Wednesday 2 April 2014

The Drumbeat For War.



Baltic Dry Index. 1316 -46

LIR Gold Target in 2019: $30,000.  Revised due to QE programs.

"As fewer and fewer people have confidence in paper as a store of value, the price of gold will continue to rise. The history of fiat money is little more than a register of monetary follies and inflations. Our present age merely affords another entry in this dismal register."

Hans F. Sennholz

We open today with America’s War Party opening up a new front in their push for war with Russia. Following the botched Coup in Kiev that overthrew the elected if corrupt legitimate President of the Ukraine, the Crimea voted to return to Russia rather than be ruled by an illegal regime imposed on Kiev by America. The west has be steadily conditioned and marched towards war ever since.  Now with a massive High Frequency Trading scandal breaking across Wall Street, for more scroll down to Crooks Corner, the Great Vampire Squids need a massive diversion.

Below the latest developments. Stay long fully paid up physical precious metals held outside of the reach of John Bull and Uncle Sam. It’s NATO open season on Russia. Is Poland to get the green light to take Kaliningrad from Russia?

"Gold would have value if for no other reason than that it enables a citizen to fashion his financial escape from the state."

William F. Rickenbacker

JPMorgan Assailed by Russia as Bank Blocks Payment

Apr 2, 2014 2:00 AM GMT
JPMorgan Chase & Co. (JPM) blocked a payment involving a Russian embassy, a decision described as “illegal and absurd” by the Foreign Ministry in Moscow.

The biggest U.S. bank thwarted a remittance from the Russian embassy in Astana, Kazakhstan, to Sogaz Insurance Group “under the pretext of anti-Russian sanctions imposed by the United States,” the ministry said yesterday in a statement on its website. Sogaz lists OAO Bank Rossiya, a St. Petersburg-based lender facing U.S. sanctions over the Ukrainian crisis, as a strategic partner on its website.

Interfering with the transaction was an “absolutely unacceptable, illegal and absurd decision,” Alexander Lukashevich, a ministry spokesman, said in the statement.

U.S. President Barack Obama announced the action against Bank Rossiya last month as part of a broadening of sanctions that targeted government officials and allies of Russian President Vladimir Putin, whose associates own Rossiya. The embassy’s transaction was for less than $5,000 dollars, a person with knowledge of the dispute said, asking not to be identified because such transfers aren’t public.

“Any hostile actions against the Russian diplomatic mission are not only a grossest violation of international law, but are also fraught with countermeasures that unavoidably will affect activities of the embassy and consulates of the U.S. in Russia,” Lukashevich said.
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Ukraine crisis: Poland asks Nato to station 10,000 troops on its territory

Nato is divided over demands from Poland and the Baltic states for a permanent deployment of the Alliance's troops to defend them from Russia

Poland asked Nato to station 10,000 troops on its territory on Tuesday as a visible demonstration of the Alliance's resolve to defend all its members after Russia's seizure of Crimea.

Nato foreign ministers met in Brussels to consider requests for soldiers to be deployed in Poland and the Baltic States, all of which share borders with Russia.

Nato generals and admirals have been ordered to devise ways to better protect alliance members that feel threatened by Russia, and "all practical civilian and military cooperation" with Russia.

President Vladimir Putin has massed about 40,000 troops near Ukraine's eastern frontier, giving himself the option of seizing more of his neighbour's territory.

On Monday, he assured Angela Merkel, the German Chancellor, that some of these forces would be withdrawn. But the ministers disclosed that Russia had yet to keep this promise.

"We've had some statements from Russia about pulling back forces from the eastern border, but we haven't seen the evidence yet," said William Hague, the Foreign Secretary.

Meanwhile, Anders Fogh Rasmussen, the Nato secretary general, said he could not "confirm that Russia is withdrawing its troops" and warned of the dangers posed by a "massive military build-up"

Against this background, Radek Sikorski, the Polish foreign minister, asked for "two heavy brigades" of armoured infantry, with about 5,000 troops each, to be stationed in his country. Poland has a 144-mile border with Russia's Kaliningrad enclave.
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Below, with High Frequency Stock Market Traders getting unfavourable scrutiny in the USA, killing the rigged markets in the process as the Muppets resent being fleeced, the HFT herd is moving on into FX trading, where everyone knows that its rigged by the central banks.

