Category Archives: Uncategorized

By Pam Martens and Russ Martens: January 20, 2015 After blowing up in spectacular fashion in 2008, receiving the largest taxpayer bailout in the history of modern finance, Citigroup’s FDIC-backed bank, Citibank N.A., is allowing retail customers around the globe to gamble in the high-risk world of currency trading with leverage as great as 50 to 1. It has been more than four days since wire services reported that Citigroup’s trading desk had lost more than $150 million as a result of Switzerland’s central bank removing the cap on the Swiss Franc’s peg to the Euro. During that time, Citigroup does not appear to have demanded a correction or retraction. Thus, that much of the story has made it into the hands of the public. What is not widely known is that Citigroup, a global behemoth bank which is on a short tether by the Federal Reserve after failing its … Continue reading →

By Pam Martens and Russ Martens: January 19, 2015 U.S. stock and bond markets are closed today in honor of Martin Luther King, Jr. but market turbulence continues around the world. Last night the Shanghai Composite stock market index plunged 7.7 percent after the China Securities Regulatory Commission announced a crackdown on the margin lending operations of the country’s three largest brokerage firms. The firms were given a three-month ban on opening new margin accounts. According to the regulator, the brokerages had been failing to reassess risk before extending margin loans beyond a six-month term. The China upheaval comes on the heels of a plunge in industrial commodity prices over the past six months with crude oil falling almost 60 percent in that period. Then there was last Thursday’s shock and awe from the Switzerland central bank’s decision to remove the 1.2 cap on the Swiss Franc’s peg to the … Continue reading →

By Pam Martens and Russ Martens: January 15, 2015 Plunging yields on U.S. Treasury notes and bonds, record low yields on the sovereign debt of countries in the European Union, together with plunging industrial commodity prices, are sending a crystal clear message to stock markets: there is a glut of supply and too little demand from consumers. Such a supply-demand imbalance brings about price wars. Thus we have Saudia Arabia slashing prices on oil to its customers in an attempt to grab market share, triggering a global price war in oil; supermarket pricing wars in Britain; gas station pricing wars in the U.S.; mutual fund fee pricing wars; magazine price wars. There is even a chicken nuggets pricing war. Collapsing yields, collapsing commodity prices are the result of distorted income dispersal, otherwise known as income inequality. Last August, researchers at the Federal Reserve released a study showing the fragility of … Continue reading →

By Pam Martens and Russ Martens: January 14, 2015 JPMorgan Chase reported 2014 fourth quarter earnings this morning, missing analyst estimates. Analysts had expected $1.31 per share while the actual number came in at $1.19. Listening to the conference call this morning, there was the impression that the $1.19 would have been worse had the bank not released loan loss reserves in a number of business areas. Jamie Dimon, CEO of JPMorgan Chase, was back to characterizing the bank’s P&L as the “fortress balance sheet.” The London Whale credit derivatives traders almost blew up the fortress in 2012 and the markets are becoming skeptical as to just how much visibility there is on energy and emerging market loans souring on the books of the mega Wall Street banks. In early December, Oppenheimer analyst Chris Kotowski noted in a report that plunging oil prices could be the greatest threat to the … Continue reading →

By Pam Martens and Russ Martens: January 13, 2015 The U.S. Justice Department has yet to summon the courage to bring a criminal courtroom trial against JPMorgan’s top executives but a serious public trial is underway nonetheless at the website www.JPMadoff.com.  Originally styled as a venue for the public to read a free chapter a month of the book, JPMadoff: The Unholy Alliance Between America’s Biggest Bank and America’s Biggest Crook, the two attorneys who created the site have now moved into their grand jury stage, presenting hard evidence in Chapter 5 on why RICO charges can, and should, be brought against top executives at JPMorgan Chase. The book’s authors and site creators are Helen Davis Chaitman and Lance Gotthoffer. Chaitman is a nationally recognized litigator and author of The Law of Lender Liability. She is also a Bernie Madoff victim who lost a large part of her life savings to his Ponzi … Continue reading →

