MTA Footage of South Ferry/Whitehall St. Station Flooded

Via the MTA (h/t Reuters on G+).

Animated NOAA Satellite Image of Hurricane Sandy Moving Towards New Jersey

Take cover! Watch live streaming coverage of Hurricane Sandy here.

Must Read Macro & Financial News (10/28/2012)

These links were intricately selected by @dvolatility.

Live Streaming Updates on Hurricane Sandy

Below are three live streams covering Hurricane Sandy via CBS News, The Weather Channel, and Livestream's Storm Cam in NYC. Also, watch a NASA time-lapse video of Hurricane Sandy twirling over the Bahamas at 75mph from 22,300 miles above the earth on 10/26 (h/t Business Insider). RedBull should have someone jump into the hurricane from 128,000 feet. Allow load time for the embeds.

S&P's Deputy Chief Economist on the Housing Starts Spike ($ITB, $XHB)

Housing Starts (St. Louis Fed)
This is for the housing bulls, especially the perma-Fed-backed housing retracement bulls on Twitter. On October 25, 2012, Standard & Poor's Deputy Chief Economist Beth Ann Bovino talked about the recent upbeat housing data on S&P TV. The chart is of housing starts, which you can see is recovering off very depressed levels. Here are a few quotes from the video:

U.S. housing starts (for September) blew past consensus expectations to a near 900,00 units, which is a 4-year high. Though levels are still well below the 1.5 million historic average rate, this report adds to other upbeat news for the sector, and it doesn't look like it's over. Housing permits also climbed to a 4-year high. So it looks like building activity will remain strong over the next few months.

Former Goldman VP Greg Smith on Institutional Wall Street Boiler Rooms

Former Goldman Sachs VP Greg Smith, who just released a book on his 12 year career at Goldman Sachs, was interviewed by Aaron Task on Daily Ticker this morning. He talked about how institutional boiler rooms work on Wall Street, and why they need to be stopped. Watch the interview below courtesy of Yahoo Finance. I added Smith's interview with Reuters TV as well.

Watch LG's Elevator Floor Prank

It's going viral.

Marc Faber Sees 20% Decline For Dow, S&P (CNBC, 10/23/2012)

Marc Faber, editor and publisher of the Gloom Boom & Doom Report, sees a 20% decline ahead for the Dow and S&P 500 from their recent highs. Here's what a 20% decline in the S&P 500 ($SPX) would look like. He was featured on CNBC in Europe on 10/23/2012.


Source: StockCharts.com

Saxo Bank's Garnry: France is the Biggest Threat to the Euro Zone

From CNBC.com, "Peter Garnry, equity strategist at Saxo Bank tells CNBC why France could become the euro zone's biggest threat". Watch the video after the jump.

Recent news:

French private sector shrinks again in October, points to recession - PMI (Reuters)
France's Hollande's approval ratings now at 36 percent (Reuters/Chicago Tribune)
France Télécom Cuts Dividend: (WSJ)
France’s Quiet Bank Rescues Top $78 Billion With Peugeot: (Businessweek)
France Tops U.S. Wheat With Premium Seen at Record: (Bloomberg News)
France's Hollande's approval ratings now at 36 percent (CNBC.com)
French FinMin Rules Out Shock Treatment for Economy (NASDAQ.com)

$GLD 8-yr Chart, Jim Rogers Expects Gold Consolidation to Continue

Business Insider interviewed Jim Rogers yesterday, watch the video below. Since futures speculators are very long gold at the moment, he believes that the price of gold "will continue to correct." Here are links to gold and silver COT (commitment-of-traders) charts via cotpricecharts.com. COT reports released by the CFTC measure the net amount of futures contracts (longs + shorts) held by large and small speculators and commercial hedgers (banks). Oh, and Jim Rogers remains bullish on agricultural commodities.

If you look a the 8-year chart of $GLD, $150 is a critical support level to hold in the sideways channel. If $GLD cracks through $150, it could test the uptrend line from the 2008 low and 50 month moving average, which is around $130 today.

