By Pam Martens and Russ Martens: September 20, 2019 ~ The storyline in the business press is that the lending rate on overnight repos had spiked to an unprecedented 10 percent, necessitating an emergency infusion of $53 billion by the New York Fed on Tuesday to ramp up liquidity for overnight loans and bring down the loan rate. (That was followed with $75 billion more on Wednesday, Thursday and today – raising the question that if the money is going to the same banks, isn’t that a term loan, not an overnight loan? We don’t know, however, if the money is going to the same banks because the Fed, as it did during the 2008 financial crisis, is staying mum about where the money is going.) As it turns out, the Federal Reserve’s Federal Open Market Committee (FOMC) directive that authorized the Tuesday operation was dated July 31, 2019 – … Continue reading →

By Pam Martens and Russ Martens: September 19, 2019 ~ Following a lack of liquidity on Wall Street, which necessitated the Federal Reserve having to provide $53 billion on Tuesday and another $75 billion on Wednesday to normalize overnight lending in the repo market, the Chairman of the Fed, Jerome (Jay) Powell held his press conference at 2:30 p.m. yesterday. The press gathering followed both a one-quarter point cut in the Fed Funds rate by the Fed yesterday as well as the first intervention by the Fed in the overnight lending market since the financial crash. (The Fed had to intervene again this morning, making another $75 billion in repo loans available.) The week’s unsettling events should have provided the basis for reporters to fire questions at the Fed Chair along the following lines: (1) Did the overnight repo lending rate jump to an historical high of 10 percent on … Continue reading →

By Pam Martens and Russ Martens: September 18, 2019 ~ Yesterday felt a little like that scene from the 1946 movie “It’s a Wonderful Life” starring Jimmy Stewart. There’s a run on Stewart’s bank because his absent-minded Uncle Billy loses the cash he was sent off to deposit on behalf of the bank. The bank examiners discover there’s money missing and rumors spread. The rumors that spread yesterday were not that money was missing at a Wall Street bank but that liquidity was missing. It had dried up to the point that the major Wall Street banks could not, or would not, handle the demand for loans called overnight repurchase agreements (repos) that were coming their way. (Repos are a short-term form of borrowing where corporations, banks, brokerage firms and hedge funds secure loans by providing safe forms of collateral such as Treasury notes.) The oversized demand for the repos … Continue reading →

By Pam Martens and Russ Martens: September 17, 2019 ~ Yesterday, three traders at JPMorgan Chase, the bank headed by Jamie Dimon, got smacked with the same kind of criminal felony charge that was used to indict members of the Gambino crime family in 2017. The charge is racketeering and falls under the Racketeer Influenced and Corrupt Organizations Act or RICO. According to the Justice Department, the traders engaged in a pattern of rigging the gold, silver and other precious metals markets from approximately May 2008 to August 2016. One of the traders, Michael Nowak, was actually a Managing Director at the bank and the head of its Global Precious Metals Desk. The other two traders are Gregg Smith and Christopher Jordan. RICO is typically used to indict mobsters – which makes its use against employees of the largest bank in America a very disquieting event. But even more disquieting … Continue reading →

By Pam Martens and Russ Martens: September 16, 2019 ~ According to the amended prospectus filed with the Securities and Exchange Commission to alert the public to the thousands of warts with malignant possibilities sprouting out of the office rental company, WeWork, which plans to offer its shares to the public for the first time, JPMorgan Chase will receive something no other underwriter is getting in this deal: a cool $50 million extra as a “structuring fee.” On top of that, of course, the bank will also get the fat underwriting fees that the other banks involved in the IPO get. That’s just one of the many curious ways that JPMorgan Chase stands out in its relationship with WeWork. (The parent of WeWork, The We Company, is actually offering the shares to the public.) As it turns out, quite a few of JPMorgan Chase’s commercial real estate clients who have … Continue reading →

