SP 500 and NDX Futures Daily Charts - Blue Skies, At Least Until September

eBay reported better than expected numbers after the bell. What a surprise.

Stocks had an upward drift today, in a dull market trade.

The VIX shows the markets are once again complacent.

I would expect them to stay on a generally rosy trajectory until the Alibaba IPO can be spurted out in early August. The Street has a lot of vested interest in what may be one of the largest bell-ringing IPOs in history.

Have a pleasant evening.

Nanex: The Market Is Rigged, With Details

"A rogue does not laugh in the same way that an honest man does; a hypocrite does not shed the tears of a man of good faith. All falsehood is a mask; and however well made the mask may be, with a little attention we may always succeed in distinguishing it from the true face."

Alexandre Dumas

The market is rigged.  Oh no, this could not possibly be correct, say the trolls, shills, revolving door careerists, media carnival barkers, and conmen's assistants. They simply do not understand it!

The analysis from Nanex, rich in details, does not only apply to very large orders in excess of 10,000 shares.  I have seen the same type of activity in smaller markets with orders of only a few thousand shares.  Anyone who has Level 2 access can observe it if they look closely enough, and have the will to look with their eyes and see.

These pampered princes of Wall Street are steadily degrading the markets, and distorting and taxing the real economy with their bias to speculative grifting rather than facilitating productive investment.

I do not agree that a 'free for all market' would be better than this.  Some of these schemes are as basically corrupt as a West Coast gangster's attempt to control all the horse racing wire services information for his own benefit.  And you don't fix corruption by firing all the police and prosecutors.

There are a few things that would go a long way to fixing this.  Fairness is not so terribly hard to establish if you do not wish to twist it with the faux complexity of a confidence racket that advantages some because.

I suspect that nothing will work until we root the big money out of politics.  Its corrupting influence touches everything and is corrosive to the common good, giving scandal to all by its shameful example. 

In some sense, this would be turning the markets back to what they were before they became utter casinos dominated by big players unleashed by the repeal of Glass-Steagall and the divestment of sound regulation in the name of a utopian market ideology that serves to promote a new level of systemic criminality.

This is analysis and conclusion below is from NANEX.

"...All this evidence points to one inescapable conclusion:

The order cancellations and trade executions just before, and during the trader's order were not a coincidence. This is premeditated, programmed theft, plain and simple.

Michael Lewis probably said it best when he told 60 minutes that the stock market is rigged.

To the High Frequency Traders (HFT) that make fantastic claims about providing liquidity, perhaps one should ask: "what kind of liquidity"? To the now obvious, ludicrous claim that "everyone's order uses the same tools that HFT uses", we'll just say, the data shows otherwise. To Mary Jo White and other officials who claim the market isn't rigged and that regulators need to look at the data before making any decisions: well, you made it this far - if things aren't clear, re-read this expose (or the nearly 3000 others pages we've published), or simply call us and we'll explain it to you. Or dust off Midas and lets us show you how to work with market data.

One more note to the SEC in particular - if you believe that the industry can fix these problems on their own, then we believe you are no longer fit to regulate, because that is not, and never was, how Wall Street works. Honestly, a free for all, no–holds–barred environment would be better than the current system of complicated rules which are partially enforced, but only against some participants. And make no mistake, what is shown above is as close to automatic pilfering as one can get. It probably results in a few firms showing spectacularly perfect trading records; it definitely results in people believing the market is unfair and corrupt.

And to CNBC and other financial media companies who say these problems have all been fixed - we think you might have been lied to. Probably by the ones doing the market rigging. A certain HFT lobbyist group immediately comes to mind - the one that presents the same tired "liquidity, spreads, costs" argument, without data to back it up. This paper shows that the liquidity claim is clearly a lie.

Academics interested in continuing the study shown on this page - we believe we know how you can find and quantify these events. Serious inquiries only please.

Note that none of this would be possible if the direct feeds weren't illegally supplying HFT with faster information than the SIP.

And finally, to our regular readers: we are taking a break. Everyone has a limit to how much corruption they can witness and digest in a given period of time and we've simply reached our limit."

You may read the detailed examination and explanation of this from Nanex here.

BRICS Launc $100 Billion Development Bank and Currency Reserve Pool

And so it begins.
 

The big changes happen slowly.

I expect the BRICS to continue 'tinkering' with the meaning of reserve currency in the global financial system.

Reuters India

BRICS set up Bank to Counter Western hold on Global Finances

By Alonso Soto and Anthony Boadle

FORTALEZA Brazil

Wed Jul 16, 2014 2:56am IST

(Reuters) - Leaders of the BRICS emerging market nations launched a $100-billion development bank and a currency reserve pool on Tuesday in their first concrete step toward reshaping the Western-dominated international financial system.

The bank aimed at funding infrastructure projects in developing nations will be based in Shanghai and India will preside over its operations for the first five years, followed by Brazil and then Russia, leaders of the five-nation group announced at a summit.

