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Tuesday, September 24, 2013
Credit Suisse Closing "Non-Super Rich", "Risky" Client Accounts
In a move that clearly seeks to distance the second largest Swiss
bank from potentially "risky" or just not that profitable (read "rich or super rich")
accounts, Credit Suisse announced today that it plans to close some
clients' accounts as it focuses on high-value customers in some
countries and pulls out of others altogether. The development is
somewhat ironic: while banks around the world scramble to obtain ultra
cheap funding, of which deposits are currently the cheapest alternative,
Credit Suisse is saying to people, thanks but no thanks, we don't want
your money. Then again, perhaps this is an admirable stance by the bank.
It certainly is preferable to CS eagerly accepting every last Swiss
Franc only to pull a Cyprus in a few months (indicatively speaking) and
"bailing in" said money. It does however pose the question: has CS found
an alternative method of funding its assets now that it is actively
deleveraging, and if so what, and who is the source?
More from AFP:
http://www.zerohedge.com/news/2013-09-24/credit-suisse-closing-non-super-rich-risky-client-accounts
More from AFP:
Taking this to its next logical step, assuming the disposed capital is indeed illegally acquired, it would be unable to bypass US, and western, Anti-Money Laundering checks for securities accounts, which would leave it only one option: US real estate, where as we have been reporting over the past 18 months, the NAR is explicitly exempt from AML provisions. In fact, the NAR would welcome all illegally procured foreign capital, especially if in a few months the US District Attorney earns some cheap brownie points announcing said real estate has been confiscated (as we saw recently in New York not once but twice)."We've decided to focus on certain segments and markets and exit some countries that are too small," said a spokeswoman for the Swiss banking giant.
Switzerland's Tages-Anzeiger newspaper reported that the accounts involved would be closed by the end of the year, affecting clients in nearly 50 countries.
The Credit Suisse spokeswoman said the bank would exit some countries entirely, including Congo, Angola and Turkmenistan. In others, such as Denmark and Israel, it will close small accounts to focus on the top segment of the market, she said.
Tages-Anzeiger said the bank considered the risk to its reputation in countries such as Turkmenistan, Uzbekistan and Belarus to be too high, and elsewhere wanted to focus on "rich and super-rich clients" with balances of at least one million Swiss francs (800,000 euros, $1.1 million).
In Israel, where many clients have dual US citizenship, the bank also wanted to reduce the regulatory burden of complying with American tax law, the report said.
The bank had said in July it planned to exit smaller markets, as it announced second-quarter profits of 1.04 billion francs, a 32-percent increase from the year before.
...
Pressure has increased on banks in recent years to help identify accounts linked to organised crime, high-level corruption or other wrongdoing, causing the cost of complying with regulatory procedures to rise sharply.
http://www.zerohedge.com/news/2013-09-24/credit-suisse-closing-non-super-rich-risky-client-accounts
Bakken - Hype Versus Reality
As Wall Street, CNBC, and feckless politicians tout American energy independence from the miracle of shale oil, reality is already rearing its ugly head. Production grew by 24% over the first six months of 2012. Production has grown by only 7% over the first six months of 2013. That is a dramatic slowdown. The fact is that these wells deplete at an extremely rapid rate. Oil companies will always seek out the easiest to access oil first. They have already accessed the easy stuff. This explains the dramatic slowdown. Peak Bakken oil production will be below 1 million barrels per day. The last time I checked, we consumed 18 million barrels per day. I wonder when that energy independence will be achieved? Reality is a bitch.
Bakken Oil Production Growth Has Slowed Significantly In 2013
By: Devon Shire
http://seekingalpha.com/author/devon-shire [9]
The headlines ring of “booming” American oil production and “gluts” of oil (USO [10]). I’m here to tell you that while the boom is real, there is no glut of oil and we need to be aware that the huge production growth of the past eighteen months is going to slow.
It already is slowing.
I’ve been watching what is going on in the Bakken pretty closely because I think it is going to be an excellent proxy for what will happen across the country.
Let’s take a look at what happened to production in North Dakota during the first six months of last year (2012). Here is the raw data [11] detailing barrels of oil production per day:
December 2011 – 535,000 boe/day
January 2012 – 547,000 boe/day
February 2012 – 559,000 boe/day
March 2012 – 580,000 boe/day
April 2012 – 611,000 boe/day
May 2012 – 644,000 boe/day
June 2012 – 664,000 boe/day
Daily production in North Dakota increased by 129,000 barrels per day from December 2011 to June 2012.
Now let’s look at the same period for this year (2013):
December 2012 – 768,000 boe/day
January 2013 – 739,000 boe/day
February 2013 – 780,000 boe/day
March 2013 – 785,000 boe/day
April 2013 – 793,000 boe/day
May 2013 – 811,000 boe/day
June 2013 – 821,000 boe/day
Where last year production increased by 129,000 barrels per day in the first six months of the year, this year production is up by only 53,000 barrels per day.
Yes, the rate of growth in the Bakken has slowed considerably in 2013.
To understand why, a person needs to look at the production profile for these horizontal oil wells.
By the end of the first year of production, a new well is producing at a rate that is 30% of where it was the year before. That means a huge amount of drilling each year has to be done just to offset the production lost due to these steep decline rates.
Without a continuous step change each year in the number of wells being drilled and the capital available to do so, production in the Bakken is going to flatten.
Good things are still happening, but we can’t repeat every year the hyperbolic growth that we saw in 2012.
What this means for investors is that we shouldn’t expect oil prices to fall much from where we have seen them over the past three years.
For the past three years WTI oil prices have ranged from $85 per barrel to $105 per barrel. I think $85 is about as low as we can go for an extended period of time because that is likely just about the marginal cost of production for oil in the world today.
Production growth in the Bakken is slowing and so too will production growth in the Eagle Ford. That is the nature of these horizontal oil fields. We get an initial surge in production as capital comes into the play. Then that growth rate slows steadily until it flattens and enters a decline.
http://www.zerohedge.com/print/479286
Bakken Oil Production Growth Has Slowed Significantly In 2013
By: Devon Shire
http://seekingalpha.com/author/devon-shire [9]
The headlines ring of “booming” American oil production and “gluts” of oil (USO [10]). I’m here to tell you that while the boom is real, there is no glut of oil and we need to be aware that the huge production growth of the past eighteen months is going to slow.
It already is slowing.
I’ve been watching what is going on in the Bakken pretty closely because I think it is going to be an excellent proxy for what will happen across the country.
Let’s take a look at what happened to production in North Dakota during the first six months of last year (2012). Here is the raw data [11] detailing barrels of oil production per day:
December 2011 – 535,000 boe/day
January 2012 – 547,000 boe/day
February 2012 – 559,000 boe/day
March 2012 – 580,000 boe/day
April 2012 – 611,000 boe/day
May 2012 – 644,000 boe/day
June 2012 – 664,000 boe/day
Daily production in North Dakota increased by 129,000 barrels per day from December 2011 to June 2012.
Now let’s look at the same period for this year (2013):
December 2012 – 768,000 boe/day
January 2013 – 739,000 boe/day
February 2013 – 780,000 boe/day
March 2013 – 785,000 boe/day
April 2013 – 793,000 boe/day
May 2013 – 811,000 boe/day
June 2013 – 821,000 boe/day
Where last year production increased by 129,000 barrels per day in the first six months of the year, this year production is up by only 53,000 barrels per day.
Yes, the rate of growth in the Bakken has slowed considerably in 2013.
To understand why, a person needs to look at the production profile for these horizontal oil wells.
By the end of the first year of production, a new well is producing at a rate that is 30% of where it was the year before. That means a huge amount of drilling each year has to be done just to offset the production lost due to these steep decline rates.
Without a continuous step change each year in the number of wells being drilled and the capital available to do so, production in the Bakken is going to flatten.
Good things are still happening, but we can’t repeat every year the hyperbolic growth that we saw in 2012.
What this means for investors is that we shouldn’t expect oil prices to fall much from where we have seen them over the past three years.
For the past three years WTI oil prices have ranged from $85 per barrel to $105 per barrel. I think $85 is about as low as we can go for an extended period of time because that is likely just about the marginal cost of production for oil in the world today.
Production growth in the Bakken is slowing and so too will production growth in the Eagle Ford. That is the nature of these horizontal oil fields. We get an initial surge in production as capital comes into the play. Then that growth rate slows steadily until it flattens and enters a decline.
http://www.zerohedge.com/print/479286
Monday, September 23, 2013
$3.39T Quantitative Explosion: Fed Owns More Treasuries and MBSs Than Publicly Held Debt Amassed From Washington Through Clinton
The same day that the Federal Reserve's Federal Open Market Committee announced last week that the Fed would continue to buy $40 billion in mortgage-backed securities (MBSs) and $45 billion in U.S. Treasury securities per month, the Fed also released its latest weekly accounting sheet indicating that it had already accumulated more Treasuries and MBSs than the total value of the publicly held U.S. government debt amassed by all U.S. presidents from George Washington though Bill Clinton.
Since the beginning of September 2008, in fact, the Fed's ownership of Treasury securities and MBSs has increased seven fold.
As of the close of business Thursday, the Fed said, it owned approximately $2,052,055,000,000 in U.S. Treasury securities and approximately $1,339,771,000,000 in mortgage-backed securities—for a combined total of about $3,391,826,000,000 in Treasury securities and MBSs.
The U.S. Treasury divides the U.S. government debt into two parts: debt held by the public, which includes publicly traded Treasury securities such as Treasury bills, notes and bonds, and intra-governmental debt, which is money the Treasury has borrowed out of the Social Security trust fund and other government trust funds and then used to pay current expenses.
As of the opening of business back on Nov. 23, 2001, according to the Daily Treasury Statement, the federal government’s total debt held by the public was $3,383,605,000,000. (By the close of business that day, the total debt held by the public would increase to 3,406,661,000,000.) The $3,383,605,000,000 in U.S. Treasury debt held by the public as the morning of Nov. 23, 2001, represented the total publicly held debt the federal government had accumulated until that date from the moment the Treasury first opened during the presidency of George Washington.
The $3,383,605,000,000 the Treasury owed to the public as of the morning of Nov. 23, 2001 was less than the $3,391,826,000,000 in Treasury and mortgage-backed securities owned by the Federal Reserve as of the close of business last Thursday.
Thus the Federal Reserve now owns more debt in the form of U.S. Treasury securities and MBSs than the sum total of the publicly held debt that the U.S. government accumulated from George Washington’s administration into November 2001, during President George W. Bush’s first term.
The mortgage-backed securities owned by the Fed are those that have been issued and guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae. Ginnie Mae is government-owned corporation operated by the U.S. Department of Housing and Urban Development. Fannie Mae and Freddie Mac are congressionally chartered, government-sponsored enterprises, that are now held in conservatorships by the federal government.
“Fannie Mae and Freddie Mac are chartered by Congress as government-sponsored enterprises (GSEs) to provide liquidity in the mortgage market and to promote homeownership for underserved groups and locations,” the Congressional Research Service explained in a report published this August. “They purchase mortgages, guarantee them, and package them in mortgage-backed securities (MBSs), which they either keep as investments or sell to institutional investors. In addition to the GSEs’ guarantees, investors widely believe that MBSs are implicitly guaranteed by the federal government. In 2008, the GSEs’ financial condition had weakened and there were concerns over their ability to meet their obligations on $1.2 trillion in bonds and $3.7 trillion in MBSs that they had guaranteed. In response to the financial risks, the federal government took control of these GSEs in a process known as conservatorship as a means to stabilize the mortgage credit market.”