By Pam Martens: January 12, 2015 Barry Eichengreen, Professor of Economics and Political Science at the University of California, Berkeley, has written an essential tome contrasting the Great Depression of the 1930s with the Great Recession that began in late 2007 and deepened with the collapse of iconic Wall Street firms in 2008. Aptly titled Hall of Mirrors: The Great Depression, the Great Recession, and the Uses and Misuses of History, the book walks us through ongoing events in the U.S. and Europe during both periods. Professor Eichengreen’s book is well worth reading for the mining of nuggets such as this: “Between 1933 and 1937, real GDP in the United States grew at an annual rate of 8 percent, even though government did only passably well at these tasks. Between 2010 and 2013, by comparison, GDP growth averaged just 2 percent.” In just two sentences the Professor has encapsulated the … Continue reading →

By Pam Martens and Russ Martens: January 9, 2015 JPMorgan appears incredibly adroit at ever creative means of running its reputation through the mud. Last August the Christ Church Cathedral in Indianapolis filed a lawsuit in Federal Court alleging that its endowment funds meant to feed and shelter homeless families and children, keep food banks stocked, and give exhausted pastors a sabbatical, ended up as a wealth transfer scheme at JPMorgan. The complaint alleges that JPMorgan engaged in “self-dealing,” made “fraudulent misrepresentations,” omitted material facts about their “widespread and profound conflicts of interests and created “toxic investment products” which resulted in “the surreptitious transfer of wealth from the Christ Church Trusts to JPMorgan.” Out of the 177 different investment products JPMorgan purchased for the Christ Church endowment, the percentage of its own proprietary products that JPMorgan purchased from itself “ranged from 68% to a staggering 85% of the portfolio” according … Continue reading →

By Pam Martens: January 7, 2015 Back on October 9, 2014 when the Dow Jones Industrial Average swooned 334 points, Citigroup lost 2.55 percent on the day, very much in line with its peers. On Monday of this week, when the Dow closed down 331 points, Citigroup pulled a little ahead of the pack in terms of losses, dropping 3.15 percent. Yesterday, however, when the Dow closed down 130 points, or just 39 percent of Monday’s loss of 331 points, Citigroup pulled decisively away from its peers, losing 3.52 percent on the day to close at $50.70. It’s relevant to note at this point that Citigroup’s stock would have closed yesterday at $5.07 rather than $50.70 had it not performed a 1-for-10 reverse stock split back in 2011, stripping its shareholders of 9 shares for each 10 they owned while levitating the price to a respectable level. Citigroup back then … Continue reading →

By Pam Martens and Russ Martens: January 6, 2015 Yesterday was not an illustrious start to the first full week of the new year. The Dow Jones Industrial Average plunged 331 points on global deflation worries; U.S. crude oil dropped below $50 for the first time since 2009, with West Texas Intermediate touching $48.47 at one point on the New York Mercantile Exchange. The benchmark 10-year U.S. Treasury note, whose yield is a harbinger of future economic activity, traded below 2 percent and is yielding 1.97 percent in early morning trade today. In a strong signal that other economies are weakening around the globe, 10-year sovereign debt instruments in Australia, Austria, Belgium, Finland, France, Germany, Japan, Netherlands and the U.K. set record low yields yesterday. Against that backdrop, columnist Paul Krugman might have wished he hadn’t penned these opening words on page A17 of the New York Times yesterday: “Suddenly, … Continue reading →

By Pam Martens: January 5, 2015  Jeffrey Gundlach, the bond guru who co-founded DoubleLine  Capital in 2009 and was prescient on Treasury yields plunging in 2014, has been making some bold predictions for rates in 2015. On December 9 of last year, Gundlach told Reuters’ Jennifer Ablan that the yield on the benchmark 10-year U.S. Treasury note could fall to 1 percent this year. Gundlach is quoted as follows in the article: “I still believe that there is a danger of repeat of a Treasury meltup that 2014 did end up bringing, particularly into the crescendo of October 15. If something can’t go up, it has to go down. Yields can’t seem to go up. They might go down. And if they go down any amount again, if the 10-year goes below 2 percent, even below 2.20 percent, that’s the line in the sand I am talking about.” As of … Continue reading →