Thursday, May 30, 2013

NFA Membership Totals

NFA Membership Totals by Highest Class*

As of April 30, 2013
Total Membership4,026
Swap Dealers42
Major Swap Participants2
Retail Foreign Exchange Dealers11
Futures Commission Merchants89
Introducing Brokers1,249
Commodity Pool Operators1,614
Commodity Trading Advisors1,012

*NFA Members are listed by their highest class of membership. However, many NFA Members are registered in more than one membership category. For example, an FCM that manages or exercises discretion over customer accounts may also be registered as a CTA.

Swiss banks to cooperate with IRS

ubs-headquarters-monsterFORTUNE -- Are you among the suspected tens of thousands of Americans with a secret Swiss bank account that you are still hiding from the Internal Revenue Service? If so, you are about to acquire a Matterhorn-sized headache.
Switzerland made a desperate decision on Wednesday to save its battered private banking sector by allowing Swiss banks to cooperate with a broad tax evasion probe by U.S. investigators. It is likely to unleash a flood of fresh disclosures to the IRS by American taxpayers, lawyers say.
Such disclosures could trigger hefty fines that can reach a multiple of what an account holds. To stand a chance of reducing those fines, Americans with hidden Swiss accounts "should run, not walk, to jump in line with an IRS voluntary disclosure in light of this move by the Swiss government," says Josh Ungerman, a tax and estates lawyer in Dallas and a former IRS prosecutor.
Lawrence Horn, a tax and business crimes lawyer in Newark, N.J. and a former federal prosecutor, says he expects "at least 10,000" American taxpayers to come forward in the next 12 months or so.
The Swiss decision has two key points: Over the course of 12 months, banks will be allowed to turn over to American authorities general statistical data on their work with American clients. More significantly, the U.S. can seek concrete account details -- with names of taxpayers -- if the U.S. Senate gets its act together and passes a double-taxation treaty already green-lighted by Bern.

Wednesday, May 29, 2013

Volcker: Fed will 'fall short'

paul volker 052913
Former Federal Reserve Chairman Paul Volcker is worried that the Fed is being asked to "do too much."

The Federal Reserve has been asked to "do too much" to heal the U.S. economy and "will inevitably fall short," former Fed Chairman Paul Volcker cautioned Wednesday.

Speaking before the Economic Club of New York, Volcker said the Fed's independence and credibility are at stake, as the central bank engages in unprecedented stimulus efforts.

Nasdaq fined $10 Million for poor systems and decision making

Nasdaq OMX Group Inc. (NDAQ) agreed to pay $10 million to settle Securities and Exchange Commission charges that its mishandling of Facebook (FB) Inc.’s initial public offering last year was a violation of securities laws.
Regulators cited the second-largest operator of U.S. equity markets for its “poor systems and decision-making” during the IPO in May that was delayed by a computer malfunction. The settlement is the largest with an American exchange, which enjoy legal protections because of their self-regulating role.

Liberty Reserve founders charged unmasking $6 Billion in illicit funds

Liberty Reserve SA, whose operators are charged with running a scheme that masked more than $6 billion of criminal proceeds, was designed to help users evade scrutiny, U.S. prosecutors said.
The digital currency company, unlike traditional banks or legitimate online payment processors, didn’t require users to validate their identity and allowed accounts to be opened under fictitious names such as “Russia Hackers” and “Hacker Account,” according to prosecutors. Liberty Reserve Joe Bogus Account Said to Reflect Evasion - Bloomberg

Chart: Stocks relative to Copper

Tuesday, May 28, 2013

Got Wood? A Housing Recovery Built On Faith

With lumber prices limit-down again (and now over 28% from their March highs), we are left assuming that they are building houses with hopium, as opposed to wood, these days...


Of course this is not the first time we have mentioned the precipitous limit-down day-after-day collapse in Lumber prices (here [4]) and why it is relevant (here [5]) but the fact that we havs roundtripped to when QE3 was announced is perhaps notable in its own right (while homebuilders are up 50%)

The question now is - who will be the big bad wolf to blow these housing dreams down?