The federal government first took control of Fannie Mae and Freddie Mac on Sunday, Sept. 7, 2008. In its last weekly accounting sheet released before that, on Thursday, Sept. 4, 2008, the Fed said that it owned $479.726 billion in U.S. Treasury securities. That sheet did not even include a line item for mortgage-backed securities.
The Fed’s combined ownership of $3,391,826,000,000 in Treasury securities and mortgage-backed securities is now more than 7 times as great as the $479.726 billion in Treasury securities it owned five years ago before the takeover of Fannie and Freddie.
Of the ten members of the Federal Open Market Committee who voted on whether the Fed should continue purchasing $40 billion in MBS each month and $45 billion in Treasury securities, only one voted no. That was Esther George, who is president of the Federal Reserve Bank of Kansas City.
The Fed’s press release announcing the vote said George voted against the continued buying of Treasury securities and MBS because she was “concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.”
- See more at: http://cnsnews.com/news/article/terence-p-jeffrey/339t-quantitative-explosion-fed-owns-more-treasuries-and-mbss#sthash.lMYAYAJU.toT70JK9.dpuf
Since the beginning of September 2008, in fact, the Fed's ownership of Treasury securities and MBSs has increased seven fold.
As of the close of business Thursday, the Fed said, it owned approximately $2,052,055,000,000 in U.S. Treasury securities and approximately $1,339,771,000,000 in mortgage-backed securities—for a combined total of about $3,391,826,000,000 in Treasury securities and MBSs.
The U.S. Treasury divides the U.S. government debt into two parts: debt held by the public, which includes publicly traded Treasury securities such as Treasury bills, notes and bonds, and intra-governmental debt, which is money the Treasury has borrowed out of the Social Security trust fund and other government trust funds and then used to pay current expenses.
As of the opening of business back on Nov. 23, 2001, according to the Daily Treasury Statement, the federal government’s total debt held by the public was $3,383,605,000,000. (By the close of business that day, the total debt held by the public would increase to 3,406,661,000,000.) The $3,383,605,000,000 in U.S. Treasury debt held by the public as the morning of Nov. 23, 2001, represented the total publicly held debt the federal government had accumulated until that date from the moment the Treasury first opened during the presidency of George Washington.
The $3,383,605,000,000 the Treasury owed to the public as of the morning of Nov. 23, 2001 was less than the $3,391,826,000,000 in Treasury and mortgage-backed securities owned by the Federal Reserve as of the close of business last Thursday.
Thus the Federal Reserve now owns more debt in the form of U.S. Treasury securities and MBSs than the sum total of the publicly held debt that the U.S. government accumulated from George Washington’s administration into November 2001, during President George W. Bush’s first term.
The mortgage-backed securities owned by the Fed are those that have been issued and guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae. Ginnie Mae is government-owned corporation operated by the U.S. Department of Housing and Urban Development. Fannie Mae and Freddie Mac are congressionally chartered, government-sponsored enterprises, that are now held in conservatorships by the federal government.
“Fannie Mae and Freddie Mac are chartered by Congress as government-sponsored enterprises (GSEs) to provide liquidity in the mortgage market and to promote homeownership for underserved groups and locations,” the Congressional Research Service explained in a report published this August. “They purchase mortgages, guarantee them, and package them in mortgage-backed securities (MBSs), which they either keep as investments or sell to institutional investors. In addition to the GSEs’ guarantees, investors widely believe that MBSs are implicitly guaranteed by the federal government. In 2008, the GSEs’ financial condition had weakened and there were concerns over their ability to meet their obligations on $1.2 trillion in bonds and $3.7 trillion in MBSs that they had guaranteed. In response to the financial risks, the federal government took control of these GSEs in a process known as conservatorship as a means to stabilize the mortgage credit market.”
The federal government first took control of Fannie Mae and Freddie Mac on Sunday, Sept. 7, 2008. In its last weekly accounting sheet released before that, on Thursday, Sept. 4, 2008, the Fed said that it owned $479.726 billion in U.S. Treasury securities. That sheet did not even include a line item for mortgage-backed securities.
The Fed’s combined ownership of $3,391,826,000,000 in Treasury securities and mortgage-backed securities is now more than 7 times as great as the $479.726 billion in Treasury securities it owned five years ago before the takeover of Fannie and Freddie.
Of the ten members of the Federal Open Market Committee who voted on whether the Fed should continue purchasing $40 billion in MBS each month and $45 billion in Treasury securities, only one voted no. That was Esther George, who is president of the Federal Reserve Bank of Kansas City.
The Fed’s press release announcing the vote said George voted against the continued buying of Treasury securities and MBS because she was “concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.”
- See more at: http://cnsnews.com/news/article/terence-p-jeffrey/339t-quantitative-explosion-fed-owns-more-treasuries-and-mbss#sthash.lMYAYAJU.toT70JK9.dpuf
The same day that the Federal Reserve's Federal Open Market Committee announced last week
that the Fed would continue to buy $40 billion in mortgage-backed
securities (MBSs) and $45 billion in U.S. Treasury securities per month,
the Fed also released its latest weekly accounting sheet
indicating that it had already accumulated more Treasuries and MBSs
than the total value of the publicly held U.S. government debt amassed
by all U.S. presidents from George Washington though Bill Clinton.
Since the beginning of September 2008, in fact, the Fed's ownership of Treasury securities and MBSs has increased seven fold.
As of the close of business Thursday, the Fed said, it owned approximately $2,052,055,000,000 in U.S. Treasury securities and approximately $1,339,771,000,000 in mortgage-backed securities—for a combined total of about $3,391,826,000,000 in Treasury securities and MBSs.
The U.S. Treasury divides the U.S. government debt into two parts: debt held by the public, which includes publicly traded Treasury securities such as Treasury bills, notes and bonds, and intra-governmental debt, which is money the Treasury has borrowed out of the Social Security trust fund and other government trust funds and then used to pay current expenses.
As of the opening of business back on Nov. 23, 2001, according to the Daily Treasury Statement, the federal government’s total debt held by the public was $3,383,605,000,000. (By the close of business that day, the total debt held by the public would increase to 3,406,661,000,000.) The $3,383,605,000,000 in U.S. Treasury debt held by the public as the morning of Nov. 23, 2001, represented the total publicly held debt the federal government had accumulated until that date from the moment the Treasury first opened during the presidency of George Washington.
The $3,383,605,000,000 the Treasury owed to the public as of the morning of Nov. 23, 2001 was less than the $3,391,826,000,000 in Treasury and mortgage-backed securities owned by the Federal Reserve as of the close of business last Thursday.
Thus the Federal Reserve now owns more debt in the form of U.S. Treasury securities and MBSs than the sum total of the publicly held debt that the U.S. government accumulated from George Washington’s administration into November 2001, during President George W. Bush’s first term.
The mortgage-backed securities owned by the Fed are those that have been issued and guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae. Ginnie Mae is government-owned corporation operated by the U.S. Department of Housing and Urban Development. Fannie Mae and Freddie Mac are congressionally chartered, government-sponsored enterprises, that are now held in conservatorships by the federal government.
“Fannie Mae and Freddie Mac are chartered by Congress as government-sponsored enterprises (GSEs) to provide liquidity in the mortgage market and to promote homeownership for underserved groups and locations,” the Congressional Research Service explained in a report published this August. “They purchase mortgages, guarantee them, and package them in mortgage-backed securities (MBSs), which they either keep as investments or sell to institutional investors. In addition to the GSEs’ guarantees, investors widely believe that MBSs are implicitly guaranteed by the federal government. In 2008, the GSEs’ financial condition had weakened and there were concerns over their ability to meet their obligations on $1.2 trillion in bonds and $3.7 trillion in MBSs that they had guaranteed. In response to the financial risks, the federal government took control of these GSEs in a process known as conservatorship as a means to stabilize the mortgage credit market.”
The federal government first took control of Fannie Mae and Freddie Mac on Sunday, Sept. 7, 2008. In its last weekly accounting sheet released before that, on Thursday, Sept. 4, 2008, the Fed said that it owned $479.726 billion in U.S. Treasury securities. That sheet did not even include a line item for mortgage-backed securities.
The Fed’s combined ownership of $3,391,826,000,000 in Treasury securities and mortgage-backed securities is now more than 7 times as great as the $479.726 billion in Treasury securities it owned five years ago before the takeover of Fannie and Freddie.
Of the ten members of the Federal Open Market Committee who voted on whether the Fed should continue purchasing $40 billion in MBS each month and $45 billion in Treasury securities, only one voted no. That was Esther George, who is president of the Federal Reserve Bank of Kansas City.
The Fed’s press release announcing the vote said George voted against the continued buying of Treasury securities and MBS because she was “concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.”
- See more at: http://cnsnews.com/news/article/terence-p-jeffrey/339t-quantitative-explosion-fed-owns-more-treasuries-and-mbss#sthash.lMYAYAJU.toT70JK9.dpuf
Since the beginning of September 2008, in fact, the Fed's ownership of Treasury securities and MBSs has increased seven fold.
As of the close of business Thursday, the Fed said, it owned approximately $2,052,055,000,000 in U.S. Treasury securities and approximately $1,339,771,000,000 in mortgage-backed securities—for a combined total of about $3,391,826,000,000 in Treasury securities and MBSs.
The U.S. Treasury divides the U.S. government debt into two parts: debt held by the public, which includes publicly traded Treasury securities such as Treasury bills, notes and bonds, and intra-governmental debt, which is money the Treasury has borrowed out of the Social Security trust fund and other government trust funds and then used to pay current expenses.
As of the opening of business back on Nov. 23, 2001, according to the Daily Treasury Statement, the federal government’s total debt held by the public was $3,383,605,000,000. (By the close of business that day, the total debt held by the public would increase to 3,406,661,000,000.) The $3,383,605,000,000 in U.S. Treasury debt held by the public as the morning of Nov. 23, 2001, represented the total publicly held debt the federal government had accumulated until that date from the moment the Treasury first opened during the presidency of George Washington.
The $3,383,605,000,000 the Treasury owed to the public as of the morning of Nov. 23, 2001 was less than the $3,391,826,000,000 in Treasury and mortgage-backed securities owned by the Federal Reserve as of the close of business last Thursday.
Thus the Federal Reserve now owns more debt in the form of U.S. Treasury securities and MBSs than the sum total of the publicly held debt that the U.S. government accumulated from George Washington’s administration into November 2001, during President George W. Bush’s first term.
The mortgage-backed securities owned by the Fed are those that have been issued and guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae. Ginnie Mae is government-owned corporation operated by the U.S. Department of Housing and Urban Development. Fannie Mae and Freddie Mac are congressionally chartered, government-sponsored enterprises, that are now held in conservatorships by the federal government.