EUR/USD Preparing For a Huge Move Around 1.30 ($EURUSD, $FXE)

The euro (EUR/USD) was able to keep its 3-month uptrend intact during the past 12 days, but now it is at the crossroads. Big decision coming.

source: freestockcharts.com

$SPY vs. Federal Reserve QE and EPS Deflation (10/23/2012)

The S&P 500 ETF ($SPY) broke through April 2012 support today and is now testing a 1-year uptrend line and rising channel, which formed during the 2011 equity crash when Congress raised the debt ceiling and Standard & Poor's downgraded U.S. government debt. It is interesting that the S&P 500 peaked when the Fed announced QE3 on September 13, 2012. David Rosenberg, chief economist and strategist at Gluskin Sheff, said it is because "corporate earnings are on the down escalator." So QE is now battling EPS deflation.


source: freestockcharts.com


But if $SPY breaks down here, it could still find refuge (possibly) at the ultimate bull market uptrend line. That will be a fun line to watch when it gets tested, and even better if there is lower than average volatility.

Elliott Wave: Bernanke's Bigger Bubble: QE-3 and the Coming Economic Crash

In honor of FOMC day, here's a syndicated post by Elliott Wave International that takes on the Fed. Look at the chart of total credit market debt/GDP since 1929!

Bernanke's Bigger Bubble: QE-3 and the Coming Economic Crash
Why monetarist theory is flawed
October 18, 2012

By Elliott Wave International


Federal Reserve Chairman Ben Bernanke really means it this time.

He will rescue the economy.

Ben S. Bernanke for the first time pledged that the Federal Reserve will buy bonds until the economy gets closer to his goals ... . The central bank yesterday announced its third round of large-scale asset purchases since 2008, with the difference that it didn't set any limit on the ultimate amount it would buy or the duration of the program. ... Bernanke is "going to fight and fight until he sees a real improvement in the economy," said a co-head of global economics research at [a major bank]." He believes quantitative easing can help the economy, so he'll just keep at it until there's a real turn in the economy."

Bloomberg, Sept. 14

But we've all heard the definition of insanity: doing the same thing over and over and expecting a different result.

Why should we think QE-3 will work when the previous two failed? (Don't think they failed? Then ask yourself why we need a third one.)

MF Global Bankruptcy Claims Are Most Active on SecondMarket, Above Lehman Brothers Holdings

source: SecondMarket.com
In bankruptcy claims trading news via SecondMarket.com:

There were 766 claims traded during the month of September with a total face value of just over $2 billion. For the first time since it began trading claims back in January, MF Global reached the top of the lists for both number of claims traded and total dollar value, edging out Lehman Brothers Holdings, Inc. (LBHI) by 216 claims and $19 million. There were 308 MF Global claims transferred during September valuing $873 million, which was almost double the face value of August’s MF Global transfers. The claims were purchased by 25 institutional buyers at an average of $2.8 million per claim. MF Global claims trading has steadily increased over the past few months and will likely continue to rise as the firm works through its bankruptcy.

Where is the bankruptcy claims ETF? Here's an interesting read on this market, Introducing our new Trade Claims Series: An Interview with Andrew Gottesman from SecondMarket (Distressed Debt Investing). And watch this video to see how bankruptcy claims trade on SecondMarket's transparent, centralized and competitive platform.

Demos of the New $249 Samsung Chromebook (Videos)

Check out the new Samsung Chromebook. I might finally get one.

Former Goldman Sachs VP Greg Smith on 60 Minutes

Greg Smith's GS Bio (via DealBook)
So the movie Boiler Room was really about Wall Street investment banks all along? Greg Smith's book "Why I Left Goldman Sachs" comes out today. Watch the 60 Minutes interview after the jump. Here are a few quotes from the script.

Greg Smith: Goldman Sachs, and other firms on Wall Street, started learning how to use the information they were getting from their clients, in order to bet with their own money. At times, betting against their clients. And you know, that's a real changed mentality from how do we do what our client wants to do? Not how do we take advantage of what the client's doing to make money for ourselves?