Charts: Bloomberg

Monday, May 27, 2013

Liberty Reserve forced offline

Liberty Reserve - a Costa Rican-based digital currency service - has been shut down after the reported arrest of its founder.
Authorities in the Central American country said Arthur Budovsky had been taken into custody in Spain on suspicion of money laundering, following an investigation which also involved the US.
They added that police had raided several of Mr Budovsky's properties and seized his computer servers.
The site went offline on Thursday.
Liberty Reserve had described itself as being the internet's "oldest, safest and most popular payment processor... serving millions all around a world".
It had allowed users to open accounts and transfer money, only requiring them to provide a name, date of birth and an email address.
Cash could be put into the service using a credit card, bank wire, postal money order or other money transfer service. It was then "converted" into one of the firm's own currencies - mirroring either the Euro or US dollar - at which point it could be transferred to another account holder who could then extract the funds.
The service promised that payment transfers were "instantaneous" and it charged a maximum of $2.99 (£1.98) for each transaction. It also offered a private messaging facility which it said was "much more private and secure than email or instant messenger services".
Security expert Bryan Krebs said Liberty Reserve's features had made it a popular among cybercriminals who wanted to move funds and make payments anonymously.
However, others said they had used the service for legitimate means, viewing it as a cheaper alternative to PayPal. They fear they will now lose money still sitting in its accounts.

Monday, May 20, 2013

Caterpillar North America Sales Collapse Suggests US Economy Back To 2010 Levels

While we have wondered on numerous occasions previously [4]if the collapse in lumber prices is the far more accurate indicator of end demand for housing (as confirmed by the recent collapse in multi-family housing starts [5]), perhaps an even better indicator of trends in housing (and by implication the broader economy) is private sector intermediate end demand, such as Caterpillar North America sales, which unlike government data, are far less subject to political intervention, interpolation, guesswork, seasonal adjustments and otherwise, general manipulation.

CME Halted Silver Trading 4 Times Sunday as Prices Slid 9%

NEW YORK--Exchange operator CME Group Inc. ( CME ) said it halted silver trading four times Sunday evening due to highly volatile markets, a spokesman told Dow Jones Newswires.
The trading halts came as silver futures slumped 9.4% to a low of $20.250 a troy ounce in the first few minutes following the open of electronic trading on the Comex division of the New York Mercantile Exchange.
Silver trading was stopped for two 20 second intervals at 6:07 p.m. EDT and 6:09 p.m. EDT, and two consecutive 20 second halts at 6:09 p.m. and 6:10 p.m., the spokesman said. CME Group owns and operates both the Nymex and the Comex exchanges.
Known as Stop Logic, the trading halts are triggered in highly volatile markets to prevent excessive price movements, the spokesman said.
Silver futures were recently trading down 76.2 cents, or 3.4%, at $21.590 a troy ounce.

CME Halted Silver Trading 4 Times Sunday as Prices Slid 9%

Growing Discontent in the EU

Growing Discontent in the EU

Sunday, May 19, 2013

Save Europe: Split the Euro

On the eve of the American Civil War, Abraham Lincoln famously said that “a house divided cannot stand.” Today, the European Union -- committed for decades to the quest for “ever closer union” -- must confront an agonizing truth. Lincoln’s maxim must be inverted. For the EU to survive, the euro must divide.
Between the Treaty of Rome in 1957 and the Single European Act in 1986, Europe’s governments brought about the one great peaceful revolution the continent has seen in its long and troubled history. The creation of a single European currency would build on this remarkable success. It was the next vital step to greater unity and prosperity. The economic crisis in southern Europe shows that the euro system, at least in its current form, has instead become a mortal threat to both.
Greece, Spain, PortugalItaly and Cyprus are trapped in a recession and cannot restore their competitiveness by devaluing their currencies. The euro area’s northern economies have had to join in repeated bailouts and put aside their notions of prudent finance. A vicious circle of resentment and populism in the south and strengthening nationalism in the north is tearing the union apart.
And the crisis isn’t yet abating. France, Europe’s second-largest economy, is now sinking into a grave economic slump. Like the southern countries, it must restore its competitiveness; like them, as part of the euro system, it lacks the means. Because of its size and because of the guiding role it has played in the EU’s development, France, we’ll argue in Part 2 of this article, will be crucial in breaking the vicious circle.

