Stocks and Precious Metals Charts - The Cycle of Force and Fraud

 

"One of the most important barometers of the world's financial health could be sending false signals. In a development that has implications for borrowers everywhere, from Russian oil producers to homeowners in Detroit, bankers and traders are expressing concerns that the London inter-bank offered rate, known as Libor, is becoming unreliable. [See below: It was subsequently shown to be fraudulent.]

Libor plays a crucial role in the global financial system.  Calculated every morning in London from information supplied by banks all over the world, it's a measure of the average interest rate at which banks make short-term loans to one another.  Libor provides a key indicator of their health, rising when banks are in trouble. Its influence extends far beyond banking:  The interest rates on trillions of dollars in corporate debt, home mortgages and financial contracts reset according to Libor.

In recent months, the financial crisis sparked by subprime-mortgage problems has jolted banks and sent Libor sharply upward.  The growing suspicions about Libor's veracity suggest that banks' troubles could be worse than they're willing to admit."

Carrick Mollenkamp, Bankers Cast Doubt On Key Rate Amid Crisis, Wall Street Journal, April 16,2008

"I've been hesitant to write about the LIBOR scandal because what I want to say goes so much further.  We now know that Barclays and other major global banks have been manipulating the calculation of LIBOR through the quotation data they provided to the British Bankers Association.  What I suspect is that this is not a flaw but a feature of modern financial markets.  And if it was happening in LIBOR for between 5 and 15 years, then the business model has been profitably replicated to many other quotation-based reference prices.

Price discovery is not a sexy function of markets, but it is critical to the efficient allocation of scarce capital and resources, and to the preservation of the long term wealth of investors and the economy as a whole.  If price discovery is compromised by manipulation, then we will all be gradually impoverished and the economy will be imbalanced and unstable."

London Banker, Lies, Damn Lies, and LIBOR, 10 July 2012

"The Commodity Futures Trading Commission (CFTC) has been negligent in failing to terminate the obvious manipulation ongoing in silver.  Furthermore, the agency may be complicit in this manipulation. Worse, it has lied to the public and elected officials.  This all goes back to the time when Bear Stearns was taken over by JPMorgan in March of 2008.

It is well known that Bear Stearns went under as a result of a sudden loss of liquidity amidst a run by creditors and customers.  What is not well known is that those problems were greatly exacerbated by a $2 billion margin call on silver and gold short positions from the end of December 2007 to March 2008.  I believe the silver and gold margin calls were at the heart of Bear Stearns’ failure.

We know now (from CFTC correspondence to lawmakers in 2008) that JPMorgan took over Bear Stearns’ giant silver and gold short positions on the COMEX.  Up until that time, we did not know that Bear Stearns was the concentrated silver and gold short.  Using Commitment of Traders Report (COT) data, Bear Stearns had a COMEX silver short position of no less than 35,000 net contracts and a COMEX gold short position of no less than 60,000 net contracts from the end of December 2007 to their takeover by JPMorgan two and a half months later. 

From December 31, 2007 to mid-March 2008, the price of silver rose by $6 (from $15 to $21) and the price of gold rose from $850 to over $1000.  Based upon the number of contracts held short by Bear Stearns and the price movement at that time, that resulted in margin calls of $2 billion.  I would contend that was the real reason for Bear Stearns’ demise."

Ted Butler, Illegalities, May 25, 2012

"The key to a general reform has been and still is campaign finance reform and a reduction of lobbying payments and campaign contributions as soft bribes to Congress. As the banks cannot regulate and reform themselves, at least according to John Mack's recent advice to the American people, so the Congress and the federal government seem incapable of reforming and managing themselves. If one does it, takes liberties with the law, then they all want to do it to a greater or lesser degree; and in some ways they must if they are to be competitive, if the administration of justice creates the opportunity for selective exceptions, the weakening of regulation.

And too many are yearning for a strong leader, someone who will tell them what to do.  A great man, who will exercise authority with a directness and little or no discussion.  Someone who will 'put things right.' The primary question seems to be less policy than fashion, whether to wear brown shirts or black, and whether torchlight is too retro."

Jesse, A Partnership Between Wall Street and Government Until the System Collapses, 19 November 2009

And the wash and rinse continues.

I came in prepped for the post Non-Farm Payrolls kickback wash cycle.

Gold and silver were slammed this morning.  

The Dollar gained a little in a mostly sideways chop.

VIX fell.

Stocks fell sharply but managed to take back their losses into the afternoon close.

Keep an eye on the option expirations and the upcoming CPI and PPI numbers.

Wouldn't it have been nice if, instead of throwing away hundredsof billions of dollars in corrupt adventures in proxy wars, theft, and murder en masse overseas, we had spent a portion of that money on hardening the US infrastructure, including the water systems, public transportation, energy independence and the electric grid? 