“Fannie Mae and Freddie Mac are chartered by Congress as government-sponsored enterprises (GSEs) to provide liquidity in the mortgage market and to promote homeownership for underserved groups and locations,” the Congressional Research Service explained in a report published this August. “They purchase mortgages, guarantee them, and package them in mortgage-backed securities (MBSs), which they either keep as investments or sell to institutional investors. In addition to the GSEs’ guarantees, investors widely believe that MBSs are implicitly guaranteed by the federal government. In 2008, the GSEs’ financial condition had weakened and there were concerns over their ability to meet their obligations on $1.2 trillion in bonds and $3.7 trillion in MBSs that they had guaranteed. In response to the financial risks, the federal government took control of these GSEs in a process known as conservatorship as a means to stabilize the mortgage credit market.”
The federal government first took control of Fannie Mae and Freddie Mac on Sunday, Sept. 7, 2008. In its last weekly accounting sheet released before that, on Thursday, Sept. 4, 2008, the Fed said that it owned $479.726 billion in U.S. Treasury securities. That sheet did not even include a line item for mortgage-backed securities.
The Fed’s combined ownership of $3,391,826,000,000 in Treasury securities and mortgage-backed securities is now more than 7 times as great as the $479.726 billion in Treasury securities it owned five years ago before the takeover of Fannie and Freddie.
Of the ten members of the Federal Open Market Committee who voted on whether the Fed should continue purchasing $40 billion in MBS each month and $45 billion in Treasury securities, only one voted no. That was Esther George, who is president of the Federal Reserve Bank of Kansas City.
The Fed’s press release announcing the vote said George voted against the continued buying of Treasury securities and MBS because she was “concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.”
- See more at: http://cnsnews.com/news/article/terence-p-jeffrey/339t-quantitative-explosion-fed-owns-more-treasuries-and-mbss#sthash.lMYAYAJU.toT70JK9.dpuf
The same day that the Federal Reserve's Federal Open Market Committee announced last week
that the Fed would continue to buy $40 billion in mortgage-backed
securities (MBSs) and $45 billion in U.S. Treasury securities per month,
the Fed also released its latest weekly accounting sheet
indicating that it had already accumulated more Treasuries and MBSs
than the total value of the publicly held U.S. government debt amassed
by all U.S. presidents from George Washington though Bill Clinton.
Since the beginning of September 2008, in fact, the Fed's ownership of Treasury securities and MBSs has increased seven fold.
As of the close of business Thursday, the Fed said, it owned approximately $2,052,055,000,000 in U.S. Treasury securities and approximately $1,339,771,000,000 in mortgage-backed securities—for a combined total of about $3,391,826,000,000 in Treasury securities and MBSs.
The U.S. Treasury divides the U.S. government debt into two parts: debt held by the public, which includes publicly traded Treasury securities such as Treasury bills, notes and bonds, and intra-governmental debt, which is money the Treasury has borrowed out of the Social Security trust fund and other government trust funds and then used to pay current expenses.
As of the opening of business back on Nov. 23, 2001, according to the Daily Treasury Statement, the federal government’s total debt held by the public was $3,383,605,000,000. (By the close of business that day, the total debt held by the public would increase to 3,406,661,000,000.) The $3,383,605,000,000 in U.S. Treasury debt held by the public as the morning of Nov. 23, 2001, represented the total publicly held debt the federal government had accumulated until that date from the moment the Treasury first opened during the presidency of George Washington.
The $3,383,605,000,000 the Treasury owed to the public as of the morning of Nov. 23, 2001 was less than the $3,391,826,000,000 in Treasury and mortgage-backed securities owned by the Federal Reserve as of the close of business last Thursday.
Thus the Federal Reserve now owns more debt in the form of U.S. Treasury securities and MBSs than the sum total of the publicly held debt that the U.S. government accumulated from George Washington’s administration into November 2001, during President George W. Bush’s first term.
The mortgage-backed securities owned by the Fed are those that have been issued and guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae. Ginnie Mae is government-owned corporation operated by the U.S. Department of Housing and Urban Development. Fannie Mae and Freddie Mac are congressionally chartered, government-sponsored enterprises, that are now held in conservatorships by the federal government.
“Fannie Mae and Freddie Mac are chartered by Congress as government-sponsored enterprises (GSEs) to provide liquidity in the mortgage market and to promote homeownership for underserved groups and locations,” the Congressional Research Service explained in a report published this August. “They purchase mortgages, guarantee them, and package them in mortgage-backed securities (MBSs), which they either keep as investments or sell to institutional investors. In addition to the GSEs’ guarantees, investors widely believe that MBSs are implicitly guaranteed by the federal government. In 2008, the GSEs’ financial condition had weakened and there were concerns over their ability to meet their obligations on $1.2 trillion in bonds and $3.7 trillion in MBSs that they had guaranteed. In response to the financial risks, the federal government took control of these GSEs in a process known as conservatorship as a means to stabilize the mortgage credit market.”
The federal government first took control of Fannie Mae and Freddie Mac on Sunday, Sept. 7, 2008. In its last weekly accounting sheet released before that, on Thursday, Sept. 4, 2008, the Fed said that it owned $479.726 billion in U.S. Treasury securities. That sheet did not even include a line item for mortgage-backed securities.
The Fed’s combined ownership of $3,391,826,000,000 in Treasury securities and mortgage-backed securities is now more than 7 times as great as the $479.726 billion in Treasury securities it owned five years ago before the takeover of Fannie and Freddie.
Of the ten members of the Federal Open Market Committee who voted on whether the Fed should continue purchasing $40 billion in MBS each month and $45 billion in Treasury securities, only one voted no. That was Esther George, who is president of the Federal Reserve Bank of Kansas City.
The Fed’s press release announcing the vote said George voted against the continued buying of Treasury securities and MBS because she was “concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.”
- See more at: http://cnsnews.com/news/article/terence-p-jeffrey/339t-quantitative-explosion-fed-owns-more-treasuries-and-mbss#sthash.lMYAYAJU.toT70JK9.dpuf
Since the beginning of September 2008, in fact, the Fed's ownership of Treasury securities and MBSs has increased seven fold.
As of the close of business Thursday, the Fed said, it owned approximately $2,052,055,000,000 in U.S. Treasury securities and approximately $1,339,771,000,000 in mortgage-backed securities—for a combined total of about $3,391,826,000,000 in Treasury securities and MBSs.
The U.S. Treasury divides the U.S. government debt into two parts: debt held by the public, which includes publicly traded Treasury securities such as Treasury bills, notes and bonds, and intra-governmental debt, which is money the Treasury has borrowed out of the Social Security trust fund and other government trust funds and then used to pay current expenses.
As of the opening of business back on Nov. 23, 2001, according to the Daily Treasury Statement, the federal government’s total debt held by the public was $3,383,605,000,000. (By the close of business that day, the total debt held by the public would increase to 3,406,661,000,000.) The $3,383,605,000,000 in U.S. Treasury debt held by the public as the morning of Nov. 23, 2001, represented the total publicly held debt the federal government had accumulated until that date from the moment the Treasury first opened during the presidency of George Washington.
The $3,383,605,000,000 the Treasury owed to the public as of the morning of Nov. 23, 2001 was less than the $3,391,826,000,000 in Treasury and mortgage-backed securities owned by the Federal Reserve as of the close of business last Thursday.
Thus the Federal Reserve now owns more debt in the form of U.S. Treasury securities and MBSs than the sum total of the publicly held debt that the U.S. government accumulated from George Washington’s administration into November 2001, during President George W. Bush’s first term.
The mortgage-backed securities owned by the Fed are those that have been issued and guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae. Ginnie Mae is government-owned corporation operated by the U.S. Department of Housing and Urban Development. Fannie Mae and Freddie Mac are congressionally chartered, government-sponsored enterprises, that are now held in conservatorships by the federal government.
“Fannie Mae and Freddie Mac are chartered by Congress as government-sponsored enterprises (GSEs) to provide liquidity in the mortgage market and to promote homeownership for underserved groups and locations,” the Congressional Research Service explained in a report published this August. “They purchase mortgages, guarantee them, and package them in mortgage-backed securities (MBSs), which they either keep as investments or sell to institutional investors. In addition to the GSEs’ guarantees, investors widely believe that MBSs are implicitly guaranteed by the federal government. In 2008, the GSEs’ financial condition had weakened and there were concerns over their ability to meet their obligations on $1.2 trillion in bonds and $3.7 trillion in MBSs that they had guaranteed. In response to the financial risks, the federal government took control of these GSEs in a process known as conservatorship as a means to stabilize the mortgage credit market.”
The federal government first took control of Fannie Mae and Freddie Mac on Sunday, Sept. 7, 2008. In its last weekly accounting sheet released before that, on Thursday, Sept. 4, 2008, the Fed said that it owned $479.726 billion in U.S. Treasury securities. That sheet did not even include a line item for mortgage-backed securities.
The Fed’s combined ownership of $3,391,826,000,000 in Treasury securities and mortgage-backed securities is now more than 7 times as great as the $479.726 billion in Treasury securities it owned five years ago before the takeover of Fannie and Freddie.
Of the ten members of the Federal Open Market Committee who voted on whether the Fed should continue purchasing $40 billion in MBS each month and $45 billion in Treasury securities, only one voted no. That was Esther George, who is president of the Federal Reserve Bank of Kansas City.
The Fed’s press release announcing the vote said George voted against the continued buying of Treasury securities and MBS because she was “concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.”
- See more at: http://cnsnews.com/news/article/terence-p-jeffrey/339t-quantitative-explosion-fed-owns-more-treasuries-and-mbss#sthash.lMYAYAJU.toT70JK9.dpuf
(CNSNews.com) - The same day that the Federal Reserve's Federal Open Market Committee announced last week
that the Fed would continue to buy $40 billion in mortgage-backed
securities (MBSs) and $45 billion in U.S. Treasury securities per month,
the Fed also released its latest weekly accounting sheet
indicating that it had already accumulated more Treasuries and MBSs
than the total value of the publicly held U.S. government debt amassed
by all U.S. presidents from George Washington though Bill Clinton.
Since the beginning of September 2008, in fact, the Fed's ownership of Treasury securities and MBSs has increased seven fold.
As of the close of business Thursday, the Fed said, it owned approximately $2,052,055,000,000 in U.S. Treasury securities and approximately $1,339,771,000,000 in mortgage-backed securities—for a combined total of about $3,391,826,000,000 in Treasury securities and MBSs.
The U.S. Treasury divides the U.S. government debt into two parts: debt held by the public, which includes publicly traded Treasury securities such as Treasury bills, notes and bonds, and intra-governmental debt, which is money the Treasury has borrowed out of the Social Security trust fund and other government trust funds and then used to pay current expenses.
As of the opening of business back on Nov. 23, 2001, according to the Daily Treasury Statement, the federal government’s total debt held by the public was $3,383,605,000,000. (By the close of business that day, the total debt held by the public would increase to 3,406,661,000,000.) The $3,383,605,000,000 in U.S. Treasury debt held by the public as the morning of Nov. 23, 2001, represented the total publicly held debt the federal government had accumulated until that date from the moment the Treasury first opened during the presidency of George Washington.
The $3,383,605,000,000 the Treasury owed to the public as of the morning of Nov. 23, 2001 was less than the $3,391,826,000,000 in Treasury and mortgage-backed securities owned by the Federal Reserve as of the close of business last Thursday.
Thus the Federal Reserve now owns more debt in the form of U.S. Treasury securities and MBSs than the sum total of the publicly held debt that the U.S. government accumulated from George Washington’s administration into November 2001, during President George W. Bush’s first term.