Friday, May 17, 2013

NYSE Breaks Trades That Sent Anadarko Petroleum Shares Down 99%

The New York Stock Exchange broke trades in Anadarko Petroluem Corp. executed at or below $87.56 in the final minute of today’s session.
The transactions drove Anadarko down as much as 99 percent to 1 cent in the final second of trading, theoretically wiping out almost its entire $45 billion in market value. The stock recovered and ended the session at $90.03, up 2.5 percent on the day. Trades at $87.56 were 0.3 percent lower than the stock’s closing price yesterday and 2.7 percent below its close today. NYSE Breaks Trades That Sent Anadarko Petroleum Shares Down 99% - Bloomberg

The New York Stock Exchange on Friday canceled rogue Anadarko Petroleum Corp.APC +91.54% stock trades in the last second of the trading day that took the stock to from $90 to one cent in some trades.
Data on FactSet Research also showed erratic moves in the last hour of trading, with at least one bringing the price under $20 a share. But the sudden drop to near zero occurred in the final second of trading, FactSet showed. Shares of Anadarko ended Friday 2.2% higher at $90.03. The company deferred comment to the NYSE.
The stock exchange initiated a “clearly erroneous execution review,” which it defines as “an execution with an obvious error in any term, such as price, number of shares or other unit of trading, or identification of the security,” and eventually canceled all trades executed at or below $87.56 a share in that last second.
“The NYSE has determined to cancel all trades in Anadarko Petroleum Corp, executed at or below $87.56 between 15:59:59 and 16:00:00 today,” the exchange said in a statement. It said the decision wasn’t subject to appeal.
Exchanges regularly review such rogue trades and eventually cancel most, if not all, of them. “Broken trades,” however, have started to gather more attention — and concern — after the May 2010 “flash crash” highlighted weaknesses in trading systems stretched to the max by high-frequency and other specialized trading programs.

Risks for Cyprus are "unusually high"

May 17 (Reuters) - The IMF said on Friday that risks for Cyprus were "unusually high" given its weak banking sector and economy and the island's full adoption of an economic austerity plan was imperative.
The island's 17.5 billion euro economy faced risks from the uncertain impact of the crisis in its banking sector and the possibility that its economic contraction could be deeper than projected, the IMF said in a staff report.
"Given substantial risks to the outlook and debt sustainability, there is no room for implementation slippages," it said.
The Fund said the impact of Cyprus's debt crisis on its economy will last longer than for other euro zone members that have had debt problems, with the exception of Greece.

Tuesday, May 14, 2013

EES: Meta Trader 4 adds one click trading functionality

Argentina Peso Gap Between Official And Black Market Rate Hits To 100%, BMWs Become Inflation Hedge

Despite efforts by the government to quell the black-market (or blue-dollar) for Argentina's foreign exchange, the unofficial rate surged yesterday to 10.45 Pesos per USD. This is now double the official rate of 5.22 Pesos per USD. This implicit 50% devaluation comes amid the growing realization that there is no savings option to maintain the purchasing power of the peso in the context of sustained high inflation (no matter what the officials say) and negative real interest rates. The government is not amused, suggesting the devaluation won't happen (just as Mexico did right up until the day before they devalued), "those who seek to make money at the expense of devaluations must wait for another government." Perhaps the government should be careful with their threats? And of course, this could never happen in the US or Japan, right?

And in the meantime, looking to hedge their inflation risk while taking advantage of the massive FX rate differential, the local population has found a new and original inflation hedge: BMWs.
Argentines are buying more BMWs, Jaguars and other luxury cars as a store of value as inflation decimates their deposits and pummels the nation’s bonds.