Greg Smith: So what Wall Street will do is, they will approach one of these philanthropies, or endowments, or teachers' retirement pensions funds, in Alabama, or Virginia, or Oregon, and they'll say to them, "We have this great product that is gonna serve your needs." And it looks very alluring to these investors. But what they don't realize is that up front, they're immediately paying the bank two million dollars or three million dollars because of their lack of sophistication.

Greg Smith: Within week one, I met a junior guy who was 24 or 25 years old and the first thing he told me was he'd just traded a sophisticated derivative with a Muppet client who paid the firm an extra million dollars because the client was so trusting that he didn't check the price with other banks. Now you could think to yourself, "Is this some rogue guy who's just talking callously about clients?" But his boss, who's a managing director, was sitting right next to him nodding and chuckling along. And--

Put over-the-counter derivatives and debt securities on exchanges to fix all of these problems. There needs to be more transparency in these internal bank markets.

U.S.-Mexico Tomato Trade War Averted? (News)

Watch videos after the jump.

*Mexico offers to raise floor price for tomatoes entering U.S. (Fox News Latino)
*Mexican Tomato Growers Make Proposal to Salvage U.S. Price Pact (Bloomberg)
*Mexican Tomato Growers Offer New Trade Deal (New York Times)
*Why risk Mexico trade war? (Politico)
*Tomato war fought by Mexican and U.S. growers (Marketplace.org)

Action in the Gold Pit on the COMEX Trading Floor in 1981

The price of gold spiked when Egyptian President Anwar Sadat got assassinated in 1981. Watch interviews on the COMEX trading floor in NYC's World Trade Center.

David Rosenberg: S&P's Upside is Capped By Falling Earnings (CNBC)

David Rosenberg via CNBC.com
David Rosenberg, chief economist and strategist at Gluskin Sheff, mentioned on CNBC yesterday that he thinks the S&P's "upside is capped because corporate earnings are on the down escalator." Meaning lower EPS is currently trumping QE3's effect on stocks. I put up more interesting quotes from the video below (watch the full interview as well). The quotes are not from an official transcript. Richard Bernstein of Richard Bernstein Advisors, his former colleague at Merrill Lynch, challenged some of his views in the video.

  • "The reality is that even with this latest round of quantitative easing, maybe the most aggressive round, the reality is that the S&P 500 through the interim peaks and valleys actually hit its high on September the 14th, the day after QE3 was announced. And I think a lot of it is because what's capping the market to the upside is the fact that corporate earnings are now on the down escalator. So the Fed and the expansion of the balance sheet and the liquidity probably gives you a much firmer floor in any correction. But the market is telling you right now that the upside is capped because corporate earnings are now on the down escalator."

Man Tries to Blow Up The NY Federal Reserve But Was Set Up and Arrested By the FBI, NYPD (Full Release)

The terror plot was a sting operation. Here's the FBI press release.

"Joint Terrorism Task Force Arrests Man in Lower Manhattan After He Attempted to Bomb New York Federal Reserve Bank
NY Fed Building (newyorkfed.org)

Defendant Attempted to Strike New York’s Financial District on Behalf of al Qaeda

U.S. Attorney’s Office
October 17, 2012

Eastern District of New York
(718) 254-7000

BROOKLYN, NY—Quazi Mohammad Rezwanul Ahsan Nafis (Nafis), 21, was arrested this morning in downtown Manhattan after he allegedly attempted to detonate what he believed to be a 1,000-pound bomb at the New York Federal Reserve Bank on Liberty Street in lower Manhattan’s financial district. The defendant faces charges of attempting to use a weapon of mass destruction and attempting to provide material support to al Qaeda.

The arrest of Nafis was the culmination of an undercover operation during which he was closely monitored by the FBI New York Field Office’s Joint Terrorism Task Force (JTTF). The explosives that he allegedly sought and attempted to use had been rendered inoperable by law enforcement and posed no threat to the public.

Get Ready For The Next Cyclical Bear Market

RBC U.S. Equity Technical Analyst Rob Sluymer thinks that the S&P 500's secular move from 2000 to 2012 (chart below) looks similar to the 20-year secular moves we saw in the 1910s-1920s and 1960s-1970s. During those decades, the Dow made multiple 50%-100% moves in cyclical bull and bear markets. So the next cyclical bear market could be right around the corner with the S&P up 121% from the 2009 low. And the S&P just about retraced the entire 2007-2009 cyclical bear market, which included the collapse of the financial system.