“The worst crimes were dared by a few, willed by more, and tolerated by all.”

Tacitus

This is why nations, and empires, fail.

Have a pleasant evening.

Related: Corruption as an Element of the Financial Crisis, Le Cafe, February 2009

Stocks and Precious Metals Charts - Uncle Thug and the Bridegrooms of Death

 

"Where are the princes of this world, and those who lorded it over the creatures of the earth?  Those who made sport of the birds of the air, and hoarded up riches in which they trusted, and for whom there is no limit to their greed, those who schemed to get wealth, and were always anxious about their possessions.  But now there is no trace left of them.  They have vanished down into the bowels of the earth, and others have risen to take their place."

Baruch 3:16-19

"Rome has grown so much from its humble beginnings that it is now overwhelmed by its greatness."

Titus Livius, Praefatio, Ab Urbe Condita

“Foolishness is a more dangerous enemy of the good than malice. Against such foolishness we are defenseless. Neither protests nor the use of force accomplish anything here; reasons fall on deaf ears; facts that contradict one’s prejudgment simply need not be believed – in such moments the foolish person even becomes critical – and when facts are irrefutable they are just pushed aside as inconsequential, as incidental.

In all this the foolish person, in contrast to the malicious one, is utterly self satisfied and, being easily irritated, becomes dangerous by going on the attack. For that reason, greater caution is called for when dealing with a foolish person than with a malicious one. Never again will we try to persuade the foolish person with reasons, for it is senseless and dangerous.”

Dietrich Bonhoeffer, Prisoner for God: Letters and Papers from Prison, 1944

"Where does the truth lie? Should one go off and build a little house with flowers outside the windows and a garden outside the door and extol and thank God and turn one’s back on the world and its filth? Isn’t seclusion a form of treachery, of desertion? I am weak and small, but I want to do what is right."

Hans Scholl, Letters and Diaries, 1941

"Where are the leaders? Has our political process become so compromised by powerful interest groups and the threat of character assassination that even the best among us will not dare to speak honestly about the solutions that might bring us back to common sense and fundamental fairness?"

Senator Jim Webb, A Time to Fight, 2008

"Now why don't you just take it easy, Group Captain, and please make me a drink of grain alcohol and rainwater, and help yourself to whatever you'd like."

General Jack D. Ripper (Sterling Hayden), Dr. Strangelove


The Non-Farm Payrolls report came in much 'hotter' than expected this morning.

And that triggered a reaction in the market with regard to the timing and size of interest rate cuts by the Fed this year.

And so stocks fell, rather sharply, and put in another lower low to go with its recent trend of lower highs and lower lows.

Not constructive for the bull market narrative in equities.

Gold and silver rallied sharply higher along with the US Dollar.

I'm not quite sure how to explain that one, except that together with the rising VIX it looked like a 'flight to safety' provoked by uncertainty of what Big Daddy Fed may do next.

We will have a minor stock option expiration next Friday.

This market is one accident away from a meltdown.

And Uncle Thug and his bridegrooms of death are driving recklessly, drunk with power.

The mispricing of risks is going to have its effect.

Have a pleasant weekend.

What Then Would You Do?

 

"If today you hear his voice, harden not your hearts."

 Hebrews 3:15

"Jesus returned to Galilee in the power of the Spirit, and news about Him spread throughout the region. He began teaching in their synagogues and was praised by all.  And He came to Nazareth, where He had been brought up.  As was His custom on the Sabbath, He entered the synagogue and stood up to read. And the scroll of the prophet Isaiah was handed to Him.  He unrolled it, and found the place where it was written,

'The Spirit of the Lord is upon Me,
   Because He anointed Me to preach the good news to the poor.
He has sent Me to proclaim liberty to the captives,
   And recovery of sight to the blind,
To set free those who are oppressed,
   To proclaim the year acceptable to the Lord.'

He closed the book, gave it back to the attendant, and sat down.  The eyes of everyone in the synagogue were fixed on Him.  And He said, 'Today, this Scripture has been fulfilled in your hearing.'

When they heard these words, the people were roused to fury.  They rose up, drove him out of the town, and led him to the top of the hill upon which their town was built, intending to hurl him off the cliff.”

 Luke 4:14-21, 28-29

"With tears in my eyes I tell you now that some may be lost, forever. Their pride and their desires are the gods that they worship. They boast with pride about things of which they should be ashamed. They think only about their privilege and the advantages of this world."

Phillipians 3:19-20


If the Lord returned today, but did not return in the way in which he is expected, what would we do?

Accept him?  Bless his words?

Or reject and abuse him, because he did not come and give them what they want?

And whom then do they serve?

So do not judge others harshly, now or who have come before, to hide and excuse our own faithlessness.

