By: Daryl Montgomery
JP Morgan Chase revealed yesterday that one of its traders, Bruno Iksil, was responsible for a $2 billion loss in the last six weeks. Apparently, little has changed since 2008, when the irresponsible activities of the big banks and trading houses almost brought down the world financial system.
Iksil’s trading was hardly secret. His positions were well-known among traders and Bloomberg published an article about their high-risk nature on April 5th. Jamie Dimon, ...
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By: Daryl Montgomery
The BLS release the employment situation for April 2012 this morning. The report showed that 115,000 jobs were created last month and the current unemployment rate is 8.1%. The big story however was the incredible number of people leaving the U.S. labor force — almost ten million in the last five years.
Looking at any of the macro numbers since the Great Recession began in December 2007 indicates that the employment situation in the United States ...
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By: Daryl Montgomery
The new mantra for the U.S. markets appears to be “if it’s Tuesday, it must be bidirectional market day”. Once again the Dow went up strongly, while the Nasdaq was trading in negative territory. Events in Spain seem to be connected with this unusual and bearish market action.
At one point during the trading day, the Dow Industrials were up 123 points. Nasdaq on the other hand was down by 20 points at ...
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By: Daryl Montgomery
U.S. stock market action on Monday was highly unusual with the Dow Jones Industrials rallying strongly while the Nasdaq experienced major selling. This behavior is bearish and indicates lower stock prices in the future.
The open set the tone for the day with the Dow up over 100 points shortly thereafter and the Nasdaq down more than 20 points. The Dow rallied even further and the Nasdaq sold down to even lower levels. By the close however, not ...
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By: Daryl Montgomery
Minutes from the last Fed’s Open Market Committee meeting indicate the central bank is less likely to introduce more stimulus. While this should not have been surprising, stocks sold off on the news adding more evidence that the top has been put in.
The current market rally, indeed the entire market rally since mid-2009 has been produced primarily on liquidity provided by the Fed and other central banks. This liquidity not only allows the ...
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By: Daryl Montgomery
While stocks weakened in the U.S. on Thursday because of disappointing economic data, they were down in Europe on the resurfacing of the debt crisis issues.
The head of sovereign ratings at S&P, Moritz Kraemer, speaking at an event at the London School of Economics said that another restructuring of Greek debt is likely, with the bailout partners such as the IMF having to take a hit the next time around. Speaking at the ...
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By: Daryl Montgomery
As average U.S. gas prices head toward $4.00 a gallon, billionaire hedge fund operator John Paulson recently told a standing room only crowd at New York’s University Club that double-digit inflation is about to rear its ugly head. Paulson assumes that the Fed will continue to engage in its inflation-creating behavior.
John Paulson is famous for making a killing on shorting subprime bonds before their collapse. Most of Wall Street was bullish at the time ...
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By: Daryl Montgomery
The Federal Reserve released its stress test results of 19 banks two days early yesterday. JP Morgan Chase forced its hand by making a public announcement that it had passed the test. Although the news was not particularly good, nor the results completely believable, U.S. stocks had their best day all year.
The Fed said on Tuesday that 15 of the 19 banks tested would have enough capital, even if they suffered a financial shock. ...
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By: Daryl Montgomery
Unadjusted for inflation, U.S. retail sales rose 1.1% in February. There may have been little or no gain if price increases are accurately taken into account.
Retail sales going up in the beginning months of the year should surprise no one because this is when companies typically raise prices. Anyone who goes to Starbucks is aware of this practice. It pervades a number of industries across the spectrum. Clothing prices are being hit particularly ...
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By: Daryl Montgomery
Greece is set to swap its privately-held government bonds today for new ones that will represent a three-quarters loss of the original investment. The deal will allow the country to receive 130 billion euros in funds from its second bailout. Like the money from the first bailout, those funds will eventually run out however.
The Greek bond swap is the biggest debt writedown in history. Over 85% of private investors (essentially banks, the deal does not ...
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