Purchases of cars from Germany’s Bayerische Motoren Werke AG (BMW) and Jaguar Land Rover Automotive Plc, owned by India’s Tata Motors Ltd. (TTMT), jumped the most in April among brands sold in Argentina. The sales were part of a 30 percent surge in car sales from a year earlier that was the biggest increase in 20 months, according to the Argentine Car Producers Association. While used-car prices rose in line with inflation last year, or about 25 percent, peso bonds tied to consumer prices fell 13 percent. The drop was the biggest in emerging markets.

Car sales in Argentina increased by the most in almost two years last month as a ban on buying dollars made Argentines turn to vehicles to protect savings against the fastest inflation in the Western Hemisphere after Venezuela. Luxury models are becoming more attractive because they are imported at the official dollar rate, said Gonzalo Dalmasso, vehicle industry analyst at Buenos Aires research company Argentines with savings in dollars are able to purchase cars at half the cost by trading in the unofficial currency market.

“I’m seeing a lot of people buying high-end cars for the first time, trading Minis for middle of the market models,” Ignacio Monteserin, a salesman at BMW’s Mini Cooper dealership in Buenos Aires’s Libertador Avenue, said. “It’s become very convenient to own luxury cars in general because of the big gap in the exchange rates and you get to have a quality good that will preserve the value of your money with time.”

EU to start talks with Switzerland on bank secrecy

BRUSSELS, May 14 (Reuters) - European Union finance ministers gave the green light on Tuesday to start talks with Switzerland, Liechtenstein and three other countries on new rules for swapping bank account information, officials said.
The talks had long been opposed by EU members Luxembourg and Austria, which were seeking to defend their own bank secrecy rules, but on Tuesday their finance ministers dropped those objections.
"Ministers have adopted a negotiating mandate on (the) savings tax with Switzerland, Liechtenstein, Andorra, Monaco and San Marino," said one EU official, with knowledge of the talks. The basis of the talks with Switzerland will be the so-called EU savings tax directive.
By giving the European Commission the go-ahead to negotiate with Switzerland, EU finance ministers hope to push for the same rules to be applied to Switzerland as would be applicable to Austria and the wider European Union.UPDATE 1-EU to start talks with Switzerland on bank secrecy | Reuters

MARC FABER: 'Something Will Break Very Bad'

Faber: “What was the trigger of the ‘87 crash when markets fell 21 per cent in one day? What was the trigger of the Nasdaq crash in 2000? What was the trigger of Japanese crash of 1989? What was trigger of 2007 crash that brought global stocks down 50 per cent? We don’t know these things ahead of time, but something will always move markets up and something will always move them down. I would guess at the present time, given markets from the 2009 lows have in many cases increased by as much as 100 per cent, that they are no longer very cheap. .... Something could come along, geopolitically or otherwise. I would be very careful being overweight equities. I still have 25 per cent in equities and 25 per cent in corporate bonds.”

Read more:

Monday, May 13, 2013

Friday, May 10, 2013

Bloomberg snoops on users

Irked Goldman Sachs brass recently confronted Bloomberg LP over concerns reporters at the business news service have been using the company’s ubiquitous terminals to keep tabs on some employees of the Wall Street bank, The Post has learned.
The ability to spy on Bloomberg terminal users came to light recently when Goldman officials learned that at least one reporter at the news service had access to a wide array of information about customer usage, sources said.
In one instance, a Bloomberg reporter asked a Goldman executive if a partner at the bank had recently left the firm — noting casually that he hadn’t logged into his Bloomberg terminal in some time, sources added.
Goldman later learned that Bloomberg staffers could determine not only which of its employees had logged into Bloomberg’s proprietary terminals but also how many times they had used particular functions, insiders said.
The matter raised serious concerns for the firm about how secure information exchanged through the terminals within the firm actually was — and if the privacy of their business strategy had been compromised.
“You can basically see how many times someone has looked up news stories or if they used their messaging functions,” said one Goldman insider.
“It made us think, ‘Well, what else does [Bloomberg] have access to?’ ”

Thursday, May 9, 2013

Hungary will not use reserves to root out forex loans

May 9 (Reuters) - Hungary's central bank won't use its reserves to help households who owe trillions of forints worth in foreign currency loans, Governor Gyorgy Matolcsy told the weekly Heti Valasz.
Even after earlier relief programmes, hundreds of thousands of families remain exposed to swings in the forint's value after taking on euro and Swiss franc debt in a real estate boom.

