Sucker Alert? Insider Selling Surges After Dow 14,000

Insiders have been pulling out of stocks just as small investors are getting in.

Selling by corporate executives has surged recently as the Dow Jones Industrial Average hit 14,000 and retail investors flooded into stocks. The amount of insider selling has usually preceded market selloffs.

There have been more than nine insider sales for every one buy over the past week among NYSE stocks, according to Vickers. The last time executives sold their company's stock this aggressively was in early 2012, just before the S&P 500 went on to correct by 10 percent to its low for the year.

"Insiders know more than the vast majority of market participants," said Enis Taner, global macro editor for RiskReversal.com. "And they're usually right over a long period of time."

http://www.cnbc.com/id/100435847

A MASSIVE Bearish Bet Against Banks Has Traders Buzzing

According to Barron's columnist Steven Sears, someone made a big bet against the financials ETF yesterday (ticker symbol XLF), and it has everybody buzzing.

The trader bought 100,000 put options on the ETF (a put option increases in value when the price of the underlying asset, in this case, the ETF, goes down).

To put that number in perspective, Sears writes, "Few investors ever trade more than 500 contracts, so a 100,000 order tends to stop traffic and prompt all sorts of speculation about what's motivating the trade." According to Sears, the trade "has sparked conversations across the market."

The trade makes money if the ETF drops below $16. It's trading just north of $17.50 today.

While the bet has everyone scratching their heads, Sears offers one possible explanation: bank stocks have been on a tear lately, so it make sense for someone who own bank stocks to hedge against a reversal by purchasing put options on the ETF that tracks bank stocks.

However, Sears says a trader trying to hedge against a short-term reversal didn't need to set up the trade this way:

To be sure, it makes perfect sense to hedge a hot fund like the financial sector SPDR. The fund has surged this year, and gained about 7.2%. But if the mystery hedger was simply concerned the financial sector exchange-traded fund would retreat from its 52-week high of 17.66, which is reasonable, there are shorter-term hedges. For instance, he could have bought puts that expire no later than March, because they would be more sensitive to near-term changes.

By choosing April puts, the mystery investor has some traders concerned that they, along with the majority of investors, are too optimistic ahead of the coming budget fight.

Read the rest at Barrons.com >

Read more: http://www.businessinsider.com/massive-options-bet-against-bank-etf-2013-2#ixzz2KEG0edct

Federal Reserve hacked

US central bank confirms intrusion after hacktivist group Anonymous was claimed to have stolen 4,000 bankers' details

The US Federal Reserve bank has confirmed one of its internal websites was broken into by hackers after the hacktivist group Anonymous was claimed to have stolen details of more than 4,000 bank executives.

"The Federal Reserve system is aware that information was obtained by exploiting a temporary vulnerability in a website vendor product," a spokeswoman for the US central bank said.

"Exposure was fixed shortly after discovery and is no longer an issue. This incident did not affect critical operations of the Federal Reserve system," the spokeswoman said, adding that all individuals affected by the breach had been contacted.

The admission follows a claim that hackers linked to Anonymous struck the bank on Sunday. The technology news site ZDNet separately reported that Anonymous appeared to have published information said to containing the login information, credentials, internet protocol addresses and contact information of more than 4,000 US bankers.

http://www.guardian.co.uk/business/2013/feb/06/federal-reserve-anonymous 

Virginia moves closer to creating state’s own currency Read more: http://dailycaller.com/2013/02/06/virginia-moves-close-to-creating-states-own-currency/#ixzz2K8Cp1WNh

Lawmakers in Virginia say they want to keep their options open in case the value of the U.S. dollar ever collapses — so they’re considering minting state coinage.

Read more: http://dailycaller.com/2013/02/06/virginia-moves-close-to-creating-states-own-currency/#ixzz2K8CmYIVr

Congress eyes tax on pot

SEATTLE (AP) - An effort is building in Congress to change U.S. marijuana laws, including moves to legalize the industrial production of hemp and establish a hefty federal pot tax.

While passage this year could be a longshot, lawmakers from both parties have been quietly working on several bills, the first of which Democratic Reps. Earl Blumenauer of Oregon and Jared Polis of Colorado plan to introduce Tuesday, Blumenauer told The Associated Press.

Polis' measure would regulate marijuana the way the federal government handles alcohol: In states that legalize pot, growers would have to obtain a federal permit. Oversight of marijuana would be removed from the Drug Enforcement Administration and given to the newly renamed Bureau of Alcohol, Tobacco, Marijuana and Firearms, and it would remain illegal to bring marijuana from a state where it's legal to one where it isn't.

