Jim Sinclair’s Commentary
This puppy’s name is Algo.
Jim Sinclair’s Commentary
What nut came up with this act of pure insanity?
CIA, Saudis To Give “Select” Syrian Militants Weapons Capable Of Downing Commercial Airliners
Submitted by Tyler Durden on 11/05/2015 12:49 -0500
Wednesday brought a veritable smorgasbord of “new” information about the Russian passenger jet which fell out of the sky above the Sinai Peninsula last weekend.
First there was an audio recording from ISIS’ Egyptian affiliate reiterating that they did indeed “down” the plane. Next, the ISIS home office in Raqqa (or Langley or Hollywood) released a video of five guys sitting in the front yard congratulating their Egyptian “brothers” on the accomplishment.
Then the UK grounded air traffic from Sharm el-Sheikh noting that the plane “may well” have had an “explosive device” on board.
Finally, US media lit up with reports that according to American “intelligence” sources, ISIS was probably responsible for the crash.
Over the course of the investigation, one question that’s continually come up is whether militants could have shot the plane down. Generally speaking, the contention that ISIS (or at least IS Sinai) has the technology and/or the expertise to shoot down a passenger jet flying at 31,000 feet has been discredited by “experts” and infrared satellite imagery.
But that’s nothing the CIA can’t fix.
With the Pentagon now set to deploy US ground troops to Syria (and indeed they may already be there, operating near Latakia no less), Washington is reportedly bolstering the supply lines to “moderate” anti-regime forces at the urging of (guess who) the Saudis and Erdogan.
Jim Sinclair’s Commentary
There is a God.
Swift Guilty Verdict in Spoofing Trial May Fuel New Prosecutions in U.S.
Brian R Louis, and Janan Hanna
November 3, 2015 — 4:00 PM MST
Updated on November 3, 2015 — 8:27 PM MST
Commodities trader is first convicted under spoofing law
Prosecutors already seek extradition in Flash Crash case
The lightning fast guilty verdict against a high-speed commodities trader may embolden prosecutors who have gone on the offensive in a year of heightened regulatory scrutiny of spoofing.
Michael Coscia’s trial was the first use of an anti-spoofing law after the 2010 Dodd-Frank Act made it illegal to manipulate prices by placing orders without intending to trade on them. That law, which also provided an easier standard of proof to try cases, was put to test in Chicago federal court amid stepped-up civil enforcement by the Commodity Futures Trading Commission.
The jury of eight men and four women deliberated for about an hour before finding the 53-year-old head of Panther Energy Trading LLC guilty on the spoofing charges. The trial was widely watched by lawyers and trading firms as a bellwether for future cases.
The verdict may prove influential as U.S. authorities pursue extradition of a U.K. trader accused of helping cause the 2010 flash crash and a lawsuit against a Chicago trader who was fined $660,000 for spoofing by three of the world’s largest futures markets. They too are accused of systematically placing orders they didn’t intend to execute to trick the market into thinking there was demand or supply that didn’t actually exist.
Expect more spoofing cases, said Michael Friedman, general counsel at Trillium Trading.
“There’s going to be more of them,” said Friedman, who sees the verdict as showing it’s possible for jurors to distinguish spoofing schemes from regular market-making activity. “The CFTC has a new tool in its toolbox that it wasn’t sure worked. Now they know it works.”
Prosecution witnesses from two exchanges showed data on how large orders placed by Coscia were frequently canceled, while smaller orders he placed were canceled at a far lower rate. Those large orders were placed only to manipulate the market and move prices so Coscia could make money on the other side of the trade, prosecutors said. They claimed he made an illegal profit of about $1.4 million over three months in what they called a bait-and-switch scheme.
China Proposes Phasing-Out Manipulative Trading Algorithms – Jeff Nielson
By Jeff Nielson
Over the past decade; our markets have ceased to behave like “markets”, at all. We see obvious perversity, such as the simultaneous (and extreme) bubbles in U.S. stocks and bonds, something which is mathematically impossible in any legitimate marketplace.
More generally; we see what are supposed to be divergent stock markets (representing diverse, independent economies), diverse sectors, and diverse companies being marched up-and-down, collectively, like some gigantic, synchronized yo-yo. This is more impossible behavior – in legitimate markets.
Such insanity, and such extreme/impossible market phenomena are not confined to Western markets. Two weeks ago; blockbuster news emerged out of China, via Zero Hedge. China’s government is:
…seeking public opinion on limiting the use of automated trading programs in the stock market.
