The World's Central Bankers Are Gathering At The BIS' Basel Tower Ahead Of The Brexit Result. What happens on the 18th floor of the main tower at Centralbahnplatz 2 in Basel, stays on the 18th floor of the main tower at Centralbahnplatz 2. That's because this is where every other month the world's central bankers meet in complete secrecy - no minutes are ever kept - to discuss the global economy completely unfettered of any concerns of accountability, and decide on what monetary policies they will implement to shape its future (those unfamiliar with the peculiar BIS rituals, are urged to read "Meet The Secretive Group That Runs The World"). This is also where we learn that many, if not all, of the world's central bankers will be tomorrow when the results of the Brexit referendum are announced.
As Bloomberg reports, BOJ Governor Haruhiko Kuroda will be in Switzerland as the results are announced of the U.K.’s June 23 vote on whether to remain in the European Union. Currency manipulator just like everyone else Tommy Behnke, Mises Institute. Last month, central bankers and finance leaders from the Group of 7 (G-7) advanced economies met in Sendai to discuss the global economy at large.
As expected, the United States cautioned Japan, a US currency watchlist country, to refrain from taking further steps to manipulate its currency. This warning came as a result of finance minister Taro Aso hinting that his country was “prepared to undertake intervention” in the foreign exchange market in order to weaken the yen. The hypocrisy of US Treasury Secretary Lew’s injunction is laughable.
He might as well have told Japan, “We’re America, we’re powerful, and we’re allowed to make rules that we’re allowed to break,” because that was certainly the implication of his words. Historically, the US has been the world’s leading cheerleader for currency manipulation. Not only has the US encouraged and aided Japan in its quest to keep the yen’s value low, but it has also mimicked Japan’s own export-friendly monetary policy in times of panic.
"Somebody" Propped the Markets Up Again Yesterday. At this point the manipulations are getting ridiculous. “Someone” decided to step in a prop up stocks yesterday. How do we know it was a market prop and not real investors? There were several “tells.” They were: 1) The jump in stocks was based on a sudden move in one of the key asset classes the PPT are using to prop up the markets (they are: Oil, the VIX and Yen). 2) The price action was sudden and vertical: neither are the hallmarks of actual buyers. 3) The trading session differed dramatically from recent other sessions. Regarding #1, as everyone knows, the majority of market action today is controlled by trading algorithms. These trading algorithms operate based on correlations between asset classes. Yesterday, Oil staged a MASSIVE 5% intraday price move on the fact inventories rose less than expected.
This was a clear manipulation as evinced by the fact that Oil slid for the rest of the day following the price move. This wasn’t the end of the manipulation either. Best Regards. "If You Get Enquiries Just Obfuscate And Stonewall" - How Barclays Rigged The FX Market For Seven Years. Back in May we first introduced our readers to the FX manipulation practice known as "last look. " Wait, what's that? This is what we said: The last look practice is a legacy of over-the-phone currency trading, when traders would take a final check of the market before executing an order. It has survived even as foreign-exchange trading moved onto electronic platforms, leaving banks with the option to back out of an order after it was accepted by a client.
There was one problem with this "widely used practice in the industry" - in an age of HFT front- and now back-running, it clearly allowed extensive and very much illegal abuse by anyone tempted to do so. " There was however one small difference: "In spoofing, a trader places an offer to buy or sell, then cancels it quickly, whereas in last look, there’s always a client willing to execute one side of the trade, Mr. Or simply said, to rig the FX market to its benefit. Here is what else it did according to the DFS complaint: Negative Bond Yields and Investors | Discover FT. Why Ronald Reagan Is Rolling In His Grave: The Keynesian Putsch At The Fed.
Ronald Reagan is surely rolling in his grave. He is credited for much that he didn’t actually accomplish on the economic front, but his most singular real victory—-decisive repudiation of the Keynesian macro-economic policy model that had produced stagflationary havoc for more than a decade—-overshadows all his fiscal failures and the urban legend that he actually tamed Big Government. Needless to say, however, that 35-years ago repudiation has now been itself completely repudiated by the keynesian apparatchiks who presently rule the Eccles Building.