By Pam Martens and Russ Martens: September 13, 2019 ~  During last evening’s Democratic debate, Senator Bernie Sanders said this: “You’ve got three people in America owning more wealth than the bottom half of this country.” According to Politifact, Sanders is basing this claim on a 2017 study done by the Institute for Policy Studies which put the richest three Americans’ wealth as follows (based on the Forbes list of billionaires at that time): Bill Gates of Microsoft with $89 billion; Jeff Bezos of Amazon with $81.5 billion; and Warren Buffett of Berkshire Hathaway with $78 billion — for a total of $248.5 billion. That wealth figure contrasts with the $245 billion owned by the bottom 50 percent of Americans according to the 2016 Survey of Consumer Finances conducted by the Federal Reserve. (The Fed’s survey is conducted every three years and the 2019 study has not yet been released.) But … Continue reading →

By Pam Martens and Russ Martens: September 12, 2019 ~ Yesterday the U.S. House of Representatives’ Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets held an extremely timely hearing titled: “Examining Private Market Exemptions as a Barrier to IPOs and Retail Investment.” The thrust of the hearing was the negative impact that the ballooning private equity market is having on the dramatically shrinking pool of publicly traded stocks and the good of society in general. As the WeWork IPO train wreck plays out in the media, showing how two of the most sophisticated banks on Wall Street, JPMorgan Chase and Goldman Sachs, were set to bring this 9-year old office rental company to the public markets via an IPO, despite outrageous conflicts of interest by WeWork’s founder and CEO and a proposed valuation that turns out to have been off the mark by tens of billions of dollars, it was … Continue reading →

By Pam Martens and Russ Martens: September 11, 2019 ~  On May 6 of this year, Wall Street On Parade predicted that Senator Elizabeth Warren, now rising rapidly in her bid for President, would be targeted by Wall Street in an effort to derail her campaign. Yesterday, that Wall Street campaign officially began. CNBC’s Jim Cramer and David Faber discussed on TV how they are hearing from Wall Street bank executives that Warren must be stopped. On the same day, September 10, 2019, Bloomberg News, which is majority owned by billionaire Michael Bloomberg, whose $52.4 billion net worth derives from leasing his data terminals to thousands of Wall Street trading floors around the globe, ran this headline: “Richest Could Lose Hundreds of Billions Under Warren’s Wealth Tax.” Obviously, that wouldn’t sit too well with Michael Bloomberg, who has frequently penned his own OpEds for his financial news empire. But the … Continue reading →

By Pam Martens and Russ Martens: September 10, 2019 ~ Citigroup released an analyst’s note yesterday stating that “We expect spot gold prices to trade stronger for longer, possibly breaching $2,000 an ounce and posting new cyclical highs at some point in the next year or two.” Gold was last on a record-breaking streak in 2011 when it shot through handles of $1500, $1600, $1700 and $1800 from April through August of that year. On an intraday trading basis, gold reached a high of $1,917.90 an ounce on August 23, 2011 and another intraday high of $1923.70 on September 6, 2011. Gold then spent the next five years trading back down to the $1100 range. As the chart above indicates, gold has been moving decidedly higher this year, up 16.9 percent from January 2, 2019 to yesterday’s close. At 9:16 this morning, gold was trading at $1,504.40 an ounce. Is … Continue reading →

By Pam Martens and Russ Martens: September 9, 2019 ~ On January 26, 2018 the Dow Jones Industrial Average set a new record high of 26,616.71. Despite setting new highs multiple times thereafter, the moves were so negligible on a percentage basis that the reality is that the stock market has been a real dog over the past year and a half. This past Friday, the Dow closed at 26,797.46. That’s a meager 180.75 points, or less than a one percent move, in 19 months. That’s not exactly the stuff that retirement dreams are built on. But if you’re a typical American who has to rely on headlines or TV sound bites to tell you what’s going on in the market because you’re too busy working long hours, running the kids to dentist appointments and soccer games, doing grocery shopping and laundry on the weekends, then you may have been … Continue reading →