This initial news acquires even greater significance with the additional context provided by the China Securities Journal:
The stock market regulator said such automated systems could fuel market volatility and affect fairness.
It plans to tighten access and also review the mechanisms behind automated trading systems and would authorize stock exchanges to levy extra charges on such automated systems. [emphasis mine]
The first part of that excerpt is nothing more than stating the obvious. Computerized trading algorithms began (literally) “taking over” our markets roughly a decade ago. Today, these computer programs now account for roughly ¾ of all trading volume, dwarfing all human trading in what are (supposed to be) human markets.
Oceans of automated “stupid money”. Non-coincidentally, it is over precisely the same time-frame that we have seen “circuit-breakers” created in all of the world’s major markets. Then we’ve seen all those circuit-breakers tightened (again and again), as so called “HFT trading” became more and more dominant. Liquidity run amok.
Or is it “amok”?
In fact, as regular readers already know, evidence has emerged to strongly suggest that all this automated stupid money is a brute-force means of herding and controlling all our markets. In a lawsuit against the Chicago Mercantile Exchange, evidence was introduced allegedly showing that 50% of all trades at the CME were merely phony and illegal “wash trades”; pseudo-trades between the same entity. This amounts to roughly 100 phony/illegal trades per second, market-rigging which could only be perpetrated via computerized trading.
Jim Sinclair’s Commentary
Who is it out there that maintains there is no manipulation in the gold and silver market and that people who think markets are manipulated all wear tin hats?
Probe Widens Into Treasury Debt Auctions
Justice Department and CFTC ask banks for information tied to government debt sales
By Aruna Viswanatha in Washington, and Justin Baer and Katy Burne in New York
Nov. 3, 2015 7:21 p.m. ET
Federal prosecutors and the top U.S. commodities regulator have asked banks to turn over information in connection with a broad probe into whether their traders rigged auctions on government debt, according to people familiar with the matter.
Banks are in the process of providing details to prosecutors at the Fraud Section at the Justice Department, as well as investigators at the Commodity Futures Trading Commission, the people said.
The two agencies sent the requests this summer to many of the banks that serve as primary dealers, which are authorized to deal directly with the government on the sale of Treasury bonds, the people said. The list of primary dealers includes Goldman Sachs Group Inc., as well as other Wall Street banks and many of their biggest European and Asian counterparts.
There are 22 primary dealers, but it isn’t clear whether all of those firms received the requests.
Goldman appeared to reference the inquiries Tuesday in a regulatory filing. The firm noted that regulators were scrutinizing activities related to the offering and auction of various securities, as well as “when-issued trading,” a classification for bets dealers and traders place on the interest rate that will be offered by the government debt issued at auction a week later. The disclosures hadn’t appeared in Goldman’s previous quarterly filings. A representative for Goldman declined to comment.
The requests from the CFTC and Justice Department’s Fraud Section hasn’t been previously reported, nor has the fact that banks have begun to turn over information at the request of the two agencies.
In August, New York’s Department of Financial Services, the state’s banking regulator, sent its own information requests to nine large banks within its jurisdiction, The Wall Street Journal has reported.
There Are Now 293 Ounces Of Paper Gold For Every Ounce Of Physical As Comex Registered Gold Hits New Low
Tyler Durden on 11/04/2015 19:42 -0500
Unlike Bitcoin, which has doubled in the past few weeks (as the predicted Chinese buying onslaught indeed materialized), it hasn’t been a good week for spot gold prices which have tumbled from $1,180 to just over $1,100. While the reason for the selling is unknown, with recurring speculation that an imminent Fed rate hike will make holding gold even more unwelcome in real terms (if not in India where gold now pays interest on par with inflation), what we do know is that as of yesterday the total registered gold at the Comex had dropped to a fresh record low following another transfer of “registered” gold into “eligible.”
This reduced overnight the total amount of eligible gold by a third to just over 151,000 ounces, or under 5 tons as the zoomed in chart below shows.
And since the gold open interest continues to rise modestly…
… this means that as of today, the gold “coverage” ratio, or the amount of paper claims for every ounce of physical, has just hit a new all time high of 293 ounces of paper per ounce of registered physical.
