SP 500 and NDX Futures Daily Charts - Bliss

“I know not why anyone but a schoolboy in his declamation should whine over the Commonwealth of Rome, which grew great only by the misery of the rest of mankind.

The Romans, like others, as soon as they grew rich, grew corrupt; and in their corruption sold the lives and freedoms of themselves, and of one another.”

Samuel Johnson

Stocks continued drifting higher today ahead of the Non-Farm Payrolls number tomorrow.

All is quiet in the Pax Americana.  The natives are blissfully uninformed.

Did they know there were protests in London and Brussels? 

No, they only hear of the latest fashions, and dark tales of the evil Russian, which are quickly dispelled by the posturing of Taylor Swift, and here and there, gossip about power struggles in the Capitol District.

Have a pleasant evening.

 

Taibbi: The $9 Billion Witness - The Deal Manager That JPM Did Not Wish to Tell Her Story

"Corruption is why we win."

Danny Dalton, Syriana


"It was like watching an old lady get mugged on the street. I thought, 'I can't sit by any longer'... Every time I had a chance to talk, something always got in the way... I could be sued into bankruptcy. I could lose my license to practice law. I could lose everything.

But if we don't start speaking up, then this really is all we're going to get: the biggest financial cover-up in history."

Alayne Fleischmann, quoted in The $9 Billion Witness

It's nice to see Matt writing again about financial shenanigans.

Isn't it amazing how the sports editor at Rolling Stone magazine, and small blogs on the internet, keep coming up with amazing scoops and stories about financial corruption that are completely missed or glossed over by the mainstream media?

Confidence!  

Best markets, financial system, and news media, ever.   If you are a member of the one percent.

The $9 Billion Witness
By Matt Taibbi
November 6, 2014

Meet the woman JPMorgan Chase paid one of the largest fines in American history to keep from talking

...Fleischmann is the central witness in one of the biggest cases of white-collar crime in American history, possessing secrets that JPMorgan Chase CEO Jamie Dimon late last year paid $9 billion (not $13 billion as regularly reported – more on that later) to keep the public from hearing.

Back in 2006, as a deal manager at the gigantic bank, Fleischmann first witnessed, then tried to stop, what she describes as "massive criminal securities fraud" in the bank's mortgage operations.

Thanks to a confidentiality agreement, she's kept her mouth shut since then...

Six years after the crisis that cratered the global economy, it's not exactly news that the country's biggest banks stole on a grand scale. That's why the more important part of Fleischmann's story is in the pains Chase and the Justice Department took to silence her....

Read the entire article at Rolling Stone.

Lawsuit: CME Futures Market Creates 'Guaranteed Winners and Guaranteed Losers'

How appropriate that this morning Bart Chilton is appearing on Bloomberg TV with Terry Duffy, President of the CME, laughing it up with the 'news anchors' about 'Why Today's Markets Are Better Than Ever.'

I suppose that the US markets of today are quite efficient and effective. 

The public may just not understand in 'what way' they are intended to be efficient.

And may the odds be always in your favour.

This is a very brief excerpt of a well written story from Wall Street On Parade.

You may read it in its entirety here.
 

Lawsuit: Chicago Futures Market Creates “Guaranteed Winners and Guaranteed Losers”
By Pam Martens
November 6, 2014

Last week three futures traders told a Federal court in Chicago that it’s not just the high frequency trading firms that are reaping a windfall but the exchanges who are engaged in a conspiracy with them to create guaranteed winners and guaranteed losers...

But what Judge Charles P. Kocoras has been hearing in this case for months are these hair-raising charges of 'clandestine contracts' between the futures exchanges and high frequency traders; that the exchange is giving high frequency traders early peeks at data before the rest of the market under a process known as the 'Latency Loophole'; and that potentially as much as 50 percent of the trades on the exchange are 'wash trades.'

Gold Daily and Silver Weekly Chart - Send In the Clowns

Gold and silver were hit again rather hard last night, with a large number of contracts dumped at market during quiet periods.  This is a deliberate series of actions that are part control fraud, and part currency war. 

It is as much the predations of private money as it is government meddling.  Big money and government are in a corrupt partnership.   Those who have simplified their world views with slogans about getting rid of government do not get this.  But they will get it, and it will hurt.

This is not a problem for the Comex, which is essentially just a game.

This is going to be a huge problem for the miners, and those countries and people who depend on them. It is a problem down the road for those whose bullion has been leased out and sold by the banks into the metals markets.

For some miners, allied as they are with bullion banks in forward sales and hedges, it will be an opportunity to obtain more reserves and assets on the cheap from acquisitions and line their pockets, their shareholders be damned with the writedowns that follow.

For some analysts and industry organizations, it is a great opportunity to go along to get along, and get paid.

For some on Wall Street, this is just another brick in the wall of their historic transfer of wealth through control frauds. They are growing fat, picking the bones of the lower and middle classes.