By Pam Martens and Russ Martens: September 6, 2019 ~ Based on every meaningful investigation into the epic financial crash of 2008 that resulted in the worst economic crisis in the U.S. since the Great Depression, derivatives that were concentrated at Wall Street’s largest banks played a central role in the crisis. And yet, 11 years later, neither Federal regulators nor Congress have meaningfully reined in these risks. Three years ago we reported on President Obama’s press conference of March 7, 2016 where Obama overtly misled the American people about how Wall Street banks were complying with the 2010 Dodd-Frank financial reform legislation that mandated that the banks’ trillions of dollars in dangerous derivatives be centrally cleared rather than traded as opaque private contracts between two counterparties. President Obama stated during this press conference that “you have clearinghouses that account for the vast majority of trades taking place.” That wasn’t … Continue reading →

By Pam Martens and Russ Martens: September 5, 2019 ~ If your bank is under a criminal probe for potentially rigging gold and silver markets, it doesn’t help your case to have $50 million in fake gold bars sitting in your vaults. Nonetheless, this is what Reuters reported last week: “In the last three years, bars worth at least $50 million stamped with Swiss refinery logos, but not actually produced by those facilities, have been identified by all four of Switzerland’s leading gold refiners and found in the vaults of JPMorgan Chase & Co., one of the major banks at the heart of the market in bullion, said senior executives at gold refineries, banks and other industry sources.” Last month there was another bizarre story making the wires about JPMorgan Chase owning a ship that was raided and found to contain 20 tons of cocaine. (See With Three Felony Counts … Continue reading →

By Pam Martens and Russ Martens: September 4, 2019 ~  On July 29, those savvy market watchers at Themis Trading posted a report on their blog about how a Republican Senator from Louisiana (about 1400 miles from Wall Street) had taken a peculiar interest in the long-delayed system that would shine a bright light on who might be rigging stock trading on any particular day. The system is called the Consolidated Audit Trail (CAT) and the Securities and Exchange Commission has been stalling its creation for the entire 85 years the SEC has existed and been charged with investor protection. The idea of the CAT is to spot illegal and manipulative trading and pinpoint exactly what firms and individuals are placing the trades by looking at real-time data. A stock market without a CAT is nothing more than a thinly disguised wealth transfer system for the one percent and, apparently, … Continue reading →

By Pam Martens and Russ Martens: September 3, 2019 ~ One year ago, investors could have purchased a one-year U.S. Treasury Bill with a yield of 2.47 percent. As of this past Friday’s closing price of the Dow Jones Industrial Average, the Treasury Bill would have beaten the performance of the Dow over the past year by more than three-quarters of a point (not taking into account dividends on the Dow stocks). On Friday, August 31, 2018, the Dow closed at 25,964.82. This past Friday, August 30, 2019, the Dow closed at 26,403.28 That’s a gain of 438.46 points in a year or a return of 1.68 percent versus earning 2.47 percent on a T-bill. You would have been saved yourself the agony of living through the 800-point market plunge on August 14 and the 3746-point rout in the Dow from the close of trading on November 30, 2018 until … Continue reading →

By Pam Martens and Russ Martens: August 29, 2019 ~ Yesterday, the Dow Jones Industrial Average closed up 258 points but the yield on the 10-Year U.S. Treasury fell below 1.50 percent. In a normal market, if stocks are rallying that means there is confidence in the trajectory of economic growth in the U.S. When yields are collapsing on U.S. Treasuries, that means there is no confidence of sustained growth in the economy. So you can see why yesterday’s market activity is a serious contradiction of norms. We believe the Treasury market is already discounting (looking ahead and factoring in) what the next recession is going to look like because of constraints on how much fiscal spending the Federal government can deploy. To understand just how unprecedented the current amount of national debt is, one has to have some historical figures. At the beginning of the Bill Clinton Presidency in … Continue reading →