The mortgage-backed securities owned by the Fed are those that have been issued and guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae. Ginnie Mae is government-owned corporation operated by the U.S. Department of Housing and Urban Development. Fannie Mae and Freddie Mac are congressionally chartered, government-sponsored enterprises, that are now held in conservatorships by the federal government.
“Fannie Mae and Freddie Mac are chartered by Congress as government-sponsored enterprises (GSEs) to provide liquidity in the mortgage market and to promote homeownership for underserved groups and locations,” the Congressional Research Service explained in a report published this August. “They purchase mortgages, guarantee them, and package them in mortgage-backed securities (MBSs), which they either keep as investments or sell to institutional investors. In addition to the GSEs’ guarantees, investors widely believe that MBSs are implicitly guaranteed by the federal government. In 2008, the GSEs’ financial condition had weakened and there were concerns over their ability to meet their obligations on $1.2 trillion in bonds and $3.7 trillion in MBSs that they had guaranteed. In response to the financial risks, the federal government took control of these GSEs in a process known as conservatorship as a means to stabilize the mortgage credit market.”
The federal government first took control of Fannie Mae and Freddie Mac on Sunday, Sept. 7, 2008. In its last weekly accounting sheet released before that, on Thursday, Sept. 4, 2008, the Fed said that it owned $479.726 billion in U.S. Treasury securities. That sheet did not even include a line item for mortgage-backed securities.
The Fed’s combined ownership of $3,391,826,000,000 in Treasury securities and mortgage-backed securities is now more than 7 times as great as the $479.726 billion in Treasury securities it owned five years ago before the takeover of Fannie and Freddie.
Of the ten members of the Federal Open Market Committee who voted on whether the Fed should continue purchasing $40 billion in MBS each month and $45 billion in Treasury securities, only one voted no. That was Esther George, who is president of the Federal Reserve Bank of Kansas City.
The Fed’s press release announcing the vote said George voted against the continued buying of Treasury securities and MBS because she was “concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.”
- See more at: http://cnsnews.com/news/article/terence-p-jeffrey/339t-quantitative-explosion-fed-owns-more-treasuries-and-mbss#sthash.lMYAYAJU.toT70JK9.dpuf
Since the beginning of September 2008, in fact, the Fed's ownership of Treasury securities and MBSs has increased seven fold.
As of the close of business Thursday, the Fed said, it owned approximately $2,052,055,000,000 in U.S. Treasury securities and approximately $1,339,771,000,000 in mortgage-backed securities—for a combined total of about $3,391,826,000,000 in Treasury securities and MBSs.
The U.S. Treasury divides the U.S. government debt into two parts: debt held by the public, which includes publicly traded Treasury securities such as Treasury bills, notes and bonds, and intra-governmental debt, which is money the Treasury has borrowed out of the Social Security trust fund and other government trust funds and then used to pay current expenses.
As of the opening of business back on Nov. 23, 2001, according to the Daily Treasury Statement, the federal government’s total debt held by the public was $3,383,605,000,000. (By the close of business that day, the total debt held by the public would increase to 3,406,661,000,000.) The $3,383,605,000,000 in U.S. Treasury debt held by the public as the morning of Nov. 23, 2001, represented the total publicly held debt the federal government had accumulated until that date from the moment the Treasury first opened during the presidency of George Washington.
The $3,383,605,000,000 the Treasury owed to the public as of the morning of Nov. 23, 2001 was less than the $3,391,826,000,000 in Treasury and mortgage-backed securities owned by the Federal Reserve as of the close of business last Thursday.
Thus the Federal Reserve now owns more debt in the form of U.S. Treasury securities and MBSs than the sum total of the publicly held debt that the U.S. government accumulated from George Washington’s administration into November 2001, during President George W. Bush’s first term.
The mortgage-backed securities owned by the Fed are those that have been issued and guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae. Ginnie Mae is government-owned corporation operated by the U.S. Department of Housing and Urban Development. Fannie Mae and Freddie Mac are congressionally chartered, government-sponsored enterprises, that are now held in conservatorships by the federal government.
“Fannie Mae and Freddie Mac are chartered by Congress as government-sponsored enterprises (GSEs) to provide liquidity in the mortgage market and to promote homeownership for underserved groups and locations,” the Congressional Research Service explained in a report published this August. “They purchase mortgages, guarantee them, and package them in mortgage-backed securities (MBSs), which they either keep as investments or sell to institutional investors. In addition to the GSEs’ guarantees, investors widely believe that MBSs are implicitly guaranteed by the federal government. In 2008, the GSEs’ financial condition had weakened and there were concerns over their ability to meet their obligations on $1.2 trillion in bonds and $3.7 trillion in MBSs that they had guaranteed. In response to the financial risks, the federal government took control of these GSEs in a process known as conservatorship as a means to stabilize the mortgage credit market.”
The federal government first took control of Fannie Mae and Freddie Mac on Sunday, Sept. 7, 2008. In its last weekly accounting sheet released before that, on Thursday, Sept. 4, 2008, the Fed said that it owned $479.726 billion in U.S. Treasury securities. That sheet did not even include a line item for mortgage-backed securities.
The Fed’s combined ownership of $3,391,826,000,000 in Treasury securities and mortgage-backed securities is now more than 7 times as great as the $479.726 billion in Treasury securities it owned five years ago before the takeover of Fannie and Freddie.
Of the ten members of the Federal Open Market Committee who voted on whether the Fed should continue purchasing $40 billion in MBS each month and $45 billion in Treasury securities, only one voted no. That was Esther George, who is president of the Federal Reserve Bank of Kansas City.
The Fed’s press release announcing the vote said George voted against the continued buying of Treasury securities and MBS because she was “concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.”
- See more at: http://cnsnews.com/news/article/terence-p-jeffrey/339t-quantitative-explosion-fed-owns-more-treasuries-and-mbss#sthash.lMYAYAJU.toT70JK9.dpuf
(CNSNews.com) - The same day that the Federal Reserve's Federal Open Market Committee announced last week
that the Fed would continue to buy $40 billion in mortgage-backed
securities (MBSs) and $45 billion in U.S. Treasury securities per month,
the Fed also released its latest weekly accounting sheet
indicating that it had already accumulated more Treasuries and MBSs
than the total value of the publicly held U.S. government debt amassed
by all U.S. presidents from George Washington though Bill Clinton.
Since the beginning of September 2008, in fact, the Fed's ownership of Treasury securities and MBSs has increased seven fold.
As of the close of business Thursday, the Fed said, it owned approximately $2,052,055,000,000 in U.S. Treasury securities and approximately $1,339,771,000,000 in mortgage-backed securities—for a combined total of about $3,391,826,000,000 in Treasury securities and MBSs.
The U.S. Treasury divides the U.S. government debt into two parts: debt held by the public, which includes publicly traded Treasury securities such as Treasury bills, notes and bonds, and intra-governmental debt, which is money the Treasury has borrowed out of the Social Security trust fund and other government trust funds and then used to pay current expenses.
As of the opening of business back on Nov. 23, 2001, according to the Daily Treasury Statement, the federal government’s total debt held by the public was $3,383,605,000,000. (By the close of business that day, the total debt held by the public would increase to 3,406,661,000,000.) The $3,383,605,000,000 in U.S. Treasury debt held by the public as the morning of Nov. 23, 2001, represented the total publicly held debt the federal government had accumulated until that date from the moment the Treasury first opened during the presidency of George Washington.
The $3,383,605,000,000 the Treasury owed to the public as of the morning of Nov. 23, 2001 was less than the $3,391,826,000,000 in Treasury and mortgage-backed securities owned by the Federal Reserve as of the close of business last Thursday.
Thus the Federal Reserve now owns more debt in the form of U.S. Treasury securities and MBSs than the sum total of the publicly held debt that the U.S. government accumulated from George Washington’s administration into November 2001, during President George W. Bush’s first term.
The mortgage-backed securities owned by the Fed are those that have been issued and guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae. Ginnie Mae is government-owned corporation operated by the U.S. Department of Housing and Urban Development. Fannie Mae and Freddie Mac are congressionally chartered, government-sponsored enterprises, that are now held in conservatorships by the federal government.
“Fannie Mae and Freddie Mac are chartered by Congress as government-sponsored enterprises (GSEs) to provide liquidity in the mortgage market and to promote homeownership for underserved groups and locations,” the Congressional Research Service explained in a report published this August. “They purchase mortgages, guarantee them, and package them in mortgage-backed securities (MBSs), which they either keep as investments or sell to institutional investors. In addition to the GSEs’ guarantees, investors widely believe that MBSs are implicitly guaranteed by the federal government. In 2008, the GSEs’ financial condition had weakened and there were concerns over their ability to meet their obligations on $1.2 trillion in bonds and $3.7 trillion in MBSs that they had guaranteed. In response to the financial risks, the federal government took control of these GSEs in a process known as conservatorship as a means to stabilize the mortgage credit market.”
The federal government first took control of Fannie Mae and Freddie Mac on Sunday, Sept. 7, 2008. In its last weekly accounting sheet released before that, on Thursday, Sept. 4, 2008, the Fed said that it owned $479.726 billion in U.S. Treasury securities. That sheet did not even include a line item for mortgage-backed securities.
The Fed’s combined ownership of $3,391,826,000,000 in Treasury securities and mortgage-backed securities is now more than 7 times as great as the $479.726 billion in Treasury securities it owned five years ago before the takeover of Fannie and Freddie.
Of the ten members of the Federal Open Market Committee who voted on whether the Fed should continue purchasing $40 billion in MBS each month and $45 billion in Treasury securities, only one voted no. That was Esther George, who is president of the Federal Reserve Bank of Kansas City.
The Fed’s press release announcing the vote said George voted against the continued buying of Treasury securities and MBS because she was “concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.”
- See more at: http://cnsnews.com/news/article/terence-p-jeffrey/339t-quantitative-explosion-fed-owns-more-treasuries-and-mbss#sthash.lMYAYAJU.toT70JK9.dpuf
Since the beginning of September 2008, in fact, the Fed's ownership of Treasury securities and MBSs has increased seven fold.
As of the close of business Thursday, the Fed said, it owned approximately $2,052,055,000,000 in U.S. Treasury securities and approximately $1,339,771,000,000 in mortgage-backed securities—for a combined total of about $3,391,826,000,000 in Treasury securities and MBSs.
The U.S. Treasury divides the U.S. government debt into two parts: debt held by the public, which includes publicly traded Treasury securities such as Treasury bills, notes and bonds, and intra-governmental debt, which is money the Treasury has borrowed out of the Social Security trust fund and other government trust funds and then used to pay current expenses.
As of the opening of business back on Nov. 23, 2001, according to the Daily Treasury Statement, the federal government’s total debt held by the public was $3,383,605,000,000. (By the close of business that day, the total debt held by the public would increase to 3,406,661,000,000.) The $3,383,605,000,000 in U.S. Treasury debt held by the public as the morning of Nov. 23, 2001, represented the total publicly held debt the federal government had accumulated until that date from the moment the Treasury first opened during the presidency of George Washington.
The $3,383,605,000,000 the Treasury owed to the public as of the morning of Nov. 23, 2001 was less than the $3,391,826,000,000 in Treasury and mortgage-backed securities owned by the Federal Reserve as of the close of business last Thursday.