The bill is based on a legalization measure previously pushed by former Reps. Barney Frank of Massachusetts and Ron Paul of Texas.

http://apnews.myway.com/article/20130204/DA482F300.html

SEATTLE (AP) — An effort is building in Congress to change U.S. marijuana laws, including moves to legalize the industrial production of hemp and establish a hefty federal pot tax.

While passage this year could be a longshot, lawmakers from both parties have been quietly working on several bills, the first of which Democratic Reps. Earl Blumenauer of Oregon and Jared Polis of Colorado plan to introduce Tuesday, Blumenauer told The Associated Press.

Polis’ measure would regulate marijuana the way the federal government handles alcohol: In states that legalize pot, growers would have to obtain a federal permit. Oversight of marijuana would be removed from the Drug Enforcement Administration and given to the newly renamed Bureau of Alcohol, Tobacco, Marijuana and Firearms, and it would remain illegal to bring marijuana from a state where it’s legal to one where it isn’t.

http://www.salon.com/2013/02/04/dems_move_to_change_federal_pot_laws/

Greed is driving the market

CNN's fear and greed index
http://money.cnn.com/data/fear-and-greed/ 

The Bernanke Shock, Where is Germany's Gold?

The financial world was shocked this month by a demand from Germany's Bundesbank to repatriate a large portion of its gold reserves held abroad. By 2020, Germany wants 50% of its total gold reserves back in Frankfurt - including 300 tons from the Federal Reserve. The Bundesbank's announcement comes just three months after the Fed refused to submit to an audit of its holdings on Germany's behalf. One cannot help but wonder if the refusal triggered the demand.

Either way, Germany appears to be waking up to a reality for which central banks around the world have been preparing: the dollar is no longer the world's safe-haven asset and the US government is no longer a trustworthy banker for foreign nations. It looks like their fears are well-grounded, given the Fed's seeming inability to return what is legally Germany's gold in a timely manner. Germany is a developed and powerful nation with the second largest gold reserves in the world. If they can't rely on Washington to keep its promises, who can?

http://www.marketoracle.co.uk/Article38831.html

EES: Did MJNA get too high?

Our recent article covering Medical Marijuana (MJNA.PK) was written when the price was .20. Currently the price is .45 and it's up over 240% sincewe started recommending buying it. Obviously, this is a huge move, and is cause for analysis.

http://seekingalpha.com/article/1154761-did-medical-marijuana-get-too-high

Euro crisis not over, says Wolfgang Schaeuble

Europe’s political tremors risk spoiling the region’s market calm, with corruption allegations buffeting Spanish Premier Mariano Rajoy and Italy’s Silvio Berlusconi narrowing the front-runner’s lead as elections loom.

Rajoy, facing opposition calls to resign amid contested reports about illegal payments, traveled to Berlin today as euro-area leaders schedule a flurry of meetings this week ahead of a Feb. 7-8 European Union summit. Last week’s nationalization of the Netherlands’ fourth-largest bank and a 2.17 billion-euro ($3 billion) loss at Deutsche Bank AG underscore the fragile economic health in the region.

“The euro crisis is not over,” German Finance MinisterWolfgang Schaeuble said Feb. 1 at the Munich Security Conference where fellow panelists included Deutsche Bank co-Chief Executive Officer Anshu Jain. Still, “we’re in a much better position than we were a year ago,” the minister said.

http://www.bloomberg.com/news/2013-02-03/euro-tremors-risk-market-respite-on-spain-italy-banks.html

FTC investigating Herbalife

Somewhere, Bill Ackman is smiling.

Herbalife Ltd. HLF -4.70% shares dropped as much as 12% Monday morning after The New York Post reported the nutrition company may be under investigation by the Federal Trade Commission. The publication cited documents obtained via the Freedom on Information Law. The Wall Street Journal reported last month that officials at the Securities and Exchange Commission have opened an inquiry into the company amid the public scrutiny.

The Post’s report comes more than a month after Ackman publicly said he was betting against Herbalife, a company that he says operates as a pyramid scheme. Ackman’s firm Pershing Square Capital Management has bet more than $1 billion that Herbalife’s stock price will fall. He has called for the government to shut down the company.    http://blogs.wsj.com/marketbeat/2013/02/04/ftc-reportedly-investigating-herbalife-shares-tumble/

Is the world engaged in a Currency War?

• Is the world engaged in a “currency war?”
• January’s job report had some pleasant surprises, but more progress is needed
• Purchasing managers surveys suggest growth in the US, retreat for Europe

Just over forty years ago, major economies agreed to allow exchange rates to float. This ended a long period of fixed currency values, which had been forged at the Bretton Woods conference just before the end of World War II. John Maynard Keynes was among the participants at Bretton Woods.