Under Matolcsy, a former economy minister who took over from the hawkish Andras Simor in March, the bank has offered 250 billion forint ($1.1 billion) to help small firms with foreign currency loans.
But in the interview published on Thursday, Matolcsy gave a blunt "no" when asked if he could envisage using some of the bank's foreign currency reserves, worth 35.9 billion euros ($47.3 billion) at the end of April, to resolve the loans problem completely.

There were similar messages on Wednesday from Economy Ministry state secretary Zoltan Csefalvay, who said the government could do no more to help mortgage holders, and the central bank's managing director Marton Nagy, who said Hungary should bring in personal insolvency laws to help to deal with bad debts.
Hungary's large stock of foreign currency loans poses a major risk for central Europe's most indebted nation. It also limits the effectiveness of monetary policy because most household debt is denominated in Swiss francs or euros.

The bank has lowered interest rates in cautious quarter-point steps by a combined 225 basis points to a record low of 4.75 percent over the past nine months as inflation plunged to a 38-year low due to energy price cuts and weak demand.

Matolcsy affirmed his cautious policy stance in the interview, but added that he had discussed with bankers the idea of reducing interest rates "near consensus levels" in two or three bigger steps - an idea eventually abandoned.

"The overwhelming majority of leading bankers and strategic advisors recommended this approach (to avoid bigger cuts), and this is also closest to the conservative and responsible monetary policy that I advocate," Matolcsy was quoted as saying.

Wednesday, May 8, 2013

Euro fears grow as New Zealand and Sweden enter currency wars May 8 (Reuters) - The bailout of Cyprus shows how urgently the euro zone needs to establish a banking union to break the negative feedback loop between weak banks and governments, European Central Bank Executive Board member Joerg Asmussen said on Wednesday.

Cyprus this year became the fourth euro zone country that needed to be bailed out by international lenders, and unlike any other aid deal it controversially forced depositors to foot the cost of recapitalising banks exposed to debt-crippled Greece. The so-called currency wars progressed further in today’s session, as two new countries jumped on the bandwagon of selling or threatening to sell its own currency to unwind recent strength.

Overnight, RBNZ Governor Wheeler announced that the central bank had already once intervened in Forex markets to bring down the price of the New Zealand Dollar. During European trading hours, Swedish Finance Minister Borg said the Krona’s strength may become an issue for the country’s central bank. WASHINGTON (MarketWatch) — If you’re ever tempted to think the euro zone has turned the corner and is on the right track, go have a chat with Warren Mosler and he’ll set you straight.

The former hedge-fund manager and an original proponent of what has come to be known as modern monetary theory gave a talk recently at a wealth management conference in Zurich that took a pessimistic view of the euro /quotes/zigman/4867933/sampled EURUSD +0.81%  righting itself on its current path.

“The European slow-motion train wreck will continue until there’s recognition that deficits need to be larger,” Mosler said at the conclusion of his analysis. “The continuing efforts at deficit reduction will continue to make things worse.”

Sunday, May 5, 2013

Lenders May Create Bitcoin Rivals, Says New Zealand Bank Group

Commercial banks may create digital currencies to rival Bitcoin, the virtual money whose U.S. dollar value collapsed by 46 percent in 24 hours last month, the head of New Zealand’s banking lobby said today.
Banks noticed the low cost of international Bitcoin transfers, and some may look to introduce competitors as a cap on issuance constrains the digital currency’s supply, Kirk Hope, chief executive officer of the New Zealand Bankers’ Association, said according to the e-mailed transcript of an interview with TVNZ television.
“If it’s not Bitcoin it might be some other type of digital currency that could come into play,” Hope said. The cap on Bitcoin issuance, which limits supply to about 21 million units, “doesn’t mean that some other player couldn’t come into the market, and, you know, that might be a bank.”