Yesterday Janet Yellen was at it again, displaying outright contempt for the Gipper’s crowning achievement. To that end, she announced that interest rates will remain pegged at zero until at least September. This lunacy is purportedly necessary to accommodate economic recovery, even if it does fuel the fires of financial speculation. Yes, indeed. That’s right. This is unaltered Keynesian claptrap. That’s how it’s done. Central Banks on Flipboard. The Heretic's Guide to Global Finance: Hacking the Future of Money: Algorithmic surrealism: A slow-motion guide to high-frequency trading. I say 'perhaps', because it really depends on how long you pause on those commas I put in the sentence. If you’re an individual with great respect for commas you might give the algorithm a chance to throw in a few hundred more orders. Let’s just clarify this. That means computers owned (or leased) by a firm somewhere can 1) suck in data from a stock exchange, 2) process it through a coded step-by-step rule system (algorithm) to make a decision about whether to trade or not, 3) send a message back to the exchange with an order for shares of ownership in a company – for example, a company that makes children’s toys – 4) get the order executed and confirmed, and 5) repeat this maybe 250 times a second.
Well, it could be more or less than that, too, and to be honest, few people seem to actually know how fast these algorithmic engines trade. But even if it’s only trading 50 times a second, or even a mere 10 times a second, it’s still inhumanly fast. Nowadays, this is no longer the case. The central bank and hedge fund lovefest needs to end. In an Orwellian twist, Mario Draghi argued that private meetings with specialized audiences are "integral to its transparency policy.
" He argued that because ECB weekly reports on QE purchases showed a slightly higher pace of buying in the first two weeks of May. That showed, "the start of the moderate frontloading of purchases in May (and to be continued in June) was already clearly visible, and thus publicly available information. " What a joke. Two weeks of May data shows nothing about June and nothing about slower purchases in July and August.
What next? Despite brushing off the complaints, Draghi wrote that the ECB will take further steps in the near future. "The Executive Board has taken your request for clarification as a trigger for further steps to be taken that improve the transparency of the ECB's communication channels. Yet just this week, the ECB's Noyer was in Montreal. If the ECB wants to communicate with market participants, it should be at the staff level. How central banks have sown the seeds for the next financial crisis. As Kevin Corrigan, head of fixed income at Lombard Odier, puts it: “New regulation designed to make the financial sector “less risky” has paradoxically damaged the shock absorbing capabilities of the banking sector, and thereby made other parts of the system more risky”.
Banks are no longer willing to act as warehouses for ordinary buyers and sellers of financial assets. Denied this “market making” capacity, volatility in some markets has already picked up significantly, with often violent swings in prices and yields from one day to the next. With Eurozone bond yields climbing sharply this week, Mario Draghi, president of the European Central Bank, warns us to expect further turbulence to come. So where do the new threats come from? Hedge funds and other leveraged operators such as private equity - according to popular imagination, the original evil of finance - can reasonably be excluded. Even if they were thought dangerous, they are too small to be systemically important.
How Banking Analysts’ Biases Benefit Everyone Except Investors. Wall Street analysts influence markets and companies daily. They release earnings forecasts and investment recommendations moving stock prices and changing investors’ portfolio decisions. These movements in turn generate responses from corporate leaders that make changes in operations, strategies, acquisition, and investment plans. No wonder CEOs and CFOs spend significant amounts of time communicating with the influential analysts covering their firms. But how unbiased are the earnings forecasts that they release? To answer this question we studied Wall Street analysts that provide earnings forecasts for banks and other types of financial institutions or non-finance companies (‘banking analysts’). We classified all companies that are rated by the banking analysts as likely future employers or not, based on whether they have a sell-side equity department.
(Companies with a sell-side equity department hire banking analysts of their own and so are potential future employers.) The Fed’s Zero-Rate Policy Boosts Inequality, Nobel Economist Joseph Stiglitz Says. Dick Fuld’s Return to Wall Street Was Hard to Watch. The ex-Lehman Brothers head tried to sugarcoat the recent past, but no one was listening. Try as one might, there was no escaping the theater-of-the-absurd aspect of Dick Fuld’s appearance as the keynote speaker at a conference that he would not have been caught dead at when he was in his prime.
Here, on May 28, in front of 1,500 or so small-time investors gobbling down filet mignon and chatting among themselves at the Grand Hyatt hotel, on 42nd Street in New York, was the former Wall Street titan attempting to relieve himself of the emotional and psychological burdens of wrecking his company. “And by the way, all of you, please continue to eat,” he said at the outset. “My children always ate all the time when I was talking, so I’m used to this.” Looking none the worse for wear, nearly seven years after presiding over perhaps the most calamitous disaster in American financial history—the shocking bankruptcy filing (and subsequent liquidation) of Lehman Brothers (1850–2008, R.I.P.) How central banks are raising the chances of a long-term crash. By Nouriel Roubini A paradox has emerged in the financial markets of the advanced economies since the 2008 global financial crisis.