My fifth grade teacher had used the Bretton Woods fixings to sharpen our skill at multiplying numbers with decimals. I can still recall the conversion rate for the British currency: 2.4 dollars to the pound. Today, a pound costs $1.60. And the rate has fluctuated widely, hitting a low of $1.07 and a high of $2.60 since 1970.

Currency rates have an important influence on trade flows, as variations make one country’s goods more or less expensive to importers. The drive to export is something of an international competition, with trillions of dollars at stake. The stakes become even higher when nations are trying to work their way out of recession.

So it isn’t surprising that developments in the currency markets are getting very close attention at the moment. The euro and the yen have been at the center of that attention. 

http://www.fxstreet.com/fundamental/analysis-reports/weekly-economic-commentary/2013/02/03/

EES: Is the drop in the pound sustainable

Today the Great British Pound (FXB) dropped against all other currencies, as much as 1.8% against the Euro.

The pound slumped the most in more than two years against the euro after an industry report showed U.K. manufacturing grew less in January than economists forecast, sapping demand for Britain's currency as a haven.

 http://seekingalpha.com/article/1151571-is-the-drop-in-the-pound-sustainable 

Europe's banks still in trouble, Dutch government nationalizes SNS REALL

Nationalization of a Dutch bank Friday provided a stark reminder that Europe is still struggling to shake off the legacy of the financial crisis and find a way to let banks fail without loading up governments with debt.

The Dutch government was forced to rescue SNS REALL to protect savers' deposits after the banking and insurance group racked up huge losses on real estate lending. Attempts to find a private buyer or investor failed.

http://money.cnn.com/2013/02/01/news/economy/bank-nationalization/

Italy is grappling with a scandal at the world's oldest bank that could affect the outcome of elections next month and dent Mario Draghi's record as Europe's top central banker.

Monte dei Paschi di Siena, founded in 1427, last week revealed it faced losses of up to €720 million on three derivatives trades, carried out in 2006-2009, details of which were kept hidden from regulators.

http://money.cnn.com/2013/02/01/news/economy/bank-nationalization/

EES: FXCM Poised For Growth In Global Forex Market

FXCM is the largest retail Forex brokerage in the world. FXCM does have an institutional business, however what has made it not only the largest but also the most well known Forex brokerage in the world, was its retail business. However, it hasn't been an easy path for the company, as it has encountered many hurdles in a brand new industry.

FXCM Poised For Growth In Global Forex Market - Seeking Alpha

Moscow exchange IPO

Moscow Exchange’s initial public offering will value Russia’s main equity and fixed income bourse at $4 billion to $4.6 billion, according to two exchange shareholders.

The exchange set the IPO price range at between 55 and 63 rubles a share, according to two people, who asked not to be identified as the information hasn’t been made public. Bourse executives will meet investors for one day only on Feb. 4 at the exchange’s Moscow office, and follow with meetings in Europe and the U.S., Roman Filatov, a portfolio manager in Moscow at Sberbank Asset Management, who received an invitation, said by phone.

Moscow Exchange’s IPO Said to Value Bourse at $4 Billion - Bloomberg

Lloyds sacks two traders over 'rogue trader' scam

The “irregular” trades were discovered in 2011 in a portfolio of complex financial products that have lost Lloyds, which is 41pc owned by the taxpayer, £37m in the past two years.

Franck Kornmann, 40, the head of hybrid foreign exchange and interest rate trading, was dismissed by Lloyds last February. Another member of staff has also been sacked.

Politicians are considering rules to limit the exposure of retail banks to riskier investment activities, such as the type of trading in which Mr Kornmann was involved.

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9798132/Lloyds-sacks-two-over-rogue-trader-scam.html

EES: Medical Marijuana Proves Itself As Viable Investment

Since we recommended buying Medical Marijuana (MJNA.PK) it's up 89%. Other pot stocks are also doing well, such as Cannabis Science (CBIS.OB) up more than 2% today. There wasn't any news release today that would cause the stock to rise so sharply. We suspect that the company has been discovered as a profitable investment for reasons we've outlined before, as well as a growing interest in the budding Marijuana industry.

http://seekingalpha.com/article/1147841-medical-marijuana-proves-itself-as-viable-investment

Russ Senior gets 50 years in prison

Russell Wasendorf Sr., who admitted looting more than $100 million from broker Peregrine Financial Group in a scheme that shook confidence in the U.S. futures industry, was sentenced to 50 years behind bars on Thursday.

Wasendorf was ordered to pay $215.5 million in restitution.

Supporters of the disgraced 64-year-old executive had asked Chief Judge Linda Reade of the U.S. District Court of the Northern District of Iowa for leniency, arguing that Wasendorf is in frail health and that he had helped others even in the midst of his 20-year fraud. Former Peregrine CEO Wasendorf gets 50 years in prison - chicagotribune.com

When the elite of the global futures industry gather in Boca Raton, Fla. next month for their annual parley, the man known to many as simply "Russ Senior" will be a noticeable absentee.

