Category Archives: Uncategorized

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 →

By Pam Martens: December 31, 2014 According to the U.S. central bank, the Federal Reserve, in its December 17, 2014 policy statement delivered by the Federal Open Market Committee, America has become a veritable oasis in a sea of economic turmoil. Economic activity is “expanding,” labor conditions have “improved further,” housing spending is “rising moderately,” business fixed investment is “advancing.” And that plunge in oil prices? Well, that’s going to be “transitory” and “dissipate.” The Fed’s position that the United States can wave a magic wand and delink itself from the vicious deflationary forces besetting our trading partners is the stuff of fairy tales. As of November 2014, annual rates of inflation as measured by the Consumer Price Index (CPI), showed that ten of our trading partners, mostly in the Eurozone, were experiencing deflation: Belgium: -0.110 percent Estonia: -0.614 percent Greece: -1.246 percent Hungary: -0.739 percent Israel: -0.098 percent Poland: -0.484 percent Slovenia: -0.252 percent Spain: … Continue reading →

By Pam Martens: December 30, 2014 We are watching a collapse in industrial commodity prices, including crude oil. Yields on junk bonds (high yield debt) have risen dramatically. Investors have sought out the safe haven of U.S. Treasury notes, driving the yield lower as junk bond yields rise from an exit flight out of higher risk securities. The above paragraph could just as well be describing December of 2008. Unfortunately, it’s also an apt description of where we find ourselves on December 30, 2014. Aside from the irrationally exuberant U.S. stock market, there are two other serious mismatches that don’t compute between December of 2008, in the midst of the greatest financial collapse on Wall Street since the Great Depression, and December 2014. First, the publicly traded stocks of the largest Wall Street banks were in precipitous decline in late 2008, as they should have been, since rising levels of … Continue reading →

By Pam Martens and Russ Martens: December 29, 2014 On the cold, wintry afternoon of January 11, 2014, David Bird, a reporter who covered energy markets for the Wall Street Journal, told his wife he was going out for a walk and left his home in Long Hill, New Jersey in a red jacket with yellow zippers. Despite his colorful attire, the involvement of hundreds of volunteers, law enforcement officials, and the FBI in the search, Bird has vanished without a trace. As Wall Street On Parade previously reported in January, for the three months prior to his disappearance, Bird was reporting on a supply glut and growing stockpiles of oil. A newly retrieved article by Bird that appeared on line at the Wall Street Journal on August 21, 2013, shows the reporter had also presciently made an early connection between the Federal Reserve ending its massive bond-buying program known … Continue reading →

By Pam Martens and Russ Martens: December 23, 2014 There is a mushrooming false narrative taking over the business airwaves: lower oil prices lead to lower prices at the pump which put more cash in consumers’ pockets which will lead to a more robust economy in the United States in 2015. Yes, there are certainly lower prices at the pump. Yes, that gives consumers more disposable income. But it will decidedly not lead to a more robust economy in the United States for very long. This isn’t a little speed bump in oil prices. This is one of the most dramatic and rapid crashes in a key industrial commodity in history. Since June, the price of West Texas Intermediate (WTI), the domestic crude oil produced in the U.S., is down by 47 percent. The price of the internationally traded crude oil, Brent, is down by a similar figure. If this … Continue reading →

By Pam Martens: December 22, 2014 Last week members of both the House and Senate were issuing press releases to express their outrage over the sneaky repeal of a Dodd-Frank financial reform provision meant to stop giant Wall Street banks from using FDIC-insured bank affiliates to make wild gambles in derivatives, thus putting the U.S. economy in grave danger again and the taxpayer at risk for another behemoth bailout. What was the Federal regulator of these very same banks doing? It was bragging in a press release issued at the end of the same  week about the gargantuan risks these  insured banks were taking in derivatives. The press release was issued on Friday, December 19, 2014 by the Office of the Comptroller of the Currency (OCC), the regulator of all national banks which is mandated to make sure that insured banks “operate in a safe and sound manner.” The press … Continue reading →

By Pam Martens and Russ Martens: December 18, 2014 There has been much focus on the fiery speeches that Senator Elizabeth Warren delivered from the Senate floor in an effort to stop the roll-back of a key derivatives provision of the Dodd-Frank financial reform legislation that was slipped into the giant $1.1 trillion spending bill that was signed into law this week by President Obama – who campaigned for passage of the bill despite the weakening of protections against Wall Street abuses. The bill became known as the Cromnibus because it is part Continuing Resolution and part Omnibus spending bill to fund the government through September of 2015. Those who voted against the bill in the Senate are provided here; in the House, here. But Warren was far from alone in expressing outrage at Citigroup writing most of the provision  that was quietly slipped into a spending bill that was critical … Continue reading →

By Pam Martens: December 17, 2014 Wall Street On Parade holds great respect for Paul Krugman as an economist. We link regularly to his columns under our “Publisher’s Must Reads.” But every time Krugman posits on Dodd-Frank financial reform or the crash of 2008 he blunders into the quagmire created by financial reporter Andrew Ross Sorkin’s misinformation campaign in the pages of the New York Times. Take this past Monday for example. Krugman devoted his column to the spending bill just passed by Congress that guts a key derivatives provision of the Dodd-Frank financial reform legislation, writing that “One of the goals of financial reform was to stop banks from taking big risks with depositors’ money. Why? Well, bank deposits are insured against loss, and this creates a well-known problem of ‘moral hazard’: If banks are free to gamble, they can play a game of heads we win, tails the … Continue reading →

By Pam Martens: December 16, 2014 Citigroup is the Wall Street mega bank that forced the repeal of the Glass-Steagall Act in 1999; blew itself up as a result of the repeal in 2008; was propped back up with the largest taxpayer bailout in the history of the world even though it was insolvent and didn’t qualify for a bailout; has now written its own legislation to de-regulate itself; got the President of the United States to lobby for its passage; and received an up vote from both houses of Congress in less than a week. And there is one more thing you should know at the outset about Citigroup: it didn’t just have a hand in bringing the country to its knees in 2008; it was a key participant in the 1929 collapse under the moniker National City Bank. Both the U.S. Senate’s investigation of the collapse of the … Continue reading →

By Pam Martens: December 15, 2014 Today we welcome former SEC attorney, James A. Kidney, as a guest columnist to our front page. Mr. Kidney brings 25 years of SEC experience and wisdom to the conversation. Here’s the backdrop: The U.S. Department of Justice has been burning through millions of dollars of taxpayer money chasing down suspected insider traders who are four and five times removed from the person leaking inside information; convening grand juries to indict the traders; convincing trial courts to send them off to prison. The Securities and Exchange Commission has gone after the same individuals, banning them for life from the industry. That’s the same DOJ and SEC that have failed to bring charges against one CEO of a major Wall Street firm for the crash of 2008 — the greatest and most corrupt financial collapse since the Great Depression. Last week, in a wide-reaching decision, … Continue reading →