Thus the Federal Reserve now owns more debt in the form of U.S. Treasury securities and MBSs than the sum total of the publicly held debt that the U.S. government accumulated from George Washington’s administration into November 2001, during President George W. Bush’s first term.
The mortgage-backed securities owned by the Fed are those that have been issued and guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae. Ginnie Mae is government-owned corporation operated by the U.S. Department of Housing and Urban Development. Fannie Mae and Freddie Mac are congressionally chartered, government-sponsored enterprises, that are now held in conservatorships by the federal government.
“Fannie Mae and Freddie Mac are chartered by Congress as government-sponsored enterprises (GSEs) to provide liquidity in the mortgage market and to promote homeownership for underserved groups and locations,” the Congressional Research Service explained in a report published this August. “They purchase mortgages, guarantee them, and package them in mortgage-backed securities (MBSs), which they either keep as investments or sell to institutional investors. In addition to the GSEs’ guarantees, investors widely believe that MBSs are implicitly guaranteed by the federal government. In 2008, the GSEs’ financial condition had weakened and there were concerns over their ability to meet their obligations on $1.2 trillion in bonds and $3.7 trillion in MBSs that they had guaranteed. In response to the financial risks, the federal government took control of these GSEs in a process known as conservatorship as a means to stabilize the mortgage credit market.”
The federal government first took control of Fannie Mae and Freddie Mac on Sunday, Sept. 7, 2008. In its last weekly accounting sheet released before that, on Thursday, Sept. 4, 2008, the Fed said that it owned $479.726 billion in U.S. Treasury securities. That sheet did not even include a line item for mortgage-backed securities.
The Fed’s combined ownership of $3,391,826,000,000 in Treasury securities and mortgage-backed securities is now more than 7 times as great as the $479.726 billion in Treasury securities it owned five years ago before the takeover of Fannie and Freddie.
Of the ten members of the Federal Open Market Committee who voted on whether the Fed should continue purchasing $40 billion in MBS each month and $45 billion in Treasury securities, only one voted no. That was Esther George, who is president of the Federal Reserve Bank of Kansas City.
The Fed’s press release announcing the vote said George voted against the continued buying of Treasury securities and MBS because she was “concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.”
- See more at: http://cnsnews.com/news/article/terence-p-jeffrey/339t-quantitative-explosion-fed-owns-more-treasuries-and-mbss#sthash.lMYAYAJU.toT70JK9.dpuf
Apple Touch ID fingerprint tech 'broken', hackers say
Hackers claim to have broken Apple's iPhone 5S Touch ID fingerprint recognition system just a day after the phone was launched.
Germany's Chaos Computer Club claims it "successfully bypassed the biometric security of Apple's Touch ID using easy everyday means".By photographing a fingerprint left on a glass surface and creating a fake finger they were able to unlock the phone, the hackers claim.
But Apple maintains Touch ID is secure.
On its website the iPhone maker says there is a one in 50,000 chance of two separate fingerprints being alike and the technology provides "a very high level of security".
Karsten Nohl, chief scientist at SRLabs, a German hacking think tank, told the BBC: "It would have been incredible if Apple had managed to do something the rest of the biometrics industry has failed to achieve after decades of trying, so I'm not surprised it was hacked after just one day.
"Claiming this system offers a high level of security is just ridiculous," he added.
Convenience Apple does not suggest that Touch ID is a total replacement for traditional passcode security, simply a more convenient way of unlocking the phone.
The Chaos Computer Club believes fingerprint biometrics "should be avoided"
"Touch ID is designed to minimise the input of your passcode;
but your passcode will be needed for additional security validation,"
Apple says. But it does not address the ability of hackers lifting individual prints and creating fake fingers, as the Chaos Computer Club claims to have done.
Mr Nohl says a five-digit password would be more secure than a fingerprint and believes Apple should have focused on convenience rather than security in its marketing of the Touch ID feature.
On Friday, an influential US senator called for Apple to answer "substantial privacy questions" arising from the technology.
Apple did not respond to the BBC's request for a comment.
http://www.bbc.co.uk/news/technology-24203929
Sunday, September 22, 2013
Gold And Monetary Inflation Prospects
On Wednesday last the Fed surprised most people by deciding not to taper. What
is not generally appreciated is that once a central bank starts to use
monetary expansion as a cure-all it is extremely difficult for it to
stop. This is the basic reason the Fed has not pursued the idea, and why
it most probably never will.
That is a strong statement. But consider this: Paul Volcker faced this same dilemma in 1979, when he was appointed Chairman of the Fed. In raising interest rates to choke off inflation he had two things going for him that his successor has not: rising inflation was already over 10% so was an obvious priority, and importantly private sector debt-to-GDP was at a far lower level than today. It was a tough decision at the time to nearly double interest rates. Today, with official inflation low and private sector indebtedness high it would be extremely difficult.
Until official inflation picks up, it is far more comforting to pretend it won’t be an issue, which reasonably describes the Fed’s approach. Instead it is targeting unemployment rates, on the basis that price inflation is tied to capacity utilisation, which in turn is tied to employment.
One thing is certain in life, besides death and taxes, and that is if you expand the quantity of money prices eventually rise; or more accurately the purchasing power of debased money falls. The problem is how to measure currency debasement, and this has been a topic of heated debate since fiat currencies first developed. This has led me to propose a new measure of money, which at James Turk’s suggestion I am calling the Fiat Money Quantity (FMQ). The purpose is to gives us a measure of fiat money that enables us to assess the danger of currency hyperinflation. I shall be publishing a paper on this shortly explaining the methodology.
The principle behind it is to signal deviations from the long-term trend of currency growth to alert us to both monetary crises and excessive inflation. The approach is to unwind the historic progression from full gold convertibility to the current state of no convertibility. Our gold was first deposited with our banks, and then from there with the central bank. In return for our gold deposits we have been issued cash notes and coin and credits in the form of deposits at the bank, and our bank equally has deposits at the central bank.
The FMQ is therefore comprised of the sum of cash and coin, plus all accessible deposits, plus our bank’s deposits held at the central bank. This for the US dollar is illustrated in the chart below.
The dotted line is the long-term exponential trend rate, and it is immediately obvious that the FMQ is now hyper-inflating. It currently requires a $3.6 trillion contraction of deposits to return this measure of currency quantity back to trend.
This accurately sums up the problem facing the Fed. We must understand they are in an almost impossible position that dates back to their monetary response to the banking crisis. Not even Paul Volcker could have got us out of this one. Once the addiction to weak money hits this pace there is no solution without threatening to bring down the whole system.
http://www.zerohedge.com/news/2013-09-22/guest-post-gold-and-monetary-inflation-prospects
That is a strong statement. But consider this: Paul Volcker faced this same dilemma in 1979, when he was appointed Chairman of the Fed. In raising interest rates to choke off inflation he had two things going for him that his successor has not: rising inflation was already over 10% so was an obvious priority, and importantly private sector debt-to-GDP was at a far lower level than today. It was a tough decision at the time to nearly double interest rates. Today, with official inflation low and private sector indebtedness high it would be extremely difficult.
Until official inflation picks up, it is far more comforting to pretend it won’t be an issue, which reasonably describes the Fed’s approach. Instead it is targeting unemployment rates, on the basis that price inflation is tied to capacity utilisation, which in turn is tied to employment.
One thing is certain in life, besides death and taxes, and that is if you expand the quantity of money prices eventually rise; or more accurately the purchasing power of debased money falls. The problem is how to measure currency debasement, and this has been a topic of heated debate since fiat currencies first developed. This has led me to propose a new measure of money, which at James Turk’s suggestion I am calling the Fiat Money Quantity (FMQ). The purpose is to gives us a measure of fiat money that enables us to assess the danger of currency hyperinflation. I shall be publishing a paper on this shortly explaining the methodology.
The principle behind it is to signal deviations from the long-term trend of currency growth to alert us to both monetary crises and excessive inflation. The approach is to unwind the historic progression from full gold convertibility to the current state of no convertibility. Our gold was first deposited with our banks, and then from there with the central bank. In return for our gold deposits we have been issued cash notes and coin and credits in the form of deposits at the bank, and our bank equally has deposits at the central bank.
The FMQ is therefore comprised of the sum of cash and coin, plus all accessible deposits, plus our bank’s deposits held at the central bank. This for the US dollar is illustrated in the chart below.
The dotted line is the long-term exponential trend rate, and it is immediately obvious that the FMQ is now hyper-inflating. It currently requires a $3.6 trillion contraction of deposits to return this measure of currency quantity back to trend.
This accurately sums up the problem facing the Fed. We must understand they are in an almost impossible position that dates back to their monetary response to the banking crisis. Not even Paul Volcker could have got us out of this one. Once the addiction to weak money hits this pace there is no solution without threatening to bring down the whole system.
http://www.zerohedge.com/news/2013-09-22/guest-post-gold-and-monetary-inflation-prospects
Saturday, September 21, 2013
Alpari leaves US market
Letter from Alpari
Dear Trader,
I am writing to inform you of upcoming changes to Alpari (US) LLC's ("Alpari") business model that will impact your relationship with us. Following a strategic review, Alpari has decided to exit the US retail foreign exchange market as a Retail Foreign Exchange Dealer ("RFED") and focus on developing its successful institutional division, QuantumFX.
As of the close of business on Friday, September 27, 2013, Alpari will no longer be the counter-party to your trades. To facilitate the transition, Alpari has made arrangements to transfer your MetaTrader 4 trading account to Forex Capital Markets, LLC ("FXCM"). FXCM is a leader in online forex trading headquartered in the heart of New York City's Financial District at 55 Water Street, and is dually registered with the Commodity Futures Trading Commission ("CFTC") as a Futures Commission Merchant ("FCM") and an RFED with the National Futures Association ("NFA"), member ID 0308179.
Moving your account from Alpari to FXCM is simple, all you need is to complete this short form. There will be several changes to your account including your account number and login details, as your account will be transferred to a different counterparty but you can continue to trade through your MetaTrader 4 platform after the transfer is complete. For more information about the transfer, please visit our FAQ page.
Please note that after the close of business on September 27, 2013, Alpari will no longer be the counterparty to your trades. As such, all open positions will be liquidated and all floating profits/losses will be realized. The subsequent cash balance of your account will then be transferred to your new counterparty, FXCM.
Please be aware, FXCM intends to re-establish all open positions liquidated by Alpari. The re-establishment of positions is limited to positions liquidated by Alpari and does not include positions manually liquidated by clients between the time of this notification and the close of business at 5:00PM ET on Friday, September 27, 2013. Please manage any open positions with these considerations in mind. For more information about the transfer, please visit our FAQ page
Note: You are not required to accept the proposed transfer and may direct Alpari to liquidate your positions or transfer your account, including open positions, to a firm of your selection. If you wish to discuss alternative options regarding this transfer, please contact Alpari's customer service no later than 4:00PM ET Friday, September 27, 2013; otherwise, your account will be transferred to FXCM at the close of trading day.
Once again, for more information about the transfer, please visit our FAQ page. If you have any additional questions, please direct them to Alpari's customer service by email at cs@alpari-us.com, by phone at 1 (646) 825-5760, or via live chat. You may also contact FXCM's customer support by phone at 1 (212) 897-7660 or by email at clients@fxcm.com.