High-Frequency Traders Chase Currencies as Stock Volume Recedes

Apr 2, 2014 5:00 AM GMT
Forget the equity market. For high-frequency traders, the place to be is foreign exchange.

Firms using the ultra-fast strategies getting scrutiny thanks to Michael Lewis’s book “Flash Boys” account for more than 35 percent of spot currency volume in October 2013, up from 9 percent in October 2008, according to consultant Aite Group LLC. It’s the opposite of equities, where their proportion shrank to 50 percent in 2012 from 66 percent four years ago, according to Rosenblatt Securities Inc.

As brokers get better at cloaking orders and volume shrinks in stocks, speed trading remains a growth business in the $5.3 trillion foreign-exchange market, where authorities on three continents are examining the manipulation of benchmarks. While some see them as a sign of transparency, the tactics are catching on just as their role in equities is probed by the New York state attorney general and Federal Bureau of Investigation.

“The use of HFT will make trading and regulation in the FX market more complex, and there would also be some questions over the fairness,” Anshuman Jaswal, senior analyst at research firm Celent in Boston, said by e-mail. “Use of HFT also increases liquidity and depth in markets. Both sides of the argument carry some weight, and there is no one right answer.”

The debate surrounding high-frequency trading, a term describing strategies that use lightning-fast computers to eke out profits in securities markets, blew up this week after Lewis published “Flash Boys” and said U.S. equities are rigged. The book makes few references to currency, saying instability HFT creates is bound to spread from equities sooner or later.
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But below, it’s the end of the one way China Yuan bet. The HFT herd of thieves have missed out on the easy low hanging fruit.

China Burns Speculators as $5.5 Billion Lost on Yuan Bets

Apr 1, 2014 4:22 PM GMT
China is succeeding in making its currency less predictable. Investors are paying the price.

Clients of U.S. commercial banks have lost about $2 billion this year on $332 billion of options betting the yuan would appreciate, while Chinese companies lost $3.5 billion on $150 billion wagered on a benchmark forwards contract, according to data compiled by Morgan Stanley and the Depository Trust & Clearing Corp. in Washington. These contracts, when including bearish bets, account for more than a third of global trading in the Chinese currency.

After almost a decade of gains, speculators had come to regard the yuan as a one-way trade, leading to a surge in capital inflows that stands to leave the country vulnerable to a sudden shift in investor sentiment. Policy makers responded by selling the yuan and widening its trading band, encouraging a record 2.4 percent quarterly decline that was the biggest among Asian currencies.

“The depreciation was engineered to burn the fingers of speculators,” said David Loevinger, a former senior coordinator for China affairs at the U.S. Treasury and now a Los Angeles-based analyst at TCW Group Inc., which oversees $132 billion. “The People’s Bank of China wants two-way volatility embedded in the market.”
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Staying and ending for today with China, China seems to be gearing up for its own foreign escapades further down the road. Japan’s blank cheque from Uncle Sam over the Diaoyu Islands, now has a use by date. This is a fine time for the UK to be downsizing the British Army to 1880s levels.

Combat-Ready China Military Seen as Xi’s Goal in Graft Battle

Apr 1, 2014 5:01 PM GMT
China President Xi Jinping’s first public move to combat corruption in the People’s Liberation Army is the biggest step in his campaign to build it into a combat-ready force after decades in which the military served partly as a money-making vehicle.

Former Lieutenant-General Gu Junshan, 57, previously deputy head of the army’s General Logistics Department, faces charges including embezzlement, bribery and abuse of power, according to the official Xinhua News Agency. Chinese media has reported that Gu amassed a fortune from kickbacks and accumulated a string of properties and even a solid gold statue of Mao Zedong.

The case against Gu, the highest-ranking officer to be tried by a military court since 2006, indicates Xi’s anti-graft campaign is reaching further into the ranks of the world’s largest army by headcount. Xi, who took over as head of the Central Military Commission when he became Communist Party secretary in November 2012, is seeking to weed out corruption as he calls on China’s military to upgrade standards so it’s capable of fighting wars.
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"With the exception only of the period of the gold standard, practically all governments of history have used their exclusive power to issue money to defraud and plunder the people."

F. A. von Hayek

At the Comex silver depositories Tuesday final figures were: Registered 53.42 Moz, Eligible 125.67 Moz, Total 179.09 Moz.  

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.

