By Pam Martens and Russ Martens: April 9, 2015 You know times are weird on Wall Street when JPMorgan CEO Jamie Dimon devotes a good chunk of his shareholder letter, released yesterday, to fretting about whether there will be enough Treasury notes to go around in a safe haven stampede during the next crisis. Dimon writes that “In a crisis, everyone rushes into Treasuries to protect themselves. In the last crisis, many investors sold risky assets and added more than $2 trillion to their ownership of Treasuries (by buying Treasuries or government money market funds). This will be even more true in the next crisis. But it seems to us that there is a greatly reduced supply of Treasuries to go around – in effect, there may be a shortage of all forms of good collateral.” To underscore his point, Dimon invoked the tumult in the Treasury market on October … Continue reading →

By Pam Martens and Russ Martens: April 8, 2015  Having defeated the Crown in a bloody revolution some two centuries ago, Americans don’t like living under a patriarchy, oligarchy or kleptocracy. Unfortunately, the U.S. central bank, the Federal Reserve, is a little of all three. On Monday of this week, the President of the Federal Reserve Bank of New York stated in a speech that “the Federal Reserve already is very transparent and accountable to Congress and to the public.” Two days later, Wall Street On Parade attempted to get one piece of very basic information from the Fed and got the royal runaround. We wanted to know if JPMorgan Chase, a bank operating under a deferred prosecution agreement for two felony counts and under a criminal investigation for potential currency rigging, was still the custodian of $1.7 trillion of mortgage backed securities owned by the Federal Reserve, as we … Continue reading →

By Pam Martens and Russ Martens: April 7, 2015  Thanks to the Federal Reserve feeding its habit for six years, the U.S. stock market now reacts like a junkie who needs a constant fix from the reassurance of zero, or extremely low, interest rates. William (Bill) Dudley, the President of the New York Fed, was peculiarly on hand yesterday morning to feed the addiction with a speech to members of the Business Partners Roundtable at the New Jersey Performing Arts Center in Newark, New Jersey. Anytime a President of a regional Fed Bank makes a public statement on the timing of interest rate hikes or the pace of economic activity that influences that timing, it is well established that it moves stock, bond and currency markets. But yesterday was not just any routine day – it was a particularly odd day for any Fed President to speak before the stock … Continue reading →

By Pam Martens and Russ Martens: April 6, 2015 “Wall Street Democrats” is a political phrase gaining traction. It encapsulates a growing realization that Bill Clinton’s two terms as President and Barack Obama’s eight years in office have been a great boon to enriching the one percent on Wall Street and an economic disaster for mostly everyone else. It was the Bill Clinton administration that deregulated the financial markets through the repeal of the Depression era Glass-Steagall Act and it was the Obama administration that created the masquerade that strict regulation of Wall Street was put back into place under the Dodd-Frank Wall Street Reform and Consumer Protection Act. Instead of reform, Wall Street banks have become larger, more dangerous and an increasing threat to the economic stability of the U.S., if not the globe. There is a serious and growing chorus calling for an expulsion of the Wall Street … Continue reading →

By Pam Martens and Russ Martens: April 2, 2015 Yesterday, economists at the Federal Reserve Bank of Atlanta notched down their forecast for U.S. economic growth in the first three month of 2015 from 0.2 percent to zero. To put it another way, if the U.S. economy was a hospital patient, it would be flat-lining with an emergency team huddled around it attempting to shock it back to life with defibrillators. The forecast for GDP growth has been coming down steadily at the Atlanta Fed while the Federal Reserve in Washington, D.C. has been releasing Federal Open Market Committee (FOMC) statements highlighting the strength of the economy and talking about the potential for a rate hike to ward off inflation that comes from an overheating economy. All of the rate hike talk this year has kept the country focused on the wrong data point. The debate should not be about … Continue reading →