Source: StockCharts.com

China Technical Update: $FXI, $FXI/$SPY, $FXI/$SSEC (10/15/2012)

FXI (iShares FTSE China 25 Index Fund), the FXI/SPY ratio, and $SSEC (Shanghai Stock Exchange Composite Index) appear to be testing multi-year downtrend lines. FXI is almost at the apex point of a multi-year symmetrical triangle and is testing downtrend resistance above the 50dma and 200dma (daily moving average). In the second chart, which goes back to 2005, it looks like a huge move is setting up for FXI in the symmetrical triangle.

Highlights of Felix Baumgartner's Supersonic Freefall from 128,100 Feet

Redbullstratos.com said "Baumgartner reached an estimated speed of 1,342.8 KM/H (Mach 1.24) jumping from the stratosphere, which when certified will make him the first man to break the speed of sound in freefall and set several other records while delivering valuable data for future space exploration."

Watch the highlights below via RedBull.

Watch Felix Baumgartner Skydive From the Edge of Space and Break the Sound Barrier (LIVE VIDEO)

Watch the live video below via Youtube.

Financial Links For October 11, 2012

First, the shady news.

Foreign-Exchange Trading Creeps into Dark Pools (WSJ)
E-Mails Cited to Back Lawsuit’s Claim That Private Equity Firms Colluded on Big Deals (NYT DealBook)
U.S. sues Wells Fargo in mortgage fraud case (Reuters)
With Tapes, Authorities Build Criminal Cases Over JPMorgan Loss (NYT DealBook)
Sallie Krawcheck: Banks Weren't Fully Aware Of Risks They Were Taking Going Into Downturn (Business Insider)
RBS Said to Suspend Trader Over Interest Rate Rigging (Businessweek)
Rigged Libor Hits States-Localities With $6 Billion: Muni Credit (Bloomberg)
20% of US Firms Cook the Books During Earnings: Report (Yahoo's Daily Ticker)

Next, market and economic news.

Euro Bulls Fight to Keep 3-Month Uptrend Intact After S&P Downgrades Spain to 'BBB-' ($EURUSD)

EUR/USD (source: FreeStockcharts.com)
S&P cut Spain's credit rating to 'BBB-' from 'BBB+' yesterday, which is one notch above junk status. Spain is experiencing a financial and economic crisis similar to the U.S's in 2008/9 (banks going bust, high unemployment, deleveraging). But it is being compounded because Spain is also dealing with a sovereign debt crisis which is forcing austerity measures on its people. And not only that, Spain doesn't have a way to bail itself directly with a central bank (print money to buy assets like the Federal Reserve, ECB, and Bank of Japan).

Spain is part of Europe's Economic and Monetary Union (EMU) which uses the euro currency via the European Central Bank. That's why when ECB president Mario Draghi said the "ECB is ready to do whatever it takes to preserve the Euro" on July 26 (read the ECB's 9/10 release on sterilized bond buying), EUR/USD started to rally, squeezed Lord Rothschild's $200 million short position (CNBC, Telegraph), and broke out of the 2011-2012 descending channel.

Fibonacci in Nature: The Golden Ratio and the Golden Spiral - Guest Post

Syndicated post by Elliott Wave International

Fibonacci in Nature: The Golden Ratio and the Golden Spiral
The more you learn about Fibonacci, the more amazed you will be at its importance
October 10, 2012

By Elliott Wave International

If you've studied the financial markets, even for a short time, you've probably heard the term "Fibonacci numbers." The ratios and relationships derived from this mathematical sequence are applied to the markets to help determine targets and retracement levels.

Did you know that Fibonacci numbers are found in nature as well? In fact, we can see examples of the Fibonacci sequence all around us, from the ebb and flow of ocean tides to the shape of a seashell. Even our human bodies are examples of Fibonacci. Read more about the fascinating phenomenon of Fibonacci in nature.