We sincerely appreciate your business with us and I would like to personally thank you for your continued support over the years. We wish you the best of luck in all of your future trading endeavors.
Sincerely,
Jermaine C. Harmon
CEO, Alpari (US), LLC
FXCM announced that it will be assuming the retail client accounts of Alpari US, in a notification issued today. The listed firm was chosen by Alpari US, as it exits the retail FX arena in the United States.
Alpari US has revealed that the 27th of September, the last Friday of the month, as its departure date. FXCM will take over client accounts from the specified date.
Alpari US issued a statement earlier today, providing further details of the reason the company was pulling out of the US market. The statement came after the news release issued by Forex Magnates about the move. In addition, the firm sent out an email to all of its clients, providing details about the withdrawal, and also contained specific questions and answers that could be raised by clients.
One of the most important questions for current clients was answered in the email.
“What will happen to my open positions? Alpari will not transfer open positions to FXCM. All open positions will be liquidated, and all pending orders will be cancelled at close of business at 5:00PM ET on Friday, September 27, 2013. Alpari recommends that you manage all your positions prior to this date. However, FXCM intends to re-establish the positions liquidated by Alpari. Please note, that the re-establishment of positions is limited to positions liquidated by Alpari, and does not include positions manually liquidated by clients, between the time of this notification and the close of business at 5:00PM ET on Friday, September 27, 2013. Additionally, FXCM will only be able to re-establish positions offered by both Alpari and FXCM.”
The US FX brokerage space has been systematically declining over the last three years since the implemetation of the new rules, which have affected leverage, capital adequacy and order types. Once a flourishing industry, the US FX brokerage sector was home to the world’s largest providers. The regulatory changes have had a negative impact, with a flurry of brokers packing their bags. Alpari US follows in the shadows of FX Solutions, Easy Forex, Forex Club and GFT.
The new rulings are thought to be positive for the market. However, when assessing their impact on traders, the results are quite the opposite. The reduction in the number of brokers from whom traders can choose, means that there will be little or no competition, in addition, brokers will not have the need nor desire to innovate and introduce new trading solutions. Only regulated firms in the USA are allowed to solicit US clients. Therefore, US clients will lose out.
Capital adequacy requirements for FX brokers in the US are extraordinarily high, when compared to other major regulators. In the UK, firms need to hold a minimum of seven hundred and thirty thousand Euros. In Singapore firms are obliged to hold one million Singapore dollars.
The $20 million bounty set by the US regulator, has been one of the major factors that has been drowning the FX markets in USA.
Turkey’s financial regulator, SPK, issued a circular specifying that it intends to increase capital requirements for brokers. Unlike other regulators, the SPK is following the direction of the NFA.
Financial terms of the transaction between FXCM and Alpari US have not been disclosed.
http://forexmagnates.com/fxcm-adopts-retail-fx-accounts-from-alpari-us/
Wednesday, September 18, 2013
NFA fines New York forex firm FXDirectDealer LLC $1.1 million and orders the firm to pay $1.8 million in restitution to customers
For Immediate Release
September 18, 2013
For more information contact:
Larry Dyekman (312) 781-1372, ldyekman@nfa.futures.org
Karen Wuertz (312) 781-1335, kwuertz@nfa.futures.org
NFA fines New York forex firm FXDirectDealer LLC $1.1 million and orders the firm to pay $1.8 million in restitution to customers
September 18, Chicago - National Futures Association (NFA) has issued a $1.1 million fine and a $1.8 million restitution order against FXDirectDealer LLC (FXDD), a registered futures commission merchant Forex Dealer Member of NFA located in New York City. The Decision, issued by NFA's Hearing Committee (Committee), is based on Complaints filed on June 29 and October 23, 2012 and a settlement offer submitted by FXDD.
The June 29 Complaint charged FXDD with using asymmetrical price slippage settings that favored FXDD over its customers; failing to supervise the trade integrity of the firm's electronic trading systems; failing to maintain complete and accurate records; and failing to review the use of promotional material. The June Complaint also charged FXDD with making improper price adjustments in customers' accounts; converting customer funds; willfully submitting misleading information to NFA and others; and failing to treat all customers equally when giving price adjustments.
In addition, the June Complaint charged FXDD with failing to implement an adequate anti-money laundering (AML) program; failing to develop and implement adequate screening procedures to determine whether persons and entities with whom FXDD intended to do forex business were required to be registered with the Commodity Futures Trading Commission (CFTC) and Members or Associates of NFA.
The October 23 Complaint charged FXDD with failing to implement an adequate AML program and failing to adequately supervise the firm's AML program.
As part of the settlement offer, FXDD agreed to pay restitution in the amount of $1,828,261 to FXDD customers who experienced unfavorable price slippage on "limit-fill-or-kill" trades placed in their accounts from December 10, 2009 until June 29, 2011.
In addition, FXDD will pay a fine of $1.1 million, of which $914,131 is attributable to FXDD's unfavorable price slippage practices. In a related action taken by the Commodity Futures Trading Commission, FXDD will pay an additional penalty of $914,131 to the CFTC.
FXDD neither admitted nor denied the allegations.
The complete text of the June 29 Complaint, October 23 Complaint and Decision can be viewed on NFA's website (www.nfa.futures.org).
http://www.nfa.futures.org/news/newsRel.asp?ArticleID=4299
September 18, 2013
For more information contact:
Larry Dyekman (312) 781-1372, ldyekman@nfa.futures.org
Karen Wuertz (312) 781-1335, kwuertz@nfa.futures.org
NFA fines New York forex firm FXDirectDealer LLC $1.1 million and orders the firm to pay $1.8 million in restitution to customers
September 18, Chicago - National Futures Association (NFA) has issued a $1.1 million fine and a $1.8 million restitution order against FXDirectDealer LLC (FXDD), a registered futures commission merchant Forex Dealer Member of NFA located in New York City. The Decision, issued by NFA's Hearing Committee (Committee), is based on Complaints filed on June 29 and October 23, 2012 and a settlement offer submitted by FXDD.
The June 29 Complaint charged FXDD with using asymmetrical price slippage settings that favored FXDD over its customers; failing to supervise the trade integrity of the firm's electronic trading systems; failing to maintain complete and accurate records; and failing to review the use of promotional material. The June Complaint also charged FXDD with making improper price adjustments in customers' accounts; converting customer funds; willfully submitting misleading information to NFA and others; and failing to treat all customers equally when giving price adjustments.
In addition, the June Complaint charged FXDD with failing to implement an adequate anti-money laundering (AML) program; failing to develop and implement adequate screening procedures to determine whether persons and entities with whom FXDD intended to do forex business were required to be registered with the Commodity Futures Trading Commission (CFTC) and Members or Associates of NFA.
The October 23 Complaint charged FXDD with failing to implement an adequate AML program and failing to adequately supervise the firm's AML program.
As part of the settlement offer, FXDD agreed to pay restitution in the amount of $1,828,261 to FXDD customers who experienced unfavorable price slippage on "limit-fill-or-kill" trades placed in their accounts from December 10, 2009 until June 29, 2011.
In addition, FXDD will pay a fine of $1.1 million, of which $914,131 is attributable to FXDD's unfavorable price slippage practices. In a related action taken by the Commodity Futures Trading Commission, FXDD will pay an additional penalty of $914,131 to the CFTC.
FXDD neither admitted nor denied the allegations.
The complete text of the June 29 Complaint, October 23 Complaint and Decision can be viewed on NFA's website (www.nfa.futures.org).
http://www.nfa.futures.org/news/newsRel.asp?ArticleID=4299
The Machines Win: Within Milliseconds, The Move Was Over
We hope everyone is enjpying the spoils of war from reading the FOMC
statement and buying appropriately. Of course, as Nanex shows, unless your trigger finger hit that big green button within a millisecond or so, you missed the entire move...
Via Nanex,
Market reaction to the FOMC news was instant. Within a thousandth of a second, the move was already over. What any human saw was like reading yesterdays newspaper.
1. SPY Showing Trades color coded by exchange. This is 150 milliseconds of time.
2. December 2013 eMini (ES) Futures trades.
3. SPY Showing Trades color coded by exchange. Zooming out to 1 second of time.
4. December 2013 eMini (ES) Futures trades. Zooming out to 1 second of time.
5. SPY Showing bids and asks color coded by exchange.
Via Nanex,
Market reaction to the FOMC news was instant. Within a thousandth of a second, the move was already over. What any human saw was like reading yesterdays newspaper.
1. SPY Showing Trades color coded by exchange. This is 150 milliseconds of time.
2. December 2013 eMini (ES) Futures trades.
3. SPY Showing Trades color coded by exchange. Zooming out to 1 second of time.
4. December 2013 eMini (ES) Futures trades. Zooming out to 1 second of time.
5. SPY Showing bids and asks color coded by exchange.
No taper
WASHINGTON (MarketWatch) - The Federal Reserve on Wednesday held its
asset-purchase program steady, putting off any decision for tapering
until later in the year. By a 9-1 vote, the Fed plans to continue to buy
$85 billion a month in Treasurys and mortgage-backed bonds. The central
bank pointed to an elevated unemployment rate and said government
spending cuts and rising mortgage rates are "restraining economic
growth." The Fed said it will wait for "more evidence that progress will
be sustained" before it starts to cut its asset purchases. The move
surprised economists, who had expected a "tiny taper" in a range of $10
billion to $20 billion. And Wall Street could be unnerved by renewed Fed
concerns about the health of the U.S. economy. The Fed, in its
statement, sought to reassure investors by noting gradual improvement in
the economy over the past year. The bank said it still believes growth
will accelerate in the near future.
The Complete FOMC Announcement Preview
As we have not tired of showing over the past five years, and while
correlation is not causation, the near uniformity between the increase
in the Fed's balance sheet and the performance of risk assets shown in
the chart below (via Diapason), leaves zero doubt who, in the absence of
any self-sustained economic recovery, has been responsible for the
stock market's "outperformance" since the onset of the Great Financial
Crisis.
What we have also not shown constantly for years, is that as a result of the wealth transfer with each incremental program of central bank intervention in the capital markets, the rich got richer, the poor got poorer, the US middle class is ever closer to extinction, and as the WSJ added moments ago, "As QE winds down, it leaves a divided society."
With that said, today's FOMC announcement at 2:00 PM Eastern will certainly have a substantial impact on risk, and on the economy. One thing is known: when QE1 and QE2 were unwound, the hit to the S&P (and bond inversely, bond yields) was swift and sharp. Furthermore, the unwinds back then were said to take place at a time when the economy (also) was on the verge of a "self-sustaining" recovery. The fact that not only open-ended QE emerged but the unprecedented liquidity injection in Japan too, which inject more stimulus into the risk markets than the program launched at the depths of the market crisis, shows that it was all a lie. This time will not be different.
With all that out of the way, and with less than three hours to go, here is a succinct summary courtesy of RanSquawk, of all the outstanding issues, and potential options for Bernanke, as the 2:00 PM hour approaches.