Unconventional monetary policies have created a massive overhang of liquidity. But a series of recent shocks suggests that macro liquidity has become linked with severe market illiquidity. Policy interest rates are near zero (and sometimes below it) in most advanced economies, and the monetary base (money created by central banks in the form of cash and liquid commercial-bank reserves) has soared – doubling, tripling, and, in the United States, quadrupling relative to the pre-crisis period. Concerning trend And yet investors have reason to be concerned. Likewise, in October 2014, US Treasury yields plummeted by almost 40 basis points in minutes, which statisticians argue should occur only once in three billion years. Four factors Fourth, before the 2008 crisis, banks were market makers in fixed-income instruments. On bubbles and herding. Who Else Spilled Secrets at Hedge-Fund Party?
On Monday evening, European Central Bank board member Benoit Coeure told a closed-door reception for hedge-fund traders, economists and fellow central bankers that the bank would probably accelerate bond-buying this month and next, ahead of an anticipated summer lull. Everyone else learned about the plan on Tuesday morning, an appalling breach of the rules concerning selective disclosure. What we don't yet know is which other central bankers at the event might have spilled illicit beans. Here's the line-up for the Monday afternoon session of the all-day conference where Coeure spoke, which was organized by the Brevan Howard Centre for Financial Analysis at Imperial College London Business School, the Centre for Economic Policy Research and the Swiss National Bank: Almost two full days after the event, a lengthy Internet search failed to produce the text of what those four central bank officials said. I found a 2014 paper by the SNB's Assenmacher on "Real Exchange Rate Persistence.
" The Great Disconnect——Central Bank Driven “Markets” Have Nothing To Do With Economics. The German bund yield is soaring like a rocket today. After touching on the truly lunatic rate of 5 bps only a few weeks back, it has just crossed the 60 bps marker. Needless to say, when a blue chip 10-year bond widely held on @95% repo leverage moves that far that fast—–there is some heavy duty furniture breakage happening in fast money land.
But don’t cry for the bond market gamblers. They already made a killing front-running the ECB. During the 16 months between January 2014 and the April peak, speculators in German 10-year bunds would have made a 350% profit using essentially zero cost repo funding. So in the last few days they have given a tad of that back while making a bee line for the exit. BUNL data by YCharts Yet during the uninterrupted march of the bund into the monetary Valhalla depicted above, how many times did you hear that the market was merely “pricing in” a flight to quality among investors and the dreaded specter of “deflation”. No it wasn’t. Oh, com’on. Experts Are Warning That The 76 Trillion Dollar Global Bond Bubble Is About To Explode.
By Michael Snyder, on May 4th, 2015 Warren Buffett believes “that bonds are very overvalued“, and a recent survey of fund managers found that 80 percent of them are convinced that bonds have become “badly overvalued“. The most famous bond expert on the planet, Bill Gross, recently confessed that he has a sense that the 35 year bull market in bonds is “ending” and he admitted that he is feeling “great unrest”.
Nobel Prize–winning economist Robert Shiller has added a new chapter to his bestselling book in which he argues that bond prices are “irrationally high”. The global bond bubble has ballooned to more than 76 trillion dollars, and interest rates have never been lower in modern history. In a recent piece entitled “A Sense Of Ending“, bond guru Bill Gross admitted that the 35 year bull market in bonds that has made him and those that have invested with him so wealthy is now coming to an end… And the way that he ended his piece sounds rather ominous…
NY Fed Head Of Banking Supervision, And Person Who Handed Over Billions In AIG Profits To Goldman, Resigns. The name Sarah Dalgren is well-known to long-term Zero Hedge readers: back in January 2010 we revealed that, just before the Great US banking system backdoor bailout by way of getting a par return on AIG CDS, back in August 2008 Goldman was willing to tear up AIG Derivative Contracts, and had in fact offered to take a haircut. It was the Fed who turned Goldman's offer down! And the person who made the decision would become the Fed's head of Special Investments [AIG] Management Group: Sarah Dahlgren. We said that Dahlgren "not only did not save US taxpayers' money, but in fact ended up costing money, when they funded the marginal difference between par (the make whole price given to all AIG counterparties after AIG was told to back off in its negotiations) and whatever discount would have been applicable to the contract tear down that had been proposed by Goldman a mere month earlier.
Moments ago she resigned. From the NY Fed: Just three questions here about Sarah Dahlgren's "resignation": Market Manipulation Takes Central Stage. Seeking Alpha. Could Machines Put Central Bankers Out of a Job? - Real Time Economics - WSJ. The Public Is Being Set Up For The Scalping Of A Lifetime. When QE Leads To Deflation: A Look At The "Confounding" Global Supply Glut.
