonresidential structures is declining and employers remain reluctant to add to payrolls.

Business people are not as stupid as we think you are.  Indeed, they’re putting pins in the Kewpie dolls with my name on them – daily.

Housing starts have edged up but remain at a depressed level.

Without a job you can’t buy a house, and nobody in their right mind would buy an overpriced house irrespective of income.  We did that before and conned America – they wised up.  Damn.

While bank lending continues to contract, financial market conditions remain supportive of economic growth.

Goldman Sachs’ HFT algorythm has been successful in passing shares of stock between each other and producing faux "prosperity" in the stock market.  Ain’t it grand?

Although the pace of economic recovery is likely to be moderate for a time, the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability.

The stock market, on the other hand, has priced in a roaring recovery.  Oh, and that claim of "price stability"?  Don’t look at oil, eh?  No inflation there!

With substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is likely to be subdued for some time.

Yes, we have record oil inventories
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Phil's Favorites

Here's Why the New York Fed Doesn't Want You to See a Photo of Its Wall Street-Esque Trading Floor

Courtesy of Pam Martens

By Pam Martens and Russ Martens: January 20, 2020 ~

Photo of the Trading Floor at the New York Fed (Obtained by Wall Street On Parade from an Educational Video)

The New York Fed is so protective of its surreptitious trading relationship with Wall Street that it previously denied Wall Street On Parade a photo of its trading floor. (We obtained the one pictured here from a Fed educational v...



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Chart School

SP500 Kitchin Cycle Review

Courtesy of Read the Ticker

The biggest known news date in the next 18 months is the US Election. The biggest unknown news date is when the US believes it is in a economic recession.

The Kitchin Cycle is still working.

We must conclude the major 900 period low is now in, and we are now in a up swing, which may top out ate 2020 or late 2021. Any future top out may only generate a 10% to 20% correction, of course this can be deemed very mild. This is expected, but the expected does always play out. 

Rolling the dice to get '7' does not always work. Post US elections seasonal's aligned with a poor start of the decade seasonal trends, add on high global recession risk, add on a stock market slump tends to occur in the years ending 9,1,2,3,4 (like 1973, 1...



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Zero Hedge

Haftar Blocks All Libyan Oil Exports Day Before Berlin Peace Conference

Courtesy of ZeroHedge View original post here.

Given Libyan commander Khalifa Haftar has over the past two years captured the majority of the oil and gas rich country's energy producing regions, he's now playing his biggest card yet to leverage international peace talks in his favor amid a final push for his Libyan National Army (LNA) forces to take Tripoli. 

Bloomberg reports Saturday that the Benghazi-based 'rebel' general has now "blocked oil exports at ports under his contr...



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The Technical Traders

Energy Continues Basing Setup - Breakout Expected Near January 24th

Courtesy of Technical Traders

After watching Crude Oil fall from the $65
ppb level to the $58 ppb level (-10.7%) over the past few weeks, we still
believe the energy sector is setting up for another great trade for skilled
investors/traders.

We are all keenly aware that Winter is still
here and that heating oil demands may continue to push certain energy prices
higher.  Yet Winter is also a time when
people don’t travel as much and, overall, energy prices tend to weaken
throughout Winter.

Over the past 37 years, the historical monthly breakdown for Crude Oil is as follows:

December: Generally l...



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Insider Scoop

10 Biggest Price Target Changes For Friday

Courtesy of Benzinga

  • Citigroup lifted Caterpillar Inc. (NYSE: CAT) price target from $145 to $170. Caterpillar closed at $147.87 on Thursday.
  • UBS cut Twitter Inc (NYSE: TWTR) price target from $37 to $35. Twitter shares closed at $34.19 on Thursday.
  • Morgan Stanley boosted the price target for Yum! Brands, Inc. (NYSE: YUM) from $113 to $118. Yum! Brands closed at $102.16 on Thursday.
  • Jefferies lifted the price target on Ventas, Inc. (NYSE: ...


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Kimble Charting Solutions

Tesla About To Run Out Of Energy Here? Short-Term Peak Possible?

Courtesy of Chris Kimble

Tesla (TSLA) has been screaming higher of late, as very impressive gains have taken place.

Is Tesla about to run out of energy/take a break/experience some selling pressure? A unique price setup is in play, that bulls might want want to be aware of.

This chart applies Fibonacci to the 2016 lows and 2017 highs at each (1). The impressive rally of late has it testing its 161% extension level, based upon those price points.

At the same time, it is hitting its 161% extension level, it finds itself at the top of a 7-year rising channel, with momentum hitting the highest ...



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Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

 

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

Courtesy of  

The repo market problem isn’t the problem. It’s a sideshow, a diversion, and a joke. It’s a symptom of the problem.

Today, I got a note from Liquidity Trader subscriber David, a professional investor, and it got me to thinking. Here’s what David wrote:

Lee,

The ‘experts’ I hear from keep saying that once 300B more in reserves have ...



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Digital Currencies

Cryptos Have Surged Since Soleimani Death, Bitcoin Tops $8,000

Courtesy of ZeroHedge View original post here.

Bitcoin is up over 15% since the assassination of Iran General Soleimani...

Source: Bloomberg

...topping $8,000 for the first time since before Thanksgiving...

Source: Bloomberg

Testing its key 100-day moving-average for the first time since October...

...



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Members' Corner

Tobin Smith: Foxocracy, the 2020 Election, and the Stock Market

 

Fox News has been spreading false information and hooking its audience into an angry, xenophobic and paranoid worldview for decades. It's no mystery that Fox was instrumental in the 2016 election -- but how did it do it? Tobin Smith, CEO of Transformity Research, Inc. and former Fox News contributor and talk show host, explores this phenomenon and discusses Fox News’ emotionally predatory and partisan propaganda media strategies and tactics in his new book, Foxocracy: Inside the Network&...



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Biotech

Why telling people with diabetes to use Walmart insulin can be dangerous advice

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

 

Why telling people with diabetes to use Walmart insulin can be dangerous advice

A vial of insulin. Prices for the drug, crucial for those with diabetes, have soared in recent years. Oleksandr Nagaiets/Shutterstock.com

Courtesy of Jeffrey Bennett, Vanderbilt University

About 7.4 million people ...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

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.

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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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