They also set up a $100 billion currency reserves pool to help countries forestall short-term liquidity pressures.

The long-awaited bank is the first major achievement of the BRICS countries since they got together in 2009 to press for a bigger say in the global financial order created by Western powers after World War II.

The BRICS were prompted to seek coordinated action following an exodus of capital from emerging markets last year, triggered by the scaling back of U.S. monetary stimulus. The new bank reflects the growing influence of the BRICS, which account for almost half the world's population and about one fifth of global economic output. The bank will start with a subscribed capital of $50 billion divided equally between its five founders, with an initial total of $10 billion in cash put in over seven years and $40 billion in guarantees.

The bank will start lending in 2016 and be open to membership by other countries, but the capital share of the BRICS cannot drop below 55 percent. The contingency currency pool will be held in the reserves of each BRICS country and can be shifted to another member to cushion balance of payments difficulties. This initiative gathered momentum after the reverse in the flows of cheap dollars that fueled a boom in emerging markets for a decade. "It will help contain the volatility faced by diverse economies as a result of the tapering of the United States' policy of monetary expansion," President Dilma Rousseff said.

China, holder of the world's largest foreign exchange reserves, will contribute the bulk of the contingency currency pool, or $41 billion. Brazil, India and Russia will chip in $18 billion each and South Africa $5 billion. If a need arises, China will be eligible to ask for half of its contribution, South Africa for double and the remaining countries the amount they put in. Negotiations over the headquarters and first presidency were reached at the eleventh hour due to differences between India and China. The impasse reflected the difficulties that Brazil, Russia, India, China and South Africa face in working together to build an alternative to the Bretton Woods institutions dominated by the International Monetary Fund and the World Bank.

"We pulled it off 10 minutes before the end of the game. We reached a balanced package that is satisfactory to all," a Brazilian diplomat told Reuters.

Negotiations to create the bank dragged on for more than two years as Brazil and India fought China's attempts to get a bigger share in the lender than the others.

Stark economic and political differences between the BRICS countries have made it difficult for the group to turn rhetoric into concrete action in coordinating policies.

Gold Daily and Silver Weekly Charts - Bubbles Carries the Day - Hit the BRICS

There was a fairly obvious hit on the metals today, to add a bit to the declines experienced yesterday.

Unless you are daytrading this type of thing ought not to be of any great concern.

The miners were certainly taken out to the woodshed on these antics.

It was a bit disappointing to see silver give up the 21 handle.

Most would think that the slam on the metals, and that is clearly what it was, is coincident with Bubbles Yellen and her appearance before the Congress. I was thinking it was more related to the BRIC meeting in Brazil.

I am sure you have heard about their plan to bring out their own development bank as a counter to the Anglo-American controlled IMF. But I am also hearing that they may say more about substantial about reserve currency alternatives in a subsequent announcement. 

Xinhua News Agency July 15, 2014 3:09pm

FLASH: BRICS AGREES TO SET UP CONTINGENT RESERVE ARRANGEMENT WITH INITIAL SIZE OF 100 BLN USD

A good chunk of silver bullion arrived in the deliverable category at Brinks, but otherwise the Comex is a snore, except for concentrated selling in quiet markets. Up and down, these jokers like to move the price to scare the retail crowd. 

The only real long term affect is to kill the markets they have, to be replaced by other markets which offer more equitable and efficient terms and execution. Bad actions crowd out the good. We are seeing that in spades as the great trading floors turn into ghost towns. Someone needs to save the crony capitalists from themselves, but I do not think it is possible.

Liz Warren's questioning of Bubbles today was a breath of fresh air.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Wobbly But Buoyant

After the bell Intel beat its numbers and Yahoo. missed. Yahoo also announced that they will be able to retain more shares of Alibaba than previously anticipated.

As you may remember, Alibaba is expected to be one of the largest IPOs ever in August of this year.

No doubt the wiseguys will seek to sustain the market until then.

The handoff of stocks to mom and pop is underway however. I am thinking of a drop in the stock markets in the autumn.

Otherwise, all is complacency despite the occasional wash and rinse.

Have a pleasant evening.

Gold Daily and Silver Weekly Charts - Liberté, Liberté Chérie

The hit on the metals began in the quiet overnight hours and received some additional momentum on the New York open. Here is a picture of a 2300 gold contract 'dump.' Just another day of price discovery, nothing to see here.

Tomorrow is when Bubbles Yellen gives her Humphrey-Hawkins testimony to the Congress.

That was a very close World Cup final game yesterday, for those who actually watched it before commenting on it. While it was largely a defensive battle, Argentina gave up a few opportunities to score that I am sure will be to their regrets in retrospect.

Götze's goal for Germany was very well done against the able goalkeeping of Romero, and was only his second of the tournament. Herr Schweinsteiger must surely have set some sort of record for the number of medical treatments on the field. But there was a general strong team play on both sides, and the sort of well executed game that graced the setting well.

Happy Bastille Day, mes amis.

Have a pleasant evening.