$SWKS Sell-Off In Sep Brings Down $AAPL, $QQQ

source: stockcharts.com
Look how Skyworks Solutions ($SWKS), a major chip supplier for Apple's iPhone 5, got liquidated in September after increasing its revenue and earnings expectations for Q3 (9/20/2012).

In the chart below I compared the 6-month performance of Apple ($AAPL), $SWKS, other iPhone suppliers ($TQNT, $AVGO), RF Micro Devices ($RFMD, a SWKS competitor), and the Nasdaq 100 ETF ($QQQ). I've noticed that the market, or tech indexes first, usually follows the performance of $SWKS.

Previous posts:
  • *Skyworks Retraces 2009-2011 Bull Move, Market Following (SWKS, RFMD, SOXX, AAPL, SPY, DIA Performance) (June 11, 2011)
  • *Skyworks Breaks Out of 8 Year Channel (SWKS, RFMD, TQNT, SMH, AAPL, QQQQ) (July 28, 2010)

See, market transparency is a good signal for publicly traded securities. Tell that to the credit default swap market. For example, there is no transparency in Hewlett-Packard's CDS on the web like its stock, options, and even corporate bonds at FINRA. But it appears to be major news when there is CDS activity, and nobody outside of hedge fund or too-big-to-fail bank land can see quotes/charts or even trade it. It's all hidden in bank trading desk/hedge fund landia to put on large capital arbitrage positions. The same trades occured in subprime mortgage-backed securities and synthetic CDOs in 2007. Interesting right?

Some Gloom and Doom and Hope in the IMF's Global Growth Forecast (10/9/2012)

source: IMF
The IMF just lowered its global growth forecast for 2012 and 2013 in its October 2012 World Economic Outlook. After the jump is the full table of the IMF's 2012 and 2013 growth projections, and below that I put up interesting Debt/GDP ratio charts (Historical Debt/GDP in Advanced Economies, "Debt-to-GDP Dynamics after Public Debt Reaches 100% of GDP") from the report. Public debt in advanced economies is at its highest level since World War II. To your right is a chart comparing the U.S. and Canada's Household Debt to Personal Disposable Income percentage since 2000.

It's not really a surprise anymore, but the release said "weak household balance sheets and confidence, relatively tight financial conditions, and continued fiscal consolidation stand in the way of stronger growth" in the United States. Fiscal consolidation meaning the "fiscal cliff." In a blog post, Olivier Blanchard, the IMF's chief economist, said the U.S. must balance monetary accommodation and fiscal consolidation to maintain growth. So that's where the Federal Reserve's QE-infinity program comes in. And for Europe, "the “core” economies are expected to see low but positive growth throughout 2012–13. Most euro area “periphery” economies are likely to suffer a sharp contraction in 2012, constrained by tight fiscal policies and financial conditions, and to begin to recover only in 2013." And Spain and Italy's sovereign debt, banks and economy must stay under control.

For a quick rundown on the IMF's growth projections and fiscal outlook, I embedded two videos from the IMF's Youtube channel.

Must See Chart: CBOE Options Total Put/Call Ratio 20-dma vs. S&P 500

Check this chart out. Click the stks.co link which points to Stocktwits. Hat tip Attitrade for the chart.



It's somewhat related to my previous post: $SPX Chart Update, November S&P 500 Put Open Interest 2.14x Call Open Interest.

$SPX Chart Update, November S&P 500 Put Open Interest 2.14x Call Open Interest

According to Reuters,

"More telling is the rising bearish positioning in the S&P 500. As of Friday morning, open interest in November SPX put contracts was at 823,000 contracts, more than double the 384,720 outstanding SPX November call options contracts, according to options analytics firm Livevol in San Francisco."

Interesting numbers. The article covers how options traders are positioning for the election and fiscal cliff.

What Impact does Oil have on the Syrian Civil War? - Guest Post

"Fire in Vicinity of Oil Pipeline"
Homs Syria (Wikimedia)
Guest post by Claude Salhani for Oilprice.com

What Impact does Oil have on the Syrian Civil War?