After Topping $500, Bitcoin Is (Again) Plunging On Extreme Volume
Tyler Durden on 11/04/2015 22:25 -0500
It appears a double in a week has prompted – just as we saw yesterday – some more profit-taking in Bitcoin as after topping $500 earlier today, the virtual currency has plunged (considerably more than yesterday) to $368 in late US trading as a high volume selling program was unleashed on the virtual currency.
As we noted during yesterday’s plunge,
To be sure, there is nothing wrong with profit taking after such a parabolic move, however we were under the impression that the kind of furious block selling – which is intended to take out the entire bid stack and reprice an asset to a lower baseline – was reserved solely for gold, courtesy of the BIS.
It appears Virtu, or the NY Fed, may have finally noticed the dramatic surge in this alternative currency. What happens next will be up to the influx of new Chinese buyers who as we predicted two month ago when BTC was $230, have nearly doubled the value of bitcoin in two months in order to bypass China’s tightened capital controls.
* * *
However, someting else caught our eye.
While the recent rise (and rapid acceleration) in Bitcoin prices have become more mainstream since we suggested Chinese capital-control-fleeing money may find the virtual currency a useful conduit, something odd has been going on in fiat currency alternatives…
Before The Fed stopped its direct money-printing in October 2014, gold and bitcoin were highly correlated, perhaps rightfully reflecting the ebbs and flows of the USD’s reserve currency strength (or weakness) as well as various crisis moments. However, as the chart below shows, since the end of QE3, the correlation regime between gold and the virtual currency has entirely flipped – most notably in the last week or two…
Of course, these gold ‘prices’ merely reflect the machinations of various paper-promise-trading manipulators amid surging physical demand, but still, we noticed one interesting point of inflection.
Since the end of QE3, the relative price of gold has surged relative to bitcoin and now roundtripped to pre-QE3 levels…
Desperate-To-Hike Fed Admits “Inflation Is Not As Low As You Think”
Submitted by Tyler Durden on 11/04/2015 21:13 -0500
Following this morning’s basic admission by Janet Yellen that “no matter what” The Fed is raising rates in December (which was then solemnly supported by an obedient Bill Dudley who “100% agrees with Yellen”), Fed Vice-Chair Stan Fischer, speaking tonight, reaffirmed this belief by, as we detailed previously, telling investors to ignore weak inflation. After San Fran Fed’s Williams admission that “there’s something going on here we don’t understand,” Fischer tonight admitted “US inflation is not as low as you think,” at once contradicting Yellen’s earlier comments and the various market-based measures, while confirming our previous detailed solving of the mystery of the hidden inflation.
Inflation Breakevens are collapsing…(longer-dated near record lows)
Inflation expectations are at a record low… and worse…
*CURTIN SAYS `DISINFLATIONARY MINDSET’ IS TAKING HOLD
But all of that is wrong.. As Stan Fischer admitted tonight:
*FISCHER SAYS NOT MUCH EVIDENCE INFLATION MEASURE IS TOO LOW
*FED’S FISCHER SAYS HE BELIEVES WAGE GROWTH WILL COME BACK
*FISCHER SAYS U.S. INFLATION IS `NOT AS LOW AS YOU THINK’
*FISCHER SAYS FED IS NOT THAT FAR FROM 2% INFLATION TARGET
Having now admitted that all of the above market-based (and survey-based) expectations (and current measures) of inflation are wrong, as we noted previously, depending on the importance of the credit channel, the Federal Reserve, by pegging the short term rate at zero, have essentially removed one recessionary market mechanism that used to efficiently clear excesses within the financial system.
While stability obsessed Keynesians on a quest to the permanent boom regard this as a positive development, the rest of us obviously understand that false stability breeds instability.
Initial Jobless Claims Jump Most In 8 Months As Energy Sector Layoffs Spike Back To 6-Month Highs
Submitted by Tyler Durden on 11/05/2015 08:35 -0500
Just when you thought (for the 10th time this year) that the worst was over in the US energy space, Challenger Grey reports a massive spike in Energy sector layoffs – to six-month highs. For context, energy sector layoffs are 9 times higher in 2015 than 2014 and Texas – with 103,422 layoffs – is the worst state for job cuts (despite Dallas Fed Fisher’s previous insistence that the state is ‘diversified’). Despite the ongoing side in initial jobless claims, employers have announced 543,935 job cuts in 2015 so far, 31% higher than 2014.
Claims surged 16k in the last week – a 6.15% rise which is the most since February…
Is this the catch up?
It’s not over…
Led by a surge in Texas…