Thursday, May 2, 2013

Year of the yuan: China's explosive currency goes global

The ‘people’s currency’ of China is redefining the global economic monetary system. The closed-capital pariah is blossoming into a reserve standard and is hedging appeal against the indebted dollar and the untested euro, piquing foreign interest.
Degenerating credit quality across the board has prompted asset managers to shy away from the dollar, euro, Japanese yen, British pound, and Swiss franc. And some are turning to the yuan, a currency that 10 years ago was completely off limits to foreign investors.
An HSBC forecast projected that by 2015, the yuan will become one of the three most used currencies in global trade, in league with the dollar and euro. The report, issued in April, also foresees a third of China’s cross-border transactions being carried out in yuan.

U.S. Stocks Rise as ECB Cuts Rate, Jobless Claims Fall

U.S. stocks rose, with the Standard & Poor’s 500 Index rebounding from the biggest drop in two weeks, as the European Central Bank cut its key interest rate and American jobless claims unexpectedly fell.
The S&P 500 advanced 0.2 percent to 1,586.32 at 9:32 a.m. in New York. The equity gauge lost 0.9 percent yesterday as U.S. payrolls and manufacturing grew less than forecast, trimming this year’s rally to 11 percent.

Wednesday, May 1, 2013

Obama has a sweet retirement package. Will you?

FORTUNE -- President Obama's proposal to limit the value of 401(k)s, pensions, and other tax-favored retirement accounts to about $3.4 million certainly sounds reasonable. After all, at a time of big budget deficits, we shouldn't subsidize "the rich" with tax breaks, should we?
But when you look a little closer -- especially when you look at the value of President Obama's taxpayer-funded retirement benefits -- you might think a little differently about what "rich" means. For starters, the point at which Obama wants to eliminate your ability to deduct retirement account contributions isn't actually the $3.4 million in his budget proposal -- that's just an estimate. The real number is how much a couple age 62 would have to pay for an annuity that yields $205,000 a year. That $3.4 million -- which applies to the combined values of your pension and retirement accounts -- is subject to a sharp downward change in the future because annuity issuers charge significantly less for an annuity when interest rates are higher than they do today, with rates at rock-bottom levels.
I'll grant you that $205,000 a year -- the current IRS maximum for what a pension fund can pay a recipient -- is serious money in many places. But it doesn't buy you a rich retirement lifestyle in, say, Manhattan, N.Y., where 205K is equivalent to only 88K in Manhattan, Kans. The Manhattan-Manhattan distinction, from Money's cost-of-living comparator, is an example of the difference between being rich statistically and being rich in reality.
Second, I can't get past Obama wanting to limit savers to only about half the value of what he stands to get from his post-presidential package. Based on numbers from Vanguard Annuity Access, I value his package at more than $6.6 million. (My calculations are at the bottom of this piece.)
That's right, $6.6 million. And that doesn't include the IRAs in which Obama has been socking away the $50,000-a-year maximum, or the $18,000 (plus cost of living) a year he will get at age 62 for his service in the Illinois senate, or any other benefits he or his wife may realize from past or future jobs.

Slovenia Cut to Junk

Slovenia’s credit rating was cut to junk by Moody’s Investors Service, which cited “turmoil” in the country’s banking industry and said the government would have to offer lenders more financial support.
The rating was lowered two levels to Ba1 from Baa2, on par with Turkey, Moody’s said today, assigning a negative outlook. Five members of the 17-nation euro area are now rated junk by Moody’s. Standard & Poor’s and Fitch Ratings both rate Slovenia at A-, the fourth-lowest investment grade.
“The first key factor underpinning today’s rating action is the ongoing turmoil in the country’s banking system and the high likelihood that the sovereign will be required to provide further assistance and capital injections,” Moody’s said in an e-mailed statement from New York. “Asset quality at the banks deteriorated considerably in 2012 and has continued to deteriorate since.”
Slovenia, which before the rating action was on course to sell dollar-denominated benchmark bonds, is struggling with its second recession since 2009. The government is working to fix its ailing banking industry with a 900 million-euro ($1.2 billion) capital boost and the creation of a so-called bad bank to cleanse lenders’ balance sheets and aid economic recovery. A detailed overhaul plan is set to be presented to the European Commission in Brussels by May 9.