Summary:
Most analysts are expecting the FOMC to begin to slow down their asset purchases from the current USD 85bln, made up of USD 45bln in Treasuries and USD 40bln in MBS. A New York think tank report last week showed the Fed could unveil USD 15bln taper of their QE3 program in USD 10bln in Treasury's and USD 5bln in MBS purchases. If the Fed do begin to taper asset purchases at this meeting, it is likely Fed Chairman Bernanke will try to calm markets following the announcement by saying that slowing down asset purchases is not a tightening of policy and also reiterating that policy will remain highly accommodative in the foreseeable future. Some have suggested, including Goldman Sachs, that the FOMC could adjust their forward guidance in an attempt to calm markets by lowering their threshold for a rate hike from the current 6.5%.
Many members on the FOMC have said that any tapering of asset purchases is data dependant and recent economic data has not been too favourable with the most recent Non-Farm Payrolls report showing 169K jobs created vs. Exp. 180K, below the monthly gain of 200K many members on the FOMC have said they would like to see consistently before a slow down of asset purchases. Another risk to the tapering argument comes from the looming fiscal situation in the US, with the current fiscal year ending on September 30th and still no sign of an agreement in Congress regarding sequestration, which is likely to have an impact on economic growth if an agreement is not reached. Other issues potentially having an impact could be the geopolitical situation in Syria and the volatility seen in emerging markets as Fed tapering started to be priced in. Furthermore, the FOMC are expected to lower their 2013 growth forecast when they release their economic projections, which some argue would be a reason not to taper at this meeting.
Another issue that may come into focus, particularly during Bernanke’s press conference, could be that of his successor. Bernanke’s term as chairman is due to come to an end in January with Obama set to nominate his successor during the Fall. Former Treasury Secretary Larry Summers has this week ruled himself out of the running for the job which supported Treasury's as the renowned dove, Janet Yellen, is now firm favourite for the role.
Market Reactions: obviously these refer to a world in which logic and a normal market applied. In the "new normal", neither is quite relevant.
If the FOMC do decide to taper asset purchases it is likely a knee-jerk reaction lower in Treasuries, equity markets and gold will be seen, with the USD strengthening, as liquidity is withdrawn from the market. With equities in the US trading around record highs, there is scope for downside, however Treasuries trade at their lowest levels since July 2011 with the 10y yield in the US recently trading above 3.0% for the first time in over two years. However if the Fed do begin to taper, the reaction in Treasuries could depend on how the central bank slow their buying. If the Fed just slow purchases in Treasuries, the long-end of the curve is likely to come under pressure as the majority of Fed purchases are in longer-dated Treasuries.
If the Fed lowers their forward guidance threshold, alongside tapering, Eurodollars would likely be subject to upside. Markets are currently pricing in a first rate hike by the Fed in Q4 2014 so red and green contracts could see the most volatility with any lowering of the forward guidance threshold. However, some do not expect the Fed to change their forward guidance as Bernanke can reiterate that a fall in the unemployment rate to 6.5% is not a trigger for a rate hike but rather a guide.
If the Fed unexpectedly abstains from tapering then it is likely the USD will come under very heavy selling pressure and upside will be observed in Treasuries, equity markets and gold, as it is largely priced in that the FOMC will taper at this meeting. However, as mentioned previously, equity markets are currently trading near record highs which could mean any scope for upside may be limited, although there would be room for a decline in yields which would help support stocks. If the Fed does not taper at this meeting then many expect them to refrain from doing so at the October meeting as there is no scheduled press conference after the announcement from Fed Chairman Bernanke. This would then mean the next opportunity to slow down asset purchases would be the policy meeting on December 18th.
Economic Projections from the June meeting
The following FOMC forecasts will be updated at 1900BST/1300CDT alongside the monetary policy statement. As a side note, the forecast horizon is expected to be increased to 2016 although these figures are likely to be similar to 2015.
Sees end 2013 unemployment rate at 7.2% - 7.3%
Sees end 2014 unemployment rate at 6.5% - 6.8%
Sees end 2015 unemployment rate at 5.8% - 6.2%
Sees 2013 GDP growth rate at 2.3% - 2.6%
Sees 2014 GDP growth rate at 3.0% - 3.5%
Sees 2015 GDP growth rate at 2.9% - 3.6%
Sees 2013 PCE inflation of 0.8% - 1.2%
Sees 2014 PCE inflation of 1.4% - 2.0%
Sees 2015 PCE inflation of 1.6% - 2.0%
What others are expecting...
What we have also not shown constantly for years, is that as a result of the wealth transfer with each incremental program of central bank intervention in the capital markets, the rich got richer, the poor got poorer, the US middle class is ever closer to extinction, and as the WSJ added moments ago, "As QE winds down, it leaves a divided society."
With that said, today's FOMC announcement at 2:00 PM Eastern will certainly have a substantial impact on risk, and on the economy. One thing is known: when QE1 and QE2 were unwound, the hit to the S&P (and bond inversely, bond yields) was swift and sharp. Furthermore, the unwinds back then were said to take place at a time when the economy (also) was on the verge of a "self-sustaining" recovery. The fact that not only open-ended QE emerged but the unprecedented liquidity injection in Japan too, which inject more stimulus into the risk markets than the program launched at the depths of the market crisis, shows that it was all a lie. This time will not be different.
With all that out of the way, and with less than three hours to go, here is a succinct summary courtesy of RanSquawk, of all the outstanding issues, and potential options for Bernanke, as the 2:00 PM hour approaches.
Summary:
- Expectations for Fed to begin to taper asset purchases by USD 10-15bln
- Ranges for pace of Treasury purchases: high USD 45bln, low USD 25bln
- Ranges for pace of MBS purchases: high USD 45bln, low USD 30bln
- Some see FOMC lowering unemployment threshold from current 6.5%
- Summary of Economic Projections and Press Conference from Fed Chairman Bernanke follow the announcement
Most analysts are expecting the FOMC to begin to slow down their asset purchases from the current USD 85bln, made up of USD 45bln in Treasuries and USD 40bln in MBS. A New York think tank report last week showed the Fed could unveil USD 15bln taper of their QE3 program in USD 10bln in Treasury's and USD 5bln in MBS purchases. If the Fed do begin to taper asset purchases at this meeting, it is likely Fed Chairman Bernanke will try to calm markets following the announcement by saying that slowing down asset purchases is not a tightening of policy and also reiterating that policy will remain highly accommodative in the foreseeable future. Some have suggested, including Goldman Sachs, that the FOMC could adjust their forward guidance in an attempt to calm markets by lowering their threshold for a rate hike from the current 6.5%.
Many members on the FOMC have said that any tapering of asset purchases is data dependant and recent economic data has not been too favourable with the most recent Non-Farm Payrolls report showing 169K jobs created vs. Exp. 180K, below the monthly gain of 200K many members on the FOMC have said they would like to see consistently before a slow down of asset purchases. Another risk to the tapering argument comes from the looming fiscal situation in the US, with the current fiscal year ending on September 30th and still no sign of an agreement in Congress regarding sequestration, which is likely to have an impact on economic growth if an agreement is not reached. Other issues potentially having an impact could be the geopolitical situation in Syria and the volatility seen in emerging markets as Fed tapering started to be priced in. Furthermore, the FOMC are expected to lower their 2013 growth forecast when they release their economic projections, which some argue would be a reason not to taper at this meeting.
Another issue that may come into focus, particularly during Bernanke’s press conference, could be that of his successor. Bernanke’s term as chairman is due to come to an end in January with Obama set to nominate his successor during the Fall. Former Treasury Secretary Larry Summers has this week ruled himself out of the running for the job which supported Treasury's as the renowned dove, Janet Yellen, is now firm favourite for the role.
Market Reactions: obviously these refer to a world in which logic and a normal market applied. In the "new normal", neither is quite relevant.
If the FOMC do decide to taper asset purchases it is likely a knee-jerk reaction lower in Treasuries, equity markets and gold will be seen, with the USD strengthening, as liquidity is withdrawn from the market. With equities in the US trading around record highs, there is scope for downside, however Treasuries trade at their lowest levels since July 2011 with the 10y yield in the US recently trading above 3.0% for the first time in over two years. However if the Fed do begin to taper, the reaction in Treasuries could depend on how the central bank slow their buying. If the Fed just slow purchases in Treasuries, the long-end of the curve is likely to come under pressure as the majority of Fed purchases are in longer-dated Treasuries.
If the Fed lowers their forward guidance threshold, alongside tapering, Eurodollars would likely be subject to upside. Markets are currently pricing in a first rate hike by the Fed in Q4 2014 so red and green contracts could see the most volatility with any lowering of the forward guidance threshold. However, some do not expect the Fed to change their forward guidance as Bernanke can reiterate that a fall in the unemployment rate to 6.5% is not a trigger for a rate hike but rather a guide.
If the Fed unexpectedly abstains from tapering then it is likely the USD will come under very heavy selling pressure and upside will be observed in Treasuries, equity markets and gold, as it is largely priced in that the FOMC will taper at this meeting. However, as mentioned previously, equity markets are currently trading near record highs which could mean any scope for upside may be limited, although there would be room for a decline in yields which would help support stocks. If the Fed does not taper at this meeting then many expect them to refrain from doing so at the October meeting as there is no scheduled press conference after the announcement from Fed Chairman Bernanke. This would then mean the next opportunity to slow down asset purchases would be the policy meeting on December 18th.
Economic Projections from the June meeting
The following FOMC forecasts will be updated at 1900BST/1300CDT alongside the monetary policy statement. As a side note, the forecast horizon is expected to be increased to 2016 although these figures are likely to be similar to 2015.
Sees end 2013 unemployment rate at 7.2% - 7.3%
Sees end 2014 unemployment rate at 6.5% - 6.8%
Sees end 2015 unemployment rate at 5.8% - 6.2%
Sees 2013 GDP growth rate at 2.3% - 2.6%
Sees 2014 GDP growth rate at 3.0% - 3.5%
Sees 2015 GDP growth rate at 2.9% - 3.6%
Sees 2013 PCE inflation of 0.8% - 1.2%
Sees 2014 PCE inflation of 1.4% - 2.0%
Sees 2015 PCE inflation of 1.6% - 2.0%
What others are expecting...
- Bank of America – Sees taper in December although risk is a “token-taper” of USD 10-15bln
- Goldman Sachs – Sees USD 10bln taper, all in Treasuries, and strengthening of forward guidance
- Citi – Sees USD 10-15bln taper and forward guidance to be shifted out
- JPMorgan – Sees USD 15bln taper of USD 10bln in Treasuries and USD 5bln in MBS
- Barclays - Sees small first taper and any lowering of 6.5% unemployment threshold as very unlikely
- Deutsche Bank - Sees USD 5bln taper in MBS and USD 10bln in Treasuries, does not expect adjustment to forward guidance
- Fed watcher Hilsenrath said Fed officials exploring how to justify low rates far into future and forecasts could show economy at "full employment" by 2016.
IBM to spend $1 Billion on Linux
IBM on Tuesday will announce that
it has committed $1 billion to convince its customers to use Linux, a
freely available open source operating system that competes with
Windows, reports The Wall Street Journal's Don Clark.
This is the second time that IBM coughed up $1 billion to promote
Linux. The first was way back in 2000, when Linux was a fledgling
operating system just finding its way into enterprise data centers and
beginning to threaten Microsoft.Microsoft spent years trying to scare customers away from Linux, at one point even saying that Linux violates 235 patents and hinting that enterprises using it could be sued.
But the scare tactics didn't work
and Linux adoption grew, in large part due to IBM's vote of confidence.