There is a popular belief in the Middle East that Washington's foreign policy, particularly as it relates to this precarious region, is largely driven by America's dependency on, and insatiable appetite for Arab oil. One can make a good argument for that.

Had Syria been a major oil producing country chances are the US would have already dispatched military forces to impose a pax Americana and to put a stop to the horrific fighting that has been slowly, but without any doubt, ripping Syria apart and dismantling the infrastructures that make the Syrian state what it is today. Even if the war was to end today it would take years for Syria to return to its pre-war position from an economic and military perspective.

Why The U.S. Blocked Sprint's 4G Deal With China's Huawei (60 Minutes)

Huawei in Shenzhen, China (Wikipedia)
This 60 Minutes segment is about why the U.S. government blocked China's Huawei, the largest telecommunications equipment maker in the world (economist), from doing a 4G deal with Sprint in the U.S. Watch the 60 Minutes video below (Huawei probed for security, espionage risk).

But, did you know that some small rural wireless carriers in the U.S. currently use Huawei's telecom equipment for their 4G services? In the 60 Minutes video, the president of United Wireless said he was approached by federal agents after he signed a deal with Huawei.

Zynga's Stock Crashes After Lowered Q3 Bookings Outlook ($ZNGA)

Here's an interesting bar chart of Zynga's quarterly bookings via Statista (and then ZNGA's stock chart since the IPO). After Zynga's lowered its outlook on Friday, $ZNGA made a new low on record volume. You have to wonder when capitulation sets in here. The stock respected the perfect downtrend line and crashed to $2.21, down from a high of $15.91 in March, before closing at $2.48. You can see on the chart that $2.67ish is now a new ceiling resistance level for the stock (w/ a tight sideways channel above), and there's a downtrend as well that traders and bots could fight again. There could be a pop in the stock at some point if it breaks those resistance levels, which could even try to fill that July gap. But you are still fighting data that is technically and fundamentally trending down.

Interesting out-of-the-money option activity occurred as well on Friday in November and December puts and calls: 2,289 November $2.0 puts traded with 101 contracts open (closed at 0.09, +0.04); 18,056 November $2.50 calls traded with 788 contracts open (closed at 0.27, -0.21); 6,189 December $2.50 calls traded with 2,118 open (closed at 0.32, -.20); and 8,300 December $2 puts traded with 3,512 open (closed at 0.12, +.04). As of Sep 14, 11.7% of the float was short via Yahoo Finance, but that was a while ago.

The Most Important Links For 10/7/2012

I'm in the middle of doing an important post. So in the meantime, here are a few interesting articles to read (h/t G+ and Twitter streams). By the way the Market Center is up and running with a real-time ETF and currency quote widget, and a live stream of Bloomberg TV.

Investors Jump Off the 'Junk' Pile (Wall Street Journal)
Could interest rates fall below zero? Don’t bet against it (Globe and Mail)
California gas prices hit all-time high as average soars to $4.61 a gallon (Fox News, AP)
Could the cross-border tomato feud cost you more? (Houston Chronicle)
Rare Fungal Meningitis Outbreak Rises; 7 Dead, 64 Sick (ABC News)
US Foodstamp Usage Rises To New Record High (Zero Hedge)
Turkey warns Syria future attacks 'will be silenced' (CNN)
Israeli air force shoots down drone aircraft (Reuters)

Live PBS Video of the 2012 Presidential Debates (October 3, 11, 16, 22)

Source: Flickr, Cane and Todd Benson
Watch live coverage of the 2012 Presidential Debates below courtesy of PBS NewsHour's Ustream (Mitt Romney vs. President Obama). The debate starts at 9pm ET. They are replaying Al Gore and George W. Bush's debates from the 2000 race right now.

More information on the debates via PBS.org.

"PBS NewsHour's special election broadcast coverage continues with live coverage and post-debate analysis of the 2012 Presidential Debates on Oct. 3, 11, 16 and 22, 2012 from 9:00 pm EDT - 11:00 pm EDT."

"Wednesday, October 3 - The first Presidential Debate will focus on domestic policy and will be moderated by Jim Lehrer, Executive Editor of the PBS NewsHour at the University of Denver, Denver, CO.

