Category Archives: insider trading

Fangs may lead marts south; BTC heads north of $3K

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On Thursday, I wrote about hearing on the street that Friday was going to be a difficult day for stocks.

I then wrote on Friday that futures were not showing any worries from either the James Comey testimony, the English election results nor the possible rate hike this week by the Federal Reserve. However, the headline I wrote was “Nothing to see here, please go buy some FANGs”.

Well the FANGs were the problem. The Nasdaq traded lower by 1.8% Friday as Facebook (-3.3%), Apple (-3.8%), Netflix (-4.7%) and Google (-3.4%).

The selloff came from a Goldman Sachs analyst report saying these and other tech firms’ stock prices are getting overvalued and reaching valuations like the pre-Internet bubble burst.

The pullback should not be too much of a surprise since the Nasdaq is up more than 15% year-to-date, which is double the Dow Jones industrial average’s gains over the same period.

Bitcoin spent much of the overnight trading session above the $3K mark, before pulling back to $2995 by 6AM EDT.

The cryptocurrency is finding strength on each pullback, which for a market technician means there’s a large base being formed. This base is allowing for $80-$100 spikes in daily pricing like we saw Sunday.

Weekends are still the best price appreciation days since the buying does not need any major trading outpost such as London, New York or Hong Kong to execute the trade.

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Investors double down on new to chase returns

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Out with the old and and in with the new at double the price.

That’s what we have in the markets today. Wal-Mart has a market cap of $236B, while Amazon’s value is twice that at $478B with a share value of nearly $1,000 as compared to $78 for the predominantly brick and mortar retailer.

Also, bitcoin in the next few minutes may be worth twice the price of an ounce of gold, again.

On Tuesday it was reported that former SAC Capital chief Stevie Cohen is looking to raise at least $10B to add to his own $11B for his new hedge fund to launch in January.

Cohen was riding high until the Securities and Exchange Commission forced him to shut it down in 2013 and accept a four-year ban from the industry for not properly managing his staff when some SAC employees were charged with insider trading by then NY Federal Prosecutor Preet Bharara.

The doubling down on the new seems to be a signal of a top to the markets as the tried and true cannot find the legs to go to the next level as valuations are stymied thereby forcing capital to find a newly formed bubble.

 

Italy charges Deutsche with running a global criminal conspiracy

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Italian authorities have ramped up the charges against Deutsche Bank and its executives who are facing criminal charges of market manipulation in the merger of two banks in Italy in 2008.

In October, I wrote that six current and former managers of Deutsche Bank, including Michele Faissola and Michele Foresti, who were charged in Milan for colluding to falsify derivative accounts pertaining to Monte Paschi — the world’s oldest bank — in its takeover of another Italian bank.

In total, Deutsche Bank and Japan’s Nomura both went on trial in December, accused of colluding with Monte Paschi to cover up losses that almost toppled the Italian lender. Thirteen former managers of Deutsche, Nomura and Monte Paschi were charged for alleged false accounting and market manipulation.

Well this week Italian prosecutors in Milan have persuaded the three-judge panel to add further charges for Deutsche and its defendants of running an international criminal organization at the time. These additional charges of global fraud carries with it hefty prison sentences for the bankers should they be found guilty.

However, it could be the death knell for Deutsche, since if the bank is found guilty of running a global criminal cabal it could have to cease its banking business in Europe, Asia and the US due to losing its banking licenses.

Italian prosecutors relied on emails and other internal banking records obtained from an earlier probe by German financial regulator Bafin to build their current case.

In one instance, in order to make the Monte Paschi deal work a certain internal derivative instrument needed to be at a certain value. Once the derivative hit that needed value through Deutsche’s manipulation it is alleged, a London trader sent a  “well done!” message. The recipient was Foresti, then the bank’s head of European fixed income, who stands at trial in Milan, Bloomberg reports.

In my award-winning story on the Deutsche banker suicides, I could only suggest at the time that the bank was running nefarious global operations and that this was why there were deaths in New York, London and Sieina, Italy and that these deaths were tied to possible whistleblowers.

The Italian authorities seem to be in agreement with me on the global criminal activities, let’s see if they will go further and look into the circumstances surrounding these deaths.

Conspiracy of Dunces: Central bank manipulations in crisis

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On Monday we discover further evidence that the Bank Of England in 2008 was pressuring banks to manipulate the LIBOR rates lower as a result of the financial crisis.

At the time Mervyn King was the Governor of the Bank of England and his staff were said to be questioning UK banks — including Barclays — about why they were paying such a high rate of interest to borrow money overnight from other banks.

Tape recordings coming to light from the BBC detail a conversation between Barclays manager Mark Dearlove and Libor committee member Peter Johnson saying that the bank must lower its Libor rates because of pressure from the government and the BOE.

“The bottom line is you’re going to absolutely hate this… but we’ve had some very serious pressure from the U.K. government and the Bank of England about pushing our Libors lower,” Dearlove tells Johnson, according to the BBC.

Johnson objects, saying it’ll break the rules for setting the interest rate.

“The fact of the matter is we’ve got the Bank of England, all sorts of people involved in the whole thing… I am as reluctant as you are… these guys have just turned around and said just do it,” Dearlove replies.

The full BBC program will be aired later on Monday.

These recordings back up reports from then Barclays CEO Bob Diamond. In a memo, written on Oct 29, 2008, by Diamond and circulated to two other senior bank officials, said: “Mr Tucker [Deputy Governor of the Bank of England] reiterated that he had received calls from a number of senior figures within Whitehall (which is a reference to the UK government) to question why Barclays was always toward the top end of the Libor pricing.”

These tapes come a week after Federal Reserve Richmond governor Jeffrey Lacker immediately resigned after leaking information on what the Fed was going to release two days later.

Surely this is probably the tip of the iceberg on what central bankers were up to during the financial crisis and beyond.

You must remember this a Fed leak is just a leak, on that you can rely

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“I’m shocked, shocked to find that gambling is going on in here!” says Captain Renault in “Casablanca”.

Richmond Fed President Jeffrey Lacker resigned immediately yesterday after confessing he leaked Fed meeting information to a hedge fund  advisory firm days before the minutes from a previous meeting were to be released in Oct. 2012.

The firm, Medley Global Advisors, placed a call into Lacker’s office and he answered the analyst’s questions. The fact that Lacker misled three or possible four investigations into the leak and was allowed to stay on at the Fed for almost 5 years is a testament to the crony capitalism practiced at the Fed.

But this is only half of the leak. In late September of 2012 the Wall Street Journal’s John Hilsenrath, who covers the Fed, wrote on how the Fed was about to embark on a massive mortgage-backed securities buying spree, which would be called QE 3.

The leaker in that case has never been identified, but that’s what Medley Global was calling Lacker about and he not only confirmed that report but went further.

So the question is did Lacker give Hilsenrath his information — more than a week before the minutes were to be released? Or was there another leaker in late Sept. 2012?

One thing is for sure, don’t ask Fed chief Janet Yellen about insider trading leaks at her press conference. Hilsenrath’s WSJ colleague Pedro da Costa tried to do that in March 2015 and was soon told by his bosses that he was no longer covering the Fed’s press conferences. This is a career death-knell for a reporter covering the Fed.

There’s one other thing about Hilsenrath that always bothered me. How he produced 600 word stories on the latest Fed action and posted it one minute after the release of the information? He must be a speed reader and a quick typist.

So with Lacker’s five-year-old admission, will we get the name of the other leaker? Let’s wait and see.

But as far as the inside money of Wall Street goes, it’s what the croupier says to Captain Renault to close out that scene: “Your winnings sir.”