By Pam Martens and Russ Martens: April 1, 2015 Barron’s should have published its gushing cover story on Jamie Dimon’s stewardship of JPMorgan today – as an April Fool’s joke. The nation’s largest bank is operating under a deferred prosecution agreement until at least next January for two felony counts it received in the Madoff swindle, the largest Ponzi scheme in history.  It’s under a current criminal investigation over potential rigging of the foreign exchange markets with the New York Times reporting on February 10 that federal prosecutors had informed JPMorgan and three other banks “that they must enter guilty pleas to settle the cases.” Barron’s sister publication, the Wall Street Journal, reported on February 24 that JPMorgan is one of the 10 banks being investigated by the U.S. Justice Department for potential rigging of gold and other precious metals. Against that backdrop, Barron’s comes up with this: JPMorgan is … Continue reading →

By Pam Martens and Russ Martens: March 31, 2015 Last Friday and again yesterday, the Vice Chairman of the Federal Reserve, Stanley Fischer, delivered speeches that attempted to refocus his audience away from the systemic global risk posed by behemoth Wall Street banks and redirect their gaze to dangers lurking in the nonbank sector: things like mutual funds and hedge funds. Reading the speeches, we had an epiphany here at Wall Street On Parade: if something does blow up in the nonbank sector it is highly likely to be caused by an interaction with a Wall Street bank. The insurance company, AIG, would not have failed during the last financial crisis had it not agreed to engage in Credit Default Swaps (CDS) with Wall Street mega banks. Fannie Mae and Freddie Mac would not have failed had they not been seduced into buying dodgy mortgages,  mortgage-backed securities, and derivatives from … Continue reading →

By Pam Martens and Russ Martens: March 30, 2015 It’s tough to keep up with the conspiracy theories that run rampant from day to day in the hallowed halls of Congress. But one that is gaining traction is that the U.S. Treasury Department’s Financial Stability Oversight Council (whose acronym is pronounced F-SOC) is the handmaiden of an international finance cabal and is obediently marching to its beat instead of the mandates of Congress. These suspicions were on display at the Senate Banking Committee hearing last Wednesday and the House Financial Services Committee hearing the week before where U.S. Treasury Secretary Jack Lew, who Chairs F-SOC, was pummeled with thinly veiled, and not so thinly veiled, accusations. F-SOC was created under the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010. It is charged with the early identification of emerging risks to the financial system. Every major regulator of Wall … Continue reading →

By Pam Martens and Russ Martens: March 26, 2015 Yesterday, economists at the Atlanta Fed’s Center for Quantitative Economic Research notched down their forecast for real GDP growth – the seasonally adjusted annual rate – to a tepid 0.2 percent for the first quarter of 2015. The revision from the earlier forecast of 0.3 percent followed yesterday’s durable goods report that showed a dramatic decline of 1.4 percent in February on a seasonally adjusted basis. Durable goods are products like refrigerators, washing machines or computers, items expected to last for at least three years. Because durable goods carry higher price tags than most other consumer outlays, a weakening in durable goods can be a warning of a tapped out or retrenching consumer. This first quarter forecast stands at odds with the Federal Reserve Board’s FOMC statement of March 18, 2015 which singled out “strong job gains” and rising household spending. … Continue reading →

By Pam Martens and Russ Martens: March 25, 2015 Bloomberg News is carrying an article today that raises the question as to whether cash for trash may be the comeback kid at the European Central Bank. That, in turn, leads to speculation as to how long it will be before the comeback kid leaps across the pond and nestles into the  arms of the U.S. Federal Reserve. According to the article, the European Central Bank is buying up billions of Euros in asset-backed securities made up of things like Spanish auto loans, Portuguese home loans, and legacy deals that have been stuck on the balance sheets of European banks since the financial crisis of 2008 and 2009. The article notes that the ABS market is down from a peak of 524 billion Euros in annual issuance in 2006 to a paltry 77 billion Euros in annual average issuance over the past … Continue reading →