There's hardly an enterprise data center on the planet today that isn't
using Linux and it has become the operating system of choice for the world's biggest, fastest computers, as well as for huge Internet companies like Google and Facebook.
But Linux has not killed Windows Server. Not even close.Servers running Linux now command 23% of new server purchases by enterprises, where servers running Microsoft Windows command 49%, according to IDC's latest quarterly server report.
We'll see what happens now that IBM will pour another $1 billion in. IBM will use the money to create a “development cloud,” built with its own Power servers that run on Linux. Customers will be able to use it for free to test Linux applications remotely, reports Clark.
The money will also be spent on IBM's executive briefing centers where enterprises can do workshops and get demonstrations on Linux Power servers.
http://finance.yahoo.com/news/ibm-vows-spend-1-billion-003834438.html
http://www.pcworld.com/article/2048893/ibm-hopes-to-power-cloud-analytics-with-1-billion-linux-investment.html
Tuesday, September 17, 2013
Trader sues U.S. swap regulator to stop "unfounded" case
(Reuters) - A Chicago speed-trading firm sued
the U.S. swaps regulator on Tuesday, saying it acted to prevent the
agency from bringing an "unfounded" case against it for manipulating futures contracts.
DRW Investments and its founder Donald R. Wilson, for whom the firm is named, filed the lawsuit against the Commodity Futures Trading Commission in the U.S. District Court for the Northern District of Illinois.
"Any claim the CFTC may bring against DRW on this matter would be completely unfounded," the company said in a press release.
DRW has been the subject of a CFTC inquiry for nearly two years and found out about the probe when the CFTC requested documents in August 2011, Craig Silberberg, a DRW employee, said in a declaration filed in support of the case.
In April 2013, the CFTC's Division of Enforcement informed DRW that it intended to recommend that the Commission file an enforcement action, he added.
"DRW therefore understands that the filing of an enforcement action by the CFTC is imminent, unless the Enforcement Division's recommendation is rejected by the Commission," said Silberberg, who oversees some of DRW's trading operations.
http://www.reuters.com/article/2013/09/17/derivatives-drwinvestments-idUSL2N0HD1WS20130917?feedType=RSS&feedName=financialsSector
DRW Investments and its founder Donald R. Wilson, for whom the firm is named, filed the lawsuit against the Commodity Futures Trading Commission in the U.S. District Court for the Northern District of Illinois.
"Any claim the CFTC may bring against DRW on this matter would be completely unfounded," the company said in a press release.
DRW has been the subject of a CFTC inquiry for nearly two years and found out about the probe when the CFTC requested documents in August 2011, Craig Silberberg, a DRW employee, said in a declaration filed in support of the case.
In April 2013, the CFTC's Division of Enforcement informed DRW that it intended to recommend that the Commission file an enforcement action, he added.
"DRW therefore understands that the filing of an enforcement action by the CFTC is imminent, unless the Enforcement Division's recommendation is rejected by the Commission," said Silberberg, who oversees some of DRW's trading operations.
http://www.reuters.com/article/2013/09/17/derivatives-drwinvestments-idUSL2N0HD1WS20130917?feedType=RSS&feedName=financialsSector
Brazil Bails On US State Visit Over Illegal Spying; Demands "Full Public Apology"
While the White House is trying to play this
down currently in the press conference, Brazil's President Rousseff has
issued a statement postponing her trip to the US due to the illegal
espionage of the Americans:
Via AP,
And The White House's response,
- *BRAZIL SAYS U.S. HASN'T PROVIDED ADEQUATE EXPLANATION ON SPYING
- *BRAZIL'S SAYS IT NEEDS U.S. EXPLANATION BEFORE STATE VISIT
- *BRAZIL SAYS U.S. ILLEGAL MONITORING OF GOVT, COS. IS 'SERIOUS'
- *BRAZIL PRESIDENT ROUSSEFF POSTPONES STATE VISIT TO THE U.S.
Via AP,
Brazil's president has postponed a state visit to Washington in response to U.S. spying.
President Dilma Rousseff says Tuesday she's not making the trip next month, which was to include a state dinner.
Rousseff has been angered reports based on leaked National Security Agency documents. They've shown that her communications with top aides were intercepted.
The NSA espionage program also targeted state-run oil company Petrobras.
Brazil reportedly has been the top Latin American target for spying, with data on billions of emails and telephone calls swooped up in NSA programs.
President Barack Obama called Rousseff late Monday and tried to talk her into maintaining her trip, the Brazilian president's office said.
But Rousseff was demanding a full public apology from Obama for the spying, which she didn't get.
And The White House's response,
Statement by the Press Secretary on Postponement of the State Visit of President Dilma Rousseff of Brazil
Yesterday, the President spoke by telephone with President Dilma Rousseff of Brazil to follow-up on their meeting in St. Petersburg and Ambassador Rice’s meeting with the Foreign Minister of Brazil last week.
The United States and Brazil enjoy a strategic partnership rooted in shared democratic values and in the desire to advance broad-based economic growth and job creation. President Obama’s invitation to President Rousseff for the first State Visit of his second term is a reflection of the importance he places on this growing global partnership and the close bonds between the American and Brazilian people.
The President has said that he understands and regrets the concerns disclosures of alleged U.S. intelligence activities have generated in Brazil and made clear that he is committed to working together with President Rousseff and her government in diplomatic channels to move beyond this issue as a source of tension in our bilateral relationship. As the President previously stated, he has directed a broad review of U.S. intelligence posture, but the process will take several months to complete. President Obama and President Rousseff both look forward to the State Visit, which will celebrate our broad relationship and should not be overshadowed by a single bilateral issue, no matter how important or challenging the issue may be. For this reason, the presidents have agreed to postpone President Rousseff’s State Visit to Washington scheduled for October 23.
President Obama looks forward to welcoming President Rousseff to Washington at a date to be mutually agreed. Other important cooperation mechanisms, including the presidential dialogues on political, economic, energy, and defense cooperation, will continue.
Brazil looks to break from US-centric Internet
RIO DE JANEIRO
(AP) -- Brazil plans to divorce itself from the U.S.-centric Internet
over Washington's widespread online spying, a move that many experts
fear will be a potentially dangerous first step toward fracturing a
global network built with minimal interference by governments.
President
Dilma Rousseff ordered a series of measures aimed at greater Brazilian
online independence and security following revelations that the U.S.
National Security Agency intercepted her communications, hacked into the
state-owned Petrobras oil company's network and spied on Brazilians who
entrusted their personal data to U.S. tech companies such as Facebook
and Google.
The leader is so angered by the
espionage that she's considering cancelling a trip to Washington next
month where she's scheduled to be honored with a state dinner.
Internet
security and policy experts say the Brazilian government's reaction to
information leaked by former NSA contractor Edward Snowden is
understandable, but warn it could set the Internet on a course of
Balkanization.
"The global backlash is only
beginning and will get far more severe in coming months," said Sascha
Meinrath, director of the Open Technology Institute at the
Washington-based New America Foundation think tank. "This notion of
national privacy sovereignty is going to be an increasingly salient
issue around the globe."
While Brazil isn't
proposing to bar its citizens from U.S.-based Web services, it wants
their data to be stored locally as the nation assumes greater control
over Brazilians' Internet use to protect them from NSA snooping.
The
danger of mandating that kind of geographic isolation, Meinrath said,
is that it could render inoperable popular software applications and
services and endanger the Internet's open, interconnected structure.
The
effort by Latin America's biggest economy to digitally isolate itself
from U.S. spying not only could be costly and difficult, it could
encourage repressive governments to seek greater technical control over
the Internet to crush free expression at home, experts say.
In
December, countries advocating greater "cyber-sovereignty" pushed for
such control at an International Telecommunications Union meeting in
Dubai, with Western democracies led by the United States and the
European Union in opposition.
U.S. digital
security expert Bruce Schneier says that while Brazil's response is a
rational reaction to NSA spying, it is likely to embolden "some of the
worst countries out there to seek more control over their citizens'
Internet. That's Russia, China, Iran and Syria."
Rousseff
says she intends to push for international rules on privacy and
security in hardware and software during the U.N. General Assembly
meeting later this month. Among Snowden revelations: the NSA has created
backdoors in software and Web-based services.
Brazil
is now pushing more aggressively than any other nation to end U.S.
commercial hegemony on the Internet. More than 80 percent of online
search, for example, is controlled by U.S.-based companies.
Most
of Brazil's global Internet traffic passes through the United States,
so Rousseff's government plans to lay underwater fiber optic cable
directly to Europe and also link to all South American nations to create
what it hopes will be a network free of U.S. eavesdropping.
More
communications integrity protection is expected when Telebras, the
state-run telecom company, works with partners to oversee the launch in
2016 of Brazil's first communications satellite, for military and public
Internet traffic. Brazil's military currently relies on a satellite run
by Embratel, which Mexican billionaire Carlos Slim controls.
Rousseff
is urging Brazil's Congress to compel Facebook, Google and all
companies to store data generated by Brazilians on servers physically
located inside Brazil in order to shield it from the NSA.
If
that happens, and other nations follow suit, Silicon Valley's bottom
line could be hit by lost business and higher operating costs:
Brazilians rank No. 3 on Facebook and No. 2 on Twitter and YouTube. An
August study by a respected U.S. technology policy nonprofit estimated
the fallout from the NSA spying scandal could cost the U.S. cloud
computing industry, which stores data remotely to give users easy access
from any device, as much as $35 billion by 2016 in lost business.
Brazil
also plans to build more Internet exchange points, places where vast
amounts of data are relayed, in order to route Brazilians' traffic away
from potential interception.
And its postal
service plans by next year to create an encrypted email service that
could serve as an alternative to Gmail and Yahoo!, which according to
Snowden-leaked documents are among U.S. tech giants that have
collaborated closely with the NSA.
"Brazil
intends to increase its independent Internet connections with other
countries," Rousseff's office said in an emailed response to questions
from The Associated Press on its plans.
It
cited a "common understanding" between Brazil and the European Union on
data privacy, and said "negotiations are underway in South America for
the deployment of land connections between all nations." It said Brazil
plans to boost investment in home-grown technology and buy only software
and hardware that meet government data privacy specifications.
While
the plans' technical details are pending, experts say they will be
costly for Brazil and ultimately can be circumvented. Just as people in
China and Iran defeat government censors with tools such as "proxy
servers," so could Brazilians bypass their government's controls.
International
spies, not just from the United States, also will adjust, experts said.
Laying cable to Europe won't make Brazil safer, they say. The NSA has
reportedly tapped into undersea telecoms cables for decades.
Meinrath
and others argue that what's needed instead are strong international
laws that hold nations accountable for guaranteeing online privacy.
"There's nothing viable that Brazil can really do to protect its citizenry without changing what the U.S. is doing," he said.
Matthew
Green, a Johns Hopkins computer security expert, said Brazil won't
protect itself from intrusion by isolating itself digitally. It will
also be discouraging technological innovation, he said, by encouraging
the entire nation to use a state-sponsored encrypted email service.
"It's sort of like a Soviet socialism of computing," he said, adding that the U.S. "free-for-all model works better."
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Associated Press writer Bradley Brooks reported this story in Rio de Janeiro and Frank Bajak reported from Lima, Peru.
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Bradley Brooks on Twitter: http://www.twitter.com/bradleybrooks
Frank Bajak on Twitter: http://www.twitter.com/fbajak
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