Russell R. Wasendorf Sr., who once funded lavish receptions at the event with celebrity speakers from business, sport and politics, has left the industry shaken and embarrassed by the fraud he perpetuated over almost 20 years. 'Russ Senior' Leaves Industry Shaken - WSJ.com

EES: PFG Best Fraud Case Continues To Unravel

The case involving the fraud perpetrated by Russ Wasendorf, Sr. continues to get worse as more information comes out.

The Iowa department of revenue announced that Russ Wasendorf, Sr. also duped them, out of approximately $14 Million in unpaid taxes:

Russ Wasendorf Sr. duped customers, regulators and his colleagues as he pulled off a 20-year, $100 million fraud at his Iowa-based brokerage. The state's tax collectors say he and his ex-wife also duped them, and that the former couple owes Iowa more than $14.1 million in unpaid taxes, interest and penalties.

The Iowa Department of Revenue filed an assessment in November against Russ and Connie Wasendorf, alleging they underreported their taxable income between 2001 and 2009 by about $75 million and dodged $6.6 million in taxes as a result, according to court records released this week.

This announcement comes at a bad time for the case, now seeing more bills associated with it adding up. PricewaterhouseCoopers, one of the world's largest accounting firms, submitted a bill for $1.6 million for about 4,239 hours of work between July 22 and October 31, according to a filing in Peregrine's bankruptcy case on Monday. On Friday, Shaw Fishman Glantz & Towbin, the law firm representing Trustee Ira Bodenstein, submitted a bill for $671,417 for 1,508 hours of work between July 10 and October 31, according to court documents.

The case now has a number of the total fraud, according to documents recently released. $215 Million.

"Defendant claims the loss is less than $200 million," Acting Iowa U.S. Attorney Sean Berry said in a sentencing memorandum filed yesterday in federal court in Cedar Rapids. "The actual loss in this case can be determined with remarkable precision."

The National Futures Association, an industry self- regulator, announced the same day as the suicide attempt that about $200 million in customer funds the firm reported was on deposit at its bank were unaccounted for.

According to his plea agreement, Wasendorf started stealing from Peregrine in the early 1990s, covering his theft by altering statements from the company's bank and passing them to his chief financial officer and accountants.

Institutional Decay

If we are suspicious of our own institutions then who can we really trust? Our global financial system is comprised of a network of insittutions who custody our assets; it isn't possible for individuals to custody their own assets. If a trusted NFA Member who sat on the board of the NFA was capable of stealing $215 Million from clients over a period of many years without getting caught, what other monsters lurk in places we haven't yet looked?

In our article Modern Insitutional Decay we had outlined some facts that seem to point to a trend; the institutions that built the modern world are dead or dying.

The insituttions that watch the institutions, such as the ratings agencies, and the regulators, have also in some cases found guilty of conflicts of interest.

Traders need to rely on their own analysis, and try to obtain as much objective information as possible.

Forex Risk Disclosure - Click here to read

The risk of loss in trading foreign exchange markets (FOREX), also known as cash foreign currencies, or the FOREX markets, can be substantial.

Libor Lies Revealed in Rigging of $300 Trillion Benchmark

Every morning, from his desk by the bathroom at the far end of Royal Bank of Scotland Group Plc’s trading floor overlooking London’s Liverpool Street station, Paul White punched a series of numbers into his computer.

White, who had joined RBS in 1984, was one of the employees responsible for the firm’s submissions for the London interbank offered rate, or Libor, the global benchmark for more than $300 trillion of contracts from mortgages and student loans to interest-rate swaps. Behind him sat Neil Danziger, a derivatives trader who had worked at the bank since 2002.

On the morning of March 27, 2008, Tan Chi Min, Danziger’s boss in Tokyo, told him to make sure the next day’s submission in yen would increase, Bloomberg Markets magazine will report in its March issue. “We need to bump it way up high, highest among all if possible,” Tan, who was known by colleagues as Jimmy, wrote in an instant message to Danziger, according to a transcript made public by a Singapore court and reported on by Bloomberg before being sealed by a judge at RBS’s request.

• More from the March 2013 issue of Bloomberg Markets
• How Libor Works

Danziger typically would have swiveled in his chair, tapped White on the shoulder and relayed the request to him, people who worked on the trading floor say. Instead, as White was away that day, Danziger input the rate himself. There were no rules at RBS and other banks prohibiting derivatives traders, who stood to benefit from where Libor was set, from submitting the rate -- a flaw exploited by some traders to boost their bonuses.

http://www.bloomberg.com/news/print/2013-01-28/libor-lies-revealed-in-rigging-of-300-trillion-benchmark.html