What then would you do?

You are doing it, right now.

“Let all my nothingness be drowned in the ocean of your mercy.”

Maria Faustyna Kowalska

Repentance - Forgiveness - Thankfulness

Stocks and Precious Metals Charts - In a Hall of Mirrors

 

"Single acts of tyranny may be ascribed to the accidental opinion of a day; but a series of oppressions, begun at a distinguished period, and pursued unalterably through every change of ministers, too plainly prove a deliberate and systematical plan of reducing us to slavery."

Thomas Jefferson, 1774

"To some degree this is a battle between the politicians and the markets.  But I am firmly resolved — and I think all of my colleagues are too — to win this battle.  The fact that hedge funds are not regulated is a scandal. Britain has blocked previous efforts to do this.  First the banks failed, forcing states to carry out rescue operations.  They plunged the global economy over the precipice and we had to launch recovery packages, which increased our debts, and now they are speculating against these debts.  That is very treacherous.  Governments must regain supremacy. It is a fight against the markets and I am determined to win this fight."

Angela Merkel, Chancellor of Germany, Berlin, 6 May 2010

"The suspicions that the system is rigged in favor of the largest banks and their elites, so they play by their own set of rules to the disfavor of the taxpayers who funded their bailout, are true.  It really happened. These suspicions are valid.   Incentives are baked into the system to take advantage of it for short-term profit.  The incentives are to cheat, and cheating is profitable because there are no consequences.

It’s implicit in so much of the regulatory structure that if you don’t make too many waves there will be a job for you elsewhere.  So we have to limit those job opportunities and develop a more professional path for regulators as a career.  So much of what’s wrong with Dodd-Frank is it trusts the regulators to be completely immune to the corrupting influences of the banks. That’s so unrealistic. Congress has to take a meat cleaver to these banks and not trust regulators to do the job with a scalpel.”

Gretchen Morgensen, Neil Barofsky: Into the Bailout Buzzsaw, NY Times, July 21, 2012

"At first, the love of money, and then that of power began to prevail, and these became, as it were, the sources of every evil. For avarice subverted honesty, integrity and other honorable principles and, in their stead, inculcated pride, inhumanity, contempt of religion and general venality. These vices first advanced but slowly, and were sometimes restrained by correction; but afterward, when their infection had spread like a pestilence, the state was entirely changed, and the government, from being the most equitable and praiseworthy, became the most rapacious and insupportable."

Sallust, Conspiracy of Cataline

"Dallas Fed President, Robert Kaplan, wasn’t just trading like an aggressive hedge fund kingpin in 2020, he’s been doing the same thing for five years at the Dallas Fed while simultaneously having access to non-public, market moving information from the Federal Reserve’s interest-rate setting FOMC meetings and other confidential communications.

In addition to speculating in stock index futures, Kaplan has also made tens of millions of dollars in purchases and sales of a litany of individual stocks over the last five years, including Big Tech and fossil fuel companies, rather than adhering to the customary ethical standard by Fed officials of employing a buy and hold position in diversified mutual funds. In 2020, the vast majority of Kaplan’s individual stock trades were also for 'over $1 million.'

The role of the brokerage firm that executed these trades is a very serious matter and every American should be demanding that Fed Chairman Jerome Powell release this information immediately.  In this case, knowing your customer should have meant frantically calling your compliance department when an officer of the U.S. central bank, who sits on some of the most sensitive, non-public market intelligence in the world, instructs you to make 'over $1 million' trades, multiple times, in S&P 500 futures contracts. The S&P 500 futures trade request by Kaplan should have convened an immediate, all-hands-on-deck meeting of the entire compliance department of the brokerage firm.

Instead, the trading has gone on unimpeded for more than five years, according to Kaplan’s financial disclosures. Clients whose jobs involve having access to confidential market information, like an investment banker or a central banker, would have their trades closely monitored in a properly functioning compliance department. This compliance department was clearly not functioning and the American public deserves to know why.”

Martens, Trading Like a Hedge Fund Kingpin for Five Years, Wall Street On Parade, September 27, 2021

"The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustainable recovery."

Jesse, May 2009


The Dollar rallied this morning early, and managed to hold on to the 109 handle.

VIX wallowed near its moving averages.

Stocks slumped badly, but did not set a lower low, recovering quite a bit into the close.

Gold and silver rallied.  Gold has run up to the key resistance.

US markets will be closed tomorrow in observance of the funeral of Jimmy Carter.

The rest of the world will have to try and carry on without Wall Street.

As you know I try to suspend judgement on a new administration for the first 100 days.

I am doing the same thing again.

Well, let's see how this all unfolds.

I suspect that 2025 is going to be a year of historic, shocking changes.

See you on Friday.

Have a pleasant evening.