Today, it’s “lets make a deal time,” for some  HFT thieves at the FBI. Getting in early usually ensures a walk. Whistleblowing often brings a large cut of the fines and disgorgement. This is going to be fun. Wall Street went all-in crooked under Greenspan. Bernocchio put it on heroin and cocaine, QE Forever and ZIRP.

Old Ebenezer Squid had one-way pockets. He would walk ten miles in the snow to chisel an orphan out of tuppence.

With apologies to P.G. Wodehouse and the Duke of Dunstable

FBI Seeks Help From High-Frequency Traders to Find Abuses

Apr 1, 2014 6:31 PM GMT
Federal agents are making an unusual public plea for the financial industry to bare its secrets.

The Federal Bureau of Investigation has openly solicited traders and stock-exchange workers to blow the whistle on possible front-running and manipulation via high-speed computers.

The FBI joins a roster of authorities examining high-frequency trading, in which firms typically use super-fast computers to post and cancel orders at rates measured in thousandths or even millionths of a second to capture price discrepancies. The strategy to invite whistleblowers was prompted in part by the complexity of proving any misconduct, according to a person with direct knowledge of the matter.

Whistleblowers are ready to step forward from stock exchanges, Michael Lewis, author of “Flash Boys,” said today in an interview on NBC’s Today Show. The FBI is encouraging anyone with knowledge of possible misconduct to contact them, according to an FBI spokesman.

The FBI’s inquiry stems from a multiyear crackdown on insider trading, which has led to at least 79 convictions of hedge-fund traders and others. Agents are examining, for example, whether traders abuse information to act ahead of orders by institutional investors, according to the FBI. Even trades based on computer algorithms could amount to wire fraud, securities fraud or insider trading.

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Read Michael Lewis' Flash Boys: A Wall Street Revolt: An Adaptation

This article is adapted from the book “Flash Boys: A Wall Street Revolt,” by Michael Lewis, published by W. W. Norton & Company. Courtesy of The New York Times Magazine. The full Michael Lewis book can be purchased on Amazon.

The Wolf Hunters of Wall Street
Before the collapse of the U.S. financial system in 2008, Brad Katsuyama could tell himself that he bore no responsibility for that system. He worked for the Royal Bank of Canada, for a start. RBC might have been the fifth-biggest bank in North America, by some measures, but it was on nobody’s mental map of Wall Street. It was stable and relatively virtuous and soon to be known for having resisted the temptation to make bad subprime loans to Americans or peddle them to ignorant investors. But its management didn’t understand just what an afterthought the bank was — on the rare occasions American financiers thought about it at all. Katsuyama’s bosses sent him to New York from Toronto in 2002, when he was 23, as part of a “big push” for the bank to become a player on Wall Street. The sad truth was that hardly anyone noticed it. “The people in Canada are always saying, ‘We’re paying too much for people in the United States,’ ”
Katsuyama says. “What they don’t realize is that the reason you have to pay them too much is that no one wants to work for RBC. RBC is a nobody.”

Before arriving there as part of the big push, Katsuyama had never laid eyes on Wall Street or New York City. It was his first immersive course in the American way of life, and he was instantly struck by how different it was from the Canadian version. “Everything was to excess,” he says. “I met more offensive people in a year than I had in my entire life. People lived beyond their means, and the way they did it was by going into debt. That’s what shocked me the most. Debt was a foreign concept in Canada. Debt was evil.”

More, much, much more.

An HFT-Rigged Market: How A Rogue Algo Destroyed The BATS IPO

Considering the rancorous debate currently going on between Michael Lewis (we will have more to say about it shortly), DirectEdge CEO William O'Brien and IEX employee and latest HFT whistleblower, Brad Katsuyma, on CNBC, we decided that this would be an opportune moment to remind readers how BATS, which currently owns DirectEdge, IPOed, or rather how it failed to IPO, when it crashed and burned in its attempt to go public on March 23, 2012, when a rogue algo destabilized the order book and promptly sent the indicative price from around $16 to 0... in less than a second - perheps the perfect testament to just what HFT really does.... and just so readers have an objective perspective of how "unrigged" the market truly is.

From March 27, 2012:
SkyNet Wars: How A Nasdaq Algo Destroyed BATS
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"Of all the contrivances for cheating the laboring classes of mankind, none has been more effective than that which deludes them with paper money."

Daniel Webster 

The monthly Coppock Indicators finished March

DJIA: +197 Down. NASDAQ: +357 Up. SP500: +254 Down.

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