By Pam Martens and Russ Martens: August 28, 2019 ~ More than two dozen women who have accused Jeffrey Epstein of sexually assaulting them, most when they were underage girls, appeared in Federal Court in Manhattan yesterday. Some had their lawyers read their statement but 16 spoke on their own behalf. The theme consistent throughout their testimony is that the Justice Department must prosecute Epstein’s accomplices – anything less is a failure of justice. Two names were repeatedly mentioned by the women: Ghislaine Maxwell and Sarah Kellen. But the powerful royalty, lawyers and Wall Street titans who have been accused of being part of Epstein’s ring and participating in sexual assaults of underage girls must also be charged by the perpetually recalcitrant U.S. Justice Department. The court hearing was called at the request of Federal prosecutors in order to dismiss the case against Epstein since they can’t prosecute a dead … Continue reading →

By Pam Martens and Russ Martens: August 27, 2019 ~ Burford Capital Ltd. is a lawsuit funding company that trades on AIM, part of the London Stock Exchange’s international market for young, growing companies. Securities and Exchange Commission filings in the U.S. show tens of millions of dollars of the stock to be part of the portfolios of big-name mutual funds in the United States, despite a governance structure that takes cronyism to a whole new level. Since August 7 the stock of Burford has lost 44 percent of its value, as of intraday trading this morning. That’s the date that U.S. short seller, Muddy Waters, released a 25-page detailed and damning report on the company suggesting its accounting is Enron-esque. What stopped us in our tracks while reading the report was the paragraph revealing that the Chief Executive Officer of Burford Capital Ltd., Christopher Bogart, is married to Elizabeth … Continue reading →

By Pam Martens and Russ Martens: August 26, 2019 ~ The WeWork IPO is hype wrapped in subterfuge. It’s a money-losing commercial real estate company attempting to pass itself off as the Dalai Lama of office space rentals. The company has never made a dime of profits and its losses spiraled to $900 million in the first half of this year. Here’s a sample of the spin from its IPO prospectus: “We provide our members with flexible access to beautiful spaces, a culture of inclusivity and the energy of an inspired community, all connected by our extensive technology infrastructure. We believe our company has the power to elevate how people work, live and grow.” “We believe that individuals are more productive when they are able to express their full and authentic selves, so we aspire to be as inclusive as possible.” We’re going to have to strike out the “culture … Continue reading →

By Pam Martens and Russ Martens: August 23, 2019 ~   The WeWork IPO preliminary prospectus was filed last week with the Securities and Exchange Commission (SEC) and the company has been getting savage reviews ever since. WeWork is a commercial real estate company leasing out office space but is attempting to mesmerize the public into believing it is some genius new-age thinker. JPMorgan Securities LLC, a unit of JPMorgan Chase, and Goldman Sachs & Co. are listed as lead underwriters on the IPO. Scott Galloway, a professor at NYU’s Stern School of Business, wrote on his blog that “bankers (JPM and Goldman) stand to register $122 million in fees flinging feces at retail investors….” What has not been crystallized as yet, however, is how Jamie Dimon, Chairman and CEO of the largest bank in the U.S., JPMorgan Chase, sits smack in the middle of this mess. Dimon should definitely … Continue reading →

By Pam Martens and Russ Martens: August 22, 2019 ~ According to KPMG’s 2017 and 2018 audit of the Federal Reserve Bank of New York (New York Fed), which is just one of the 12 regional banks of the Federal Reserve System, it has provided more than half of all monies flowing to the U.S. Treasury from regional Fed banks since President Donald Trump took office. In 2017, the New York Fed shipped off $44.6 billion of the total $80.6 billion of all 12 regional banks that was remitted to the U.S. Treasury. In 2018, the New York Fed’s remittance was $33.6 billion of the total $65.3 billion from the regional Fed banks. But there was some fancy footwork in two pieces of Congressional legislation that were passed in 2018 that boosted the amount the New York Fed and other regional Fed banks would be shipping off to the Treasury … Continue reading →

