SP 500 and NDX Futures Daily Charts - Busting Broncos

Stocks saw a merciless beatdown today, similar to the Superbowl game last night.

The impetus for stocks was a lower than expected PMI number from China, and a weak ISM Index number from the States this morning. With two of the largest economies in the world showing seeming signs of weakness, the untamed horses of this long bull market were quite subdued.

If you look at the charts below carefully, you will see that what has happened is that the long year end bubble from 2013 has now deflated. One can make a good case that the Fed saw this as desirable, a necessary outcome if only to avert the disaster of an uncontrolled deflating of the asset bubble.

But it is also possible that the wiseguys who pumped it up handed what they could over to mom and pop and their institutional representatives, and are now taking the money and running. The proverbial wash and rinse, which I have been suggested was overdue.  The pause that refreshes in a continuing asset inflation, if you will.

So what next? This is a non-farm payrolls week if you have not noticed, and earnings will keep coming in before and after the bell. It would be good to keep an eye on the emerging markets and their currencies because that is where an ongoing trend might originate.

 The central bankers stand ready to print, but the markets might have to overextend a bit to send that signal, and relief may come in some extraordinary manner.

Have a pleasant evening.

Dead Bankers, Missing Reporter, and Unfolding Wall Street Scandals

I can think of a number of reasons why a connection between these unnatural deaths, and especially the mysterious disappearance of the reporter, are not related. The most significant is that they involve diverse companies and markets.

And yet all are touched by serious investigations for corruption of the markets.  And the lumbering, wobbling derivatives market represents one possibly interesting intersection of the events.

But even if they are not related, and are mere coincidences, it is telling perhaps that the financial industry is so generally foul that even random deaths and disappearances are all in proximity of market-fixing, price rigging, and white collar investigations for corruption.

And this is our financial system, which touches every part of our lives, every product, every day, man, woman, and child.

A Rash of Deaths and a Missing Reporter – With Ties to Wall Street Investigations
By Pam Martens
February 3, 2014

In a span of four days last week, two current executives and one recently retired top ranking executive of major financial firms were found dead. Both media and police have been quick to label the deaths as likely suicides. Missing from the reports is the salient fact that all three of the financial firms the executives worked for are under investigation for potentially serious financial fraud.

The deaths began on Sunday, January 26. London police reported that William Broeksmit, a top executive at Deutsche Bank who had retired in 2013, had been found hanged in his home in the South Kensington section of London. The day after Broeksmit was pronounced dead, Eric Ben-Artzi, a former risk analyst turned whistleblower at Deutsche Bank, was scheduled to speak at Auburn University in Alabama on his allegations that Deutsche had hid $12 billion in losses during the financial crisis with the knowledge of senior executives. Two other whistleblowers have brought similar charges against Deutsche Bank.

Deutsche Bank is also under investigation by global regulators for potentially rigging the foreign exchange markets – an action similar to the charges it settled in 2013 over its traders’ involvement in the rigging of the interest rate benchmark, Libor.

Just two days after Broeksmit’s death, on Tuesday, January 28, a 39-year old American, Gabriel Magee, a Vice President at JPMorgan in London, plunged to his death from the roof of the 33-story European headquarters of JPMorgan in Canary Wharf. According to Magee’s LinkedIn profile, he was involved in “Technical architecture oversight for planning, development, and operation of systems for fixed income securities and interest rate derivatives...”

Read the entire story here.

Related: On Death and Derivatives
Family of Missing WSJ Reporter 'Waiting for a Miracle'
Financial whistleblower Eric Ben-Artzi speaks at Auburn University

Weekend Reading: God and Mammon, Fear and Love

To my way of thinking, the inordinate desire for wealth, in excess and for its own sake, is just a manifestation of the will to power, which underlies most evil.

Fear, in excess or obsession, is often the spur to power, a means to seek to control that which we fear and resent. Perhaps it is part of the character, or the result of uncaring or abusiveness from our past.

There is a substantial difference between fear and respect, the latter of which is a high and proper regard, but intermingled with love and mutuality. We respect our parents, for example, if our relationship with them is proper, but we do not fear them as we would an enemy.

The will to power was the first sin of pride of the fallen angels. As John Milton said, 'Better to reign in hell, than to serve in heaven.'

"Though I speak with the tongues of men and of angels, and have not love, I am become as sounding brass, or a tinkling cymbal." 1 Cor. xiii

"...Our Lord says, 'If you love Me, keep My commandments;' but they feel that though they are, to a certain point, keeping God's commandments, yet love is not proportionate, does not keep pace, with their obedience; that obedience springs from some source short of love. This they perceive; they feel themselves to be hollow; a fair outside, without a spirit within it.

It is possible to obey, not from love towards God and man, but from a sort of conscientiousness short of love; from some notion of acting up to a law; that is, more from the fear of God than from love of Him. Surely this is what, in one shape or other, we see daily on all sides of us; the case of men, living to the world, yet not without a certain sense of religion, which acts as a restraint on them.

They pursue ends of this world, but not to the full; they are checked, and go a certain way only, because they dare not go further.
This external restraint acts with various degrees of strength on various persons. They all live to this world, and act from the love of it; they all allow their love of the world a certain range; but, at some particular point, which is often quite arbitrary, this man stops, and that man stops.

Each stops at a different point in the course of the world, and thinks every one else profane who goes further, and superstitious who does not go so far,—laughs at the latter, is shocked at the former. And hence those few who are miserable enough to have rid themselves of all scruples, look with great contempt on such of their companions as have any, be those scruples more or less, as being inconsistent and absurd. They scoff at the principle of mere fear, as a capricious and fanciful principle; proceeding on no rule, and having no evidence of its authority, no claim on our respect; as a weakness in our nature, rather than an essential portion of that nature, viewed in its perfection and entireness.

And this being all the notion which their experience gives them of religion, as not knowing really religious men, they think of religion, only as a principle which interferes with our enjoyments unintelligibly and irrationally. Man is made to love. So far is plain. They see that clearly and truly; but religion, as far as they conceive of it, is a system destitute of objects of love; a system of fear. It repels and forbids, and thus seems to destroy the proper function of man, or, in other words, to be unnatural.

And it is true that this sort of fear of God, or rather slavish dread, as it may more truly be called, is unnatural; but then it is not religion, which really consists, not in the mere fear of God, but in His love; or if it be religion, it is but the religion of devils, who believe and tremble; or of idolaters, whom devils have seduced, and whose worship is superstition,—the attempt to appease beings whom they love not; and, in a word, the religion of the children of this world, who would, if possible, serve God and Mammon, and, whereas religion consists of love and fear, give to God their fear, and to Mammon their love."

John Henry Newman, Parochial and Plain Sermons, Vol. 5, No.23

Gold Daily and Silver Weekly Charts - Next Stop, February

There was very little movement into the bullion storage category at the Comex.

Next week we being the active delivery month of February.

If I were a naked bullion short I would seriously consider getting flat and taking the money from one of the greatest market manipulations in history while I could.

But let's see what happens. 

There is still plenty of room for more monkeyshines before the trading desks bring the Western financial system back to the brink of collapse again, and belly back up to the bailout bar for more.

So far they have been doing pretty well for themselves, thanks to a lax regulatory climate and a white collar criminal friendly system of 'justice.'  What could go wrong?  Why quit while you are ahead?  Winning!

Have a pleasant weekend.