Search Results for: Federal Reserve

By Pam Martens and Russ Martens: March 29, 2022 ~ The above headline regarding Citadel Securities and Virtu Financial comes from a report authored by John Detrixhe that was published at Quartz in February of last year. The report found that as of December 2020 the New York Stock Exchange (NYSE) had a 19.9 percent share of stock market trading versus 13.4 for Citadel Securities and 9.4 percent for Virtu Financial. This gave Citadel Securities and Virtu a combined stock market trading share of 22.8 percent versus 19.9 for the NYSE. The big problem with this picture is that neither Citadel Securities or Virtu Financial are registered as stock exchanges and neither are regulated by the SEC as stock exchanges. Citadel Securities is a broker-dealer that pays for order flow from at least nine online brokerage firms and has a dubious history of regulatory fines and abusive behavior. Virtu Financial is … Continue reading →

By Pam Martens and Russ Martens: March 22, 2022 ~ As the headlines in mainstream media grew ever more alarming in late 2021 regarding Russia’s troop buildup around Ukraine, approximately $225 million per day (or $13.7 billion over a span of 61 days) had been waged in bets that Russia might default on its sovereign debt. These bets are known as Credit Default Swaps and can be used to hedge exposure or simply speculate on a debt default in hopes of making a profit. This information resides in a publicly-available swap repository maintained by the Depository Trust and Clearing Corporation (DTCC). For the period of September 20, 2021 through December 19, 2021, the DTCC shows that an average of 26 trades per day were being made in the Credit Default Swaps on the Russian Federation’s sovereign debt, for a daily total of $225 million notional (face amount of credit default swaps). … Continue reading →

By Pam Martens and Russ Martens: March 14, 2022 ~ Nike can’t seem to take its own advice and “just do it.” On March 3 Reuters and the Wall Street Journal reported that Nike was temporarily closing its more than 100 stores in Russia. The Wall Street Journal carried this statement from Nike: “We are deeply troubled by the devastating crisis in Ukraine and our thoughts are with all those impacted, including our employees, partners and their families in the region.” This sounds like something one might say following an act of nature – like a hurricane or a flood. It doesn’t sound appropriate for a barbaric bombing attack by Russian President Vladimir Putin on hospitals, schools and apartment buildings in Ukraine that had left hundreds of civilians dead at that point. The day after Nike’s statement to the press, we could find no official statement on Nike’s website to indicate that it … Continue reading →

By Pam Martens and Russ Martens: March 10, 2022 ~ This morning Kremlin spokesman Dmitry Peskov told reporters on a conference call that the economic sanctions imposed on Russia by the West were “absolutely unprecedented.” He went on to say that those sanctions made it “very hard to forecast anything.” Perhaps Putin should have thought about that before he invaded the neighboring country of Ukraine and launched a barbaric bombing assault on hospitals, schools, churches and apartment buildings. There are a few things we can help Russia forecast. Given the fact that the Russian currency, the Ruble, has plunged 40 percent against the U.S. Dollar since Russia’s murderous assault on Ukraine began on February 24, and the fact that the Ruble has continued to set lower lows against the U.S. Dollar since then, it’s a pretty good bet that the Ruble is not going to find a bottom. The Ruble is … Continue reading →

By Pam Martens and Russ Martens: March 7, 2022 ~ There is a known $41 billion in Credit Default Swaps (CDS) on Russian debt. There is likely many billions more in unknown amounts. There are also billions more in Credit Default Swaps on state-owned Russian corporate debt and non state-owned Russian corporate debt. In addition to Wall Street not knowing which global banks and other financial institutions are on the hook to pay out on the Credit Default Swap protection they sold in case of a Russian sovereign debt default (or Russian corporate debt default), there is also approximately $100 billion of Russian sovereign debt (whose default is looking more and more likely) sitting on the balance sheets of foreign banks. Put it all together and you have the makings of a replay of the 2008 banking crisis when banks backed away from lending to each other because they didn’t know … Continue reading →

By Pam Martens and Russ Martens: February 22, 2022 ~ On October 21 of last year, when the Fed originally announced its list of trading restrictions that it planned to impose on Fed officials, it made no mention of restricting its officials from short-selling (making bets on a decline in price) or preventing Fed officials from trading on margin. But when the Fed announced its finalized rules last Friday, “short sales or purchasing securities on margin” were added to the list of prohibitions. Why do we find that noteworthy? Because it was Wall Street On Parade that asked the Dallas Fed if its President at the time, Robert Kaplan, was shorting the market when he made those “over $1 million” trades in and out of S&P 500 futures contracts in 2020, a year when the S&P 500 dropped by as much as 30 percent between January 2 and March 23. The … Continue reading →

By Pam Martens and Russ Martens: February 18, 2022 ~ There are apparently stock-picking analysts across Wall Street pumping out buy recommendations on stocks to the public who have never cast their eyes on those chilling derivative charts published quarterly by the Office of the Comptroller of the Currency. If the analysts had cast their eyes on those charts, the last thing they would be recommending right now are megabank