Boston Fed Admits There Is No Exit, Suggests QE Become "Normal Monetary Policy" Negative Interest Rates May Spark Existential Crisis for Cash - Bloomberg Business. ‘I’m on My Knees’: Deutsche Traders Begged for Help Rigging Rate - Bloomberg Business. Day Trader in Leather Jacket Far Cry From Wall Street Flash Boy. The 2010 ‘flash crash’ now has a criminal suspect. Is Greek debt odious? – BBH. Once Over $12 Trillion, the World’s Reserves Are Now Shrinking.
Liquidity analysis. Central Bank Solvency and Inflation. The Inevitable Failure of Mechanistic Monetary Policy. The Fed’s grudging embrace of inflation targeting, part 2 | FT Alphaville. The Committee To Destroy The World. Why are interest rates so low, part 2: Secular stagnation. A Shocking Admission: "The Federal Reserve Is A Criminal Conspiracy" Why are interest rates so low, part 3: The Global Savings Glut. Here Is The "Rate Hike Decision" Waterfall Analysis Goldman Gave To The Fed. The Fed’s grudging embrace of inflation targeting, part 1 | FT Alphaville. Bernanke Admits, After Decades Contrary, The Fed Is Powerless. Why are interest rates so low? Speed Traders Make Peanuts in Profits From Economic Data Plays. How DIY Bond Traders Displaced Wall Street’s Hot Shots. Bernanke starting new career in private life as blogger on economics. How The ECB Is Distorting Euro Money Markets. 4 reasons the Federal Reserve is not going to raise interest rates. Has The US Federal Reserve’s ‘Patience’ Been Exhausted?
Deflation poses central banks with an existential problem. Why the Fed is setting markets on a hair-trigger. It Is Time For A Criminal Probe Into Tim Geithner's Leaks As Vice Chairman Of The Federal Reserve. Syriza and the French indemnity of 1871-73 | Michael Pettis' CHINA FINANCIAL MARKETS. Are Central Banks Creating Deflation? Big data comes to FX. "Cluster Of Central Banks" Have Secretly Invested $29 Trillion In The Market. Currency market rigging could become criminal offence | Business. The world’s biggest banks are tightening their hold on the currency market they’re accused of rigging. High Speed Traders Are Robbing Us All.
Fed Prepares to Maintain Record Balance Sheet for Years. It's a fine line between forex flow and forex fix 9 Feb 2014. Parsing the Fed: How the Statement Changed - Real Time Economics. Here Is The FT's Gold Price Manipulation Article That Was Removed. Gawker. New York regulator probing biggest foreign exchange trading banks. 10 Reasons the Gold Bugs Lost Their Shirts. Pushback: Lessons from Gold’s Rise & Fall.
Learn Forex: Understanding the ECB. Federal Reserve Said to Probe Banks Over Forex Fixing. How Twitter Algos Determine Who Is Market-Moving And Who Isn't. The evolution of the global FX market. Who Knew What 50 Seconds Before The FOMC Release? Sell-Rated Stocks Have Outperformed. Are The Markets Rigged? Futures. Money and monetary institutions after the crisis. HFT Algos Force Institutional Investors Off-Exchange. EU Fines Financial Institutions Over Fixing Key Benchmarks. eFXnews : 'The Grand Coalition Of EUR Bulls' - Commerzbank. Trader Just Joking About Manipulation. Regulators Looking At FX Market Rigging. Foreign exchange: after Libor, is the '4pm London spot rate' next? | Business | The Observer.
Global forex probe ensnares large banks like HSBC, Barclays, Citigroup, JPMorgan and others. Louise cooper ECB conspiracy theory Nov 9. Oil traders claim crude prices fixed. High Frequency Traders Are a Little Too Slow - Bloomberg. Wednesday’s Federal Reserve announcement was leaked, says a financial market analyst. The Distinction Between Human And Algo-Trading. What If Reserve Managers Aimed For Pre-Crisis EUR Allocations? - Goldman Sachs. Warren Buffett: "The Fed Is The Greatest Hedge Fund In History" Citigroup, JPMorgan Said to Put Senior Currency Dealers on Leave. Another “Conspiracy Theory” Bites The Dust: UBS Settles Over Gold Rigging, Many More Banks To Follow. Explicit cookie consent. Mario Draghi: President's address at the 16th ECB and its Watchers Conference.