SP 500 and NDX Futures Daily Charts

"At length corruption, like a general flood,
Did deluge all, and avarice creeping on,
Spread, like a low-born mist, and hid the sun.

Statesmen and patriots plied alike the stocks,
Peeress and butler shared alike the box;
And judges jobbed, and bishops bit the town,
And mighty dukes packed cards for half-a-crown:
Britain was sunk in lucre's sordid charms."

Alexander Pope

This still looks like hissy-fit tax selling.

CME Loosens Margin Requirements On Gold and Silver and other Contracts

The CME has reduced margin requirements on quite a few of their traded instruments.

In the case of gold and silver futures contracts, the reductions seem designed to bring the margins paid by specs more in line with those required of 'the professionals.'

Volume on the CME is lagging. Perhaps they are starting to feel the pinch.

Lower prices are no substitute for meaningful reform.

Full clearing memo from the CME 15 Nov 2012

Gold Daily and Silver Weekly Charts

The metals and stocks were hit hard today in advance of a weak Philly Fed number and higher than expected unemployment claims. Both results are directly attributable to Hurricane Sandy, in the manner of a no-brainer. One of the more densely populated regions of the US was brought to a virtual standstill for almost two weeks along with $40+ billion dollars of storm damage.

I suspect the selling is winding down as those who have profits take them this year to avoid higher taxes next year. I think it is overdone now. So far this has been fairly 'cool-headed' selling in stocks and shown by the VIX.

The smackdown in the metals today had all the appearances of a well-calculated bear raid timed with a dump in stocks off a predictably weak economic number. This is also known as 'a trading idea.'

I think the coil in the metals is winding tighter and tighter.

For those who can remember trading back then, this is the type of market when Rubin and Greenspan would provide some 'surprise' to turn the market around into a rally. Don't remind me of what it was like trading the short side of the futures back then. One had to be nimble.

Have a pleasant evening. Remember those in the northeastern US who are still suffering from cold and homelessness. It is a very tough situation. Warren Pollock has been reporting from his home in Long Beach, NY. He compares his own area to 'the Dominican Republic' and the area south of Merrick Road, nearer to the ocean, as 'Haiti.'

SP 500 and NDX Futures Daily Charts

Stocks headed lower today on weaker than expected economic data in unemployment claims and the Philly Fed number. There was also some distressing news about fresh outbreaks of fighting in Gaza.

Hurricane Sandy will be affecting all the economic numbers for October, and therefore for the fourth quarter. It was an enormously destructive storm, with economic damage in the $40+ Billion range.

The markets are oversold short term. They could become even more oversold, but I suspect we are nearing the end of the tax selling as a result of the Obama win.

Let's see how tomorrow takes us into the weekend. As a reminded, next week will be holiday shortened in the States for Thanksgiving holiday. This is a good time to count our blessings.

Net Asset Value Premiums of Certain Precious Metal Trusts and Funds - Sprott Underperforms

The Sprott Funds are at historically very low premiums and, when compared to the Central Funds, look cheap.

As I recall the Central Funds are a tougher short. Still, as the chart at the bottom shows, PHYS and PSLV have underperformed the Spicer funds this year.

Bernie Sanders On the Fiscal Cliff and Deficit Reduction

JPM 'Benched' from Trading in the Energy Markets for Six Months

The US Federal Regulatory Commission (FERC) has suspended JP Morgan's electrical trading privileges for six months in response to JPM's continued provision of false and misleading information.

In the story from Bloomberg:

The action, part of a more aggressive effort by the commission to monitor U.S. power markets, prohibits J.P. Morgan Ventures Energy Corp. from selling electricity at market-based rates for six months starting April 1, 2013.

In its order released late yesterday, FERC said the JPMorgan unit will essentially be allowed to participate as a bystander in wholesale power markets, granting it the ability to offer electricity into the market without a price attached. This will ensure that utilities have the ability to obtain enough power to serve the demand from customers. JPMorgan would still be able to trade derivatives under the order...

"The provision of false, misleading, or inaccurate information undermines the integrity of the FERC decision-making process, the smooth operation of markets, and FERC's ability to ensure just and reasonable rates for customers," FERC said in an e-mailed statement. "The commission continuously has warned market participants of the consequences associated with failing to abide by FERC rules and regulations."

A spokeswoman for the bank said it is reviewing the decision and its next steps. "This is a novel use of FERC's authority over market-based rates and is unsupported by FERC's own regulations," Jennifer Zuccarelli said in an e-mail.

The commission is also investigating alleged manipulation by traders for Deutsche Bank AG and Barclays Plc. Since January 2011 the agency has announced 11 market-manipulation probes, and in March it reached a $245 million settlement with Constellation Energy Group Inc. over one of those cases.

This is also a nice illustration of the moral hazards of weakly regulating the markets. It was not all that long ago that Enron roiled the California economy by manipulating the prices of electricity. It is nice to see that someone is doing something, even if it involves no criminal indictments.

If the CFTC is unable to act in the commodity markets, someone has to do something to maintain orderly pricing and clearing markets for the use of the real economy.

And one might ask, why is a bank that is backstopped by the Federal Reserve and government guarantees on deposits gambling in the energy markets to this extent? Would that function not best be served by a purely private company, rather than a de facto Government Sponsored Enterprise (GSE)?