In The News Today

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Jim Sinclair’s Commentary

A wash trade is a false price because it occurs with the buyer and seller as one and the same party or two financially related parties.

Who is to say that the huge paper gold shares at the open in the US are not wash sales? There is no risk in a wash sale. You can artificially force the price in any direction you wish with wash sales. Wash sales are illegal under present rules and regulations.

Lawsuit Stunner: Half of Futures Trades in Chicago Are Illegal Wash Trades
By Pam Martens: July 24, 2014

Since March 30 of this year when bestselling author, Michael Lewis, appeared on 60 Minutes to explain the findings of his latest book, Flash Boys, as “stock market’s rigged,” America has been learning some very uncomfortable truths about the tilted playing field against the public stock investor.

Throughout this time, no one has been more adamant than Terrence (Terry) Duffy, the Executive Chairman and President of the CME Group, which operates the largest futures exchange in the world in Chicago, that the charges made by Lewis about the stock market have nothing to do with his market. The futures markets are pristine, according to testimony Duffy gave before the U.S. Senate Agriculture Committee on May 13.

On Tuesday of this week, Duffy’s credibility and the honesty of the futures exchanges he runs came into serious question when lawyers for three traders filed a Second Amended Complaint in Federal Court against Duffy, the Chicago Mercantile Exchange, the Chicago Board of Trade and other individuals involved in leadership roles at the CME Group.

The conduct alleged in the lawsuit, backed by very specific examples, reads more like an organized crime rap sheet than the conduct of what is thought by the public to be a highly regulated futures exchange in the U.S.

The lawyers for the traders begin, correctly, by informing the court of the “vital public function” that is supposed to be played by these exchanges in “providing price discovery and risk transfer.” They then methodically show how that public purpose has been disfigured beyond recognition through secret deals and “clandestine” side agreements made with the knowledge of Duffy and his management team.

The most stunning allegation in the lawsuit is that an estimated 50 percent of all trading on the Chicago Mercantile Exchange is derived from illegal wash trades.

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Russia starts reinforcing naval fleet in Crimea
July 23, 2014 10:11 AM

Sevastopol (AFP) – Russia announced Wednesday that it had begun expanding and modernising its Black Sea fleet based in Crimea with new ships and submarines, just months after annexing the peninsula from Ukraine.

"Today we have started forming a powerful Black Sea fleet with an absolutely different level of air service, coastal missile and artillery troops and marines," said Alexander Vitko, the Black Sea fleet commander, in a message to servicemen.

"We are preparing bases and crews to serve on new ships and submarines."

Vitko said the modernisation of the fleet "lays the foundation for the future of the fleet, both in the short term and looking far ahead."

Russia’s Black Sea fleet had a base at the historic port city of Sevastopol in Crimea under an agreement with Ukraine before Russia annexed the peninsula in March.

President Vladimir Putin said at a meeting with the national security council Tuesday that Russia will bolster its defences to counter the creeping influence of NATO close to its borders.

"It is necessary to implement all of the country’s defence measures fully and promptly, including of course in Crimea and Sevastopol, where we have to de facto create military infrastructure from scratch," he said.

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Jim Sinclair’s Commentary

Continuous meaningful steps forward for the Chinese currency.

Swiss National Bank, China Agree on a Currency-Swap Deal
Deal Is Key to The Development of Yuan Market in Switzerland
By Neil MacLucas and Chiara Albanese
Updated July 21, 2014 12:16 p.m. ET

URICH—The Swiss National Bank SNBN.EB -0.55% and People’s Bank of China have agreed to set up a currency swap line designed to boost trade and investment between the two countries, joining a parade of countries hoping to become offshore hubs for trading the yuan.

The Swiss and Chinese central banks said Monday that the three-year agreement will allow them to buy and sell their currencies up to a limit of 150 billion yuan, also known as renminbi, or 21 billion Swiss francs ($23.4 billion). Such swap lines allow central banks to buy currencies from one another, making it easier for banks in each country to get hold of the underlying currencies when they need them.

The deal also will allow the SNB to buy up to 2 billion francs worth of Chinese bonds, helping it diversify its foreign-exchange reserves, which have swelled to almost 450 billion francs.

"Switzerland has taken a long time to figure out how it wanted to be involved with China but it is not lagging behind now," said RongRong Huo, head of renminbi business development for Europe, the Middle East and Africa at HSBC Holdings HSBA.LN +2.03% PLC. "It has actively progressed to the second stage of the process, which is to bridge the gap between onshore and offshore markets, especially on the infrastructure side."