For some well intentioned but incredibly naïve people who have been swept up in the political slogans of demagogues, it will be a great time to feel good, to believe that they at last are finally members of The Club, one of the In-Crowd, to feel that they are winning

But unfortunately for most, it will ultimately prove to be a pyrrhic victory when this long running scheme unwinds, and people start to stand up and say no, and stop acting out of emotions and anger and spite at each other.  And when enough of them do it, there will be real change.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Fantasy Island

There will be a Non-Farm Payrolls report for October on Friday.

Now that the elections are over, perhaps the government can stop window-dressing the statistics.

Have a pleasant evening.

Why The Democrats Got Their Clocks Cleaned

The Democrats failed to make the most of a great moment in history because there was no Democrat brave enough, independent enough, to energize their party around the mandate for reform given to them overwhelmingly by the people in 2008.

Remember when everyone thought that the Republican party was dead, completely and utterly repudiated in 2008?  And how they have risen from the dead!

Obama was a pawn of the moneyed interests before he even took office.  He didn't sell out;  he was a well engineered product with a well targeted brand, selected and groomed for it.  

Less a politician than a thoroughly modern manager, Obama's primary objectives are to please his shareholders, whomever those may be.   And they were certainly not the people who voted for him.   He is not any kind of progressive or reformer once one scratches the surface.

That became clear in his first 100 days with his appointments.  And in his defense, the Democrats on the whole have been throwing their constituents under the bus for the sake of Wall Street money since 1992.  So Obama was not so much a betrayer as a fake, a member of the Wall Street wing of the Democratic party.  He is always fumbling, and making excuses, but at the end of the day, he did as he was told. 

The Democratic leadership has tried to bridge a gap between representing the people and fattening their wallets, and have ended up pleasing few.  They won't become the party of the moneyed interests because they cannot sell out more deeply than their counterparts.  And as for their traditional constituency in the working class, the only rejoinder is, 'the other guys are worse.'  And the other guys say the same thing to their base about them.  And no one is getting served, except the one percent.

I think that the 'other guys' are going to be worse, and people are just going to have to see how bad things can get, again, before they can get any better. 

From an FDR 1936 campaign speech in Madison Square Garden:

"For nearly four years you have had an Administration which instead of twirling its thumbs has rolled up its sleeves. We will keep our sleeves rolled up.

We had to struggle with the old enemies of peace—business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering.

They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob.

Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me—and I welcome their hatred.

I should like to have it said of my first Administration that in it the forces of selfishness and of lust for power met their match. I should like to have it said of my second Administration that in it these forces met their master."

NAV Premiums of Certain Precious Metals Trusts and Funds

Some are asking why there is a such a deep discount to net value on the Central Funds.  I think the answer is fairly simple and I think I have explained this before.

There is no coincidence that there is a reasonably simple redemption facility in the Sprott Funds, and there is none in the Central Funds.

If one wishes to 'unlock the premium or discount' in Sprott all they have to do is to take delivery of some bullion.

How does one unlock the value in the Central Funds in the short term if the discount gets 'out of bounds' with historical norms?

The answer is that one does not.  The only way to unlock the NAV is if the unit values rise and one sells the units.  It works in a time of rising prices, but lacks 'teeth' in a period of falling metal prices.   

Otherwise that value is only theoretically unlocked upon the funds liquidation, and distribution of assets to unit holders.  They pay no dividend, and there is no redemption facility. 

And this makes them a very safe short, and a somewhat problematic safe haven. And so when the metals are under pressure, they can be under quite a bit of pressure through market gamesmanship.

Do people short the Central Funds by borrowing sufficient shares and reporting them?  Is naked shorting forbidden? 

Are there any practicable rules for the well connected anymore?

Yes there are hedges that one can engage in to try and bet on a reversion to the norm for the Central Funds.  But this is obviously not so efficient is it?

It is easy to make theoretical arguments and to discuss pros and cons.  And to refute them, one points to the relative performance of the Sprott funds and the Central funds in the market and says, QED.

I am not saying that the Central Funds are 'bad.'  I have purchased them any number of times, especially when some event like a share offering provokes a deep discount temporarily. 

But what I am saying is that in a period of protracted weakness, they tend to underperform, unless one thing precious metal markets are bottoming AND one has a longer term time horizon.

But at that point, one also looks to higher beta products in addition, such as miners or royalty streams.

I am merely trying to explain the phenomena, not trying to make a case for anything one way or the other.   An investment that is not fraudulent is neither good nor bad, except in terms of some function it is designed to serve in a portfolio.  It is like arguing whether a screwdriver or a hammer are inherently good or bad.

There is a redemption risk in Sprott that is not applicable to the Central Funds for example.  If someone the paper price of gold became ridiculously out of bounds relative to physical supply, it is a likelihood that there would be a redemption run on Sprott as compared to the Central Funds. 

But that seems a bit of a reach, and the market seems to indicate its agreement for now. And at that extreme point the miners with reserves would be soaring so greatly that I doubt many traders would care to waste time debating it.