By Pam Martens and Russ Martens: August 21, 2019 ~ Yesterday the Office of the Comptroller of the Currency, the regulator of national banks, and the FDIC, which provides the taxpayer-backstopped Federal insurance to deposits at these banks, announced that they were going to “simplify” the Volcker Rule. Under the Trump administration, “simplify” is code for “gut.” The Volcker Rule was part of the 2010 financial reform legislation known as Dodd-Frank. It outlawed deposit-taking banks from using those deposits to make wild gambles for the house, known as proprietary trading. It also required the banks to end their ownership of hedge funds and private equity funds where the banks can secretly dump losing positions or hide enormous losses in hard to price instruments.  Wall Street hated the Volcker Rule so much that it made sure the rule never came into being. It has stonewalled the implementation of the rule for … Continue reading →

By Pam Martens and Russ Martens: August 20, 2019 ~ Two of Wall Street’s crony regulators announced today that they are going to “simplify” the Volcker Rule’s ban on proprietary trading at Wall Street banks, providing another big win for Wall Street and another big nightmare for Main Street. The financial crash on Wall Street in 2008 was the deepest economic upheaval in the U.S. since the Great Depression. Millions of honest, hardworking Americans lost their jobs, and then their homes, as a result of the economic collapse. Many of these Americans have yet to fully recover financially after more than a decade has passed. The promise of the Obama administration was that its Dodd-Frank Wall Street Reform and Consumer Protection Act that was signed into law in 2010 would put an end to the reckless gambling casino on Wall Street that had brought on the collapse. One of the … Continue reading →

By Pam Martens and Russ Martens: August 19, 2019 ~ From 1976 to 1981, Jeffrey Epstein worked for the Wall Street investment bank, Bear Stearns. Epstein was found dead in his jail cell on August 10 while awaiting trial on charges of sex trafficking of underage girls, dozens of whom he allegedly sexually assaulted after grooming them first with “inappropriate touching.” Bear Stearns collapsed in the early days of the 2008 financial crisis and was purchased by JPMorgan Chase. One of the last acts of Bear Stearns’ CEO, Jimmy Cayne, was to make a $2 million payment to a woman who charged that the legendary Chairman of Bear Stearns, Ace Greenberg, had engaged in “inappropriate touching.” The young woman was said to have had a witness to her charges. In a 2017 report by the New York Times, a former Managing Director of Bear Stearns, Maureen Sherry, reported that “…it … Continue reading →

By Pam Martens and Russ Martens: August 16, 2019 ~ The Dow Jones Industrial Average rallied 99.97 points yesterday but the mega Wall Street bank, Citigroup, closed in the red, down 0.15 percent. That decline follows a dramatic loss of 5.28 percent on Wednesday,  a day that the Dow was down only 3.05 percent. Citigroup’s closing price yesterday was $61.32. The stock has lost more than 88 percent of its value since 2007, despite its attempt to dress up the share price with a 1-for-10 reverse stock split in 2011, which left its long-term shareholders with 1 share for each 10 shares previously held. Citi’s share price has also been dropping like a rock since July 24 of this year when it closed at $73.01. But that hasn’t triggered a rethink on the part of its competitor banks on Wall Street who have “Buy” or “Overweight” ratings on Citi’s stock … Continue reading →

By Pam Martens and Russ Martens: August 15, 2019 ~ As we’ve previously reported, five mega banks on Wall Street hold the fate of the entire financial system of the United States in their crony, frequently soiled hands. Yesterday’s trading action clearly showed the ugly warts between those banks and their derivative counterparties in the insurance industry. And even though their crony regulator, the Securities and Exchange Commission, allows the banks to trade their own stocks in darkness in their own internal Dark Pools, someone else clearly got the upper hand yesterday. The Dow Jones Industrial Average lost a whopping 800 points or 3.05 percent but each of the five mega banks outpaced the Dow’s losses on a percentage basis. That’s not a good thing when Congress has left the fate of a nation in such perilous hands – especially when those very same banks caused the greatest financial crash … Continue reading →