The Swiss franc offers China a strong haven currency as an alternative to the euro, she said.

For Switzerland, the effort to promote yuan trading "is a country push rather than a location push, as the country is actively promoting both Zurich and Geneva," Ms. Huo said.

The Swiss central bank, based in Zurich, said the agreement will further strengthen collaboration between it and its Chinese counterpart and is a "key requisite for the development of a renminbi market in Switzerland."

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Sales of U.S. New Homes Fell in June After Large Revision
By Victoria Stilwell and Nina Glinski Jul 24, 2014 12:46 PM ET

July 24 (Bloomberg) — Bloomberg’s Scarlet Fu reports that new home sales in June fell 8.1 percent to an annualized pace of 406,000, as the median home sale price also fell. She speaks on “Market Makers.”

Fewer U.S. new homes than forecast were sold in June and data for the prior month was revised down by a record, painting a troubling picture of a market struggling to gain traction.

Sales declined 8.1 percent to a 406,000 annualized pace, the fewest since March and lower than any projection in a Bloomberg survey of economists, Commerce Department figures showed today in Washington. That followed a May rate of 442,000 that was 12.3 percent less than estimated last month.

Restrictive lending rules, limited land supply, higher mortgage rates and more expensive properties are restraining housing, underscoring Federal Reserve Chair Janet Yellen’s concern that the industry is underperforming. Other data showed the fewest Americans in more than eight years filed applications for unemployment benefits last week, probably reflecting a pickup in auto-making during a typically slow time of year.

“The housing data on balance has looked weaker than some of the other indicators on the economy,” said Michelle Meyer, a senior U.S. economist at Bank of America Corp. in New York. “The tightness in credit conditions has limited the pool of prospective buyers.”

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Jim Sinclair’s Commentary

Easily due to auto retooling date difference.

Jobless Claims in U.S. Unexpectedly Drop to Eight-Year Low
By Nina Glinski and Victoria Stilwell  Jul 24, 2014 8:59 AM ET 

July 24 (Bloomberg) — Nariman Behraveshm chief economist at IHS, and Bloomberg’s Scarlet Fu discuss this week’s initial jobless claims report, which fell to an eight-year low of 284,000, and what it means for the quality of job creation in the United States. They speak on “In The Loop.”

The number of Americans filing applications for unemployment benefits dropped last week to the lowest level in more than eight years, reflecting what could be a pickup in auto making during a typically slow time of year.

Jobless claims fell by 19,000 to 284,000 in the week ended July 19, the fewest since February 2006 and lower than any economist surveyed by Bloomberg forecast, a Labor Department report showed today in Washington. Applications can be volatile in July because of auto plant shutdowns, even as state data showed nothing inconsistent with prior years, a Labor Department spokesman said as the data was released to the press.

Fewer claims signal employers are reluctant to let go of staff as the talent pool shrinks and sales improve. A tightening labor market could lift wages and spur consumer spending, which accounts for about 70 percent of the economy.

“Make no mistake — the broader trend is definitely one for improvement,” said Tom Porcelli, chief U.S. economist at RBC Capital Markets in New York, who projected claims would drop. “But there’s an asterisk that needs to be assigned to this number, and that’s broadly true for claims in July.”

Stock-index futures held earlier gains after the report. The contract on the Standard & Poor’s 500 Index maturing in September climbed 0.2 percent to 1,984.4 8:59 a.m. in New York.

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US Manufacturing PMI Drops, Biggest Miss On Record
Submitted by Tyler Durden on 07/24/2014 09:50 -0400

But, but, but… the rest of the world’s PMIs are soaring as soft-survey data trumps any hard data facts. US Manufacturing dropped from 57.3 to 56.3 despite analysts that were convinced it should rise further to 57.5. This is the biggest miss on record, and the 2nd miss in a row. In spite of soaring markets proving the recoverty is just picking up and accelerating, new export orders weakened, manufacturing production fell, input costs surged, and employment tumbled to 10-month lows. But, stocks are surging on this dismal news…

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as Employment tumbled to its worst of the year!

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"Worryingly, job creation slid to its lowest since last September, which in part reflects concerns that current sales growth may not be sustained. A key source of concern is export sales, which continue to show disappointingly meagre gains"

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