Thousands of Bombs Dumped in Gulf of Mexico Pose Huge Threat to Oil Rigs - Guest Post

Guest post by Joao Peixe of Oilprice.com

Thousands of Bombs Dumped in Gulf of Mexico Pose Huge Threat to Oil Rigs

After World War II the US government dumped millions of kilograms of unexploded bombs into the Gulf of Mexico. This is no secret; many governments dumped their unexploded ordnance into oceans and lakes from 1946 up until the 1970s when it was made illegal under international treaty.

Now that technology has advanced enough for oil companies to drill deep sea wells in the Gulf of Mexico, those forgotten payloads have become a real hazard.

Bearish Linkfest (10/3/2012)

Source: US Naval Research
Dylan Grice Writes His Most Negative Note Ever: 'I Am More Worried Than I Have Ever Been' (Business Insider)

The One Chart No Equity Portfolio Manager Wants To See (Zero Hedge)

ROSENBERG: There's Another Bubble Keeping Buyers Out Of The US Housing Market (Business Insider)

Gap between college tuition and consumer income is at record levels (Sober Look)

California Has A PMI Report And It Just Took A Horrifying Nose Dive (Testosterone Pit at Business Insider)

AUD/USD's Reaction to RBA's 25 bps Rate Cut (10/2/2012)

I haven't covered the Australian Dollar in a while, mainly because it's been in a tight range since the beginning of 2011. But, AUD/USD might start to get interesting again as it trades closer to the apex point of a multi-year symmetrical triangle. After the Reserve Bank of Australia cut its cash rate by 25 basis points to 3.25%, AUD/USD fell 0.63% to 1.03. Read the RBA's statement here.

JPM (Bear Stearns) Gets Sued Again For MBS Fraud

The NY Attorney General just sued JPMorgan (Bear Stearns) for defrauding investors in Bear Stearns' mortgage securitizations in 2006-2007. Read the full complaint here via ThomsonReuters (h/t Business Insider).

It's always interesting to see how Bear Stearns University - School of Finance operated during the credit bubble. Were any credit professionals at the big banks looking at data on their Bloomberg Terminals during this time? Isn't that the reason why financial institutions (CIOs) pay thousands of dollars a month to analyze opaque loan data, mortgage-backed securities, and credit default swaps? Or were entry level, post-grad junior analysts the only ones looking at trends at this point. There should be more MBS charts on the St. Louis Fed's FRED database. The Federal Reserve regulates the financial system right? After the crisis, it is still hard to find quality data on the mortgage and MBS markets.

"30. Defendants were aware that many of their loan originators were selling defective loans but continued to buy and securitize those loans. For example, according to a June 2006 internal Bear Stearns email, almost 60% of AHM loans that were purchased through the conduit were 30 or more days delinquent. After learning this information, Defendants went on to issue over 30 subprime and Alt-A securitizations that included AHM loans. At least four of these securitizations contained 30% or more loans originated by or purchased from AHM, including SACO I Trust (“SACO”) 2006-8, Structured Asset Mortgage Investments II Trust (“SAMI”) 2007-AR4, SAMI 2007-AR6, and SAMI 2007-AR7. Other internal communications reflect Defendants’ awareness of the bad quality of loans that were being included in other securitizations. In connection with the Bear Stearns Second Lien Trust 2007-1 (“BSSLT 2007-1”) securitization, for example, one Bear Stearns executive asked whether the securitization was a “going out of business sale” and expressed a desire to “close this dog.” In another internal email, the SACO 2006-8 securitization was referred to as a “SACK OF SHIT” and a “shit breather.”

S&P Has Been Rising With Negative Earnings Pre-announcements Since QE2 (Two Years Straight)

Look at this amazing FactSet chart via Business Insider today. As you can see, usually the market goes down when there are negative earnings pre-announcements (see 2007 and 2008). But ever since QE2 was announced by the Fed in August 2010 (and then Operation Twist and QE3), it looks like the S&P 500 and negative earnings pre-announcements have been rising in tandem for two years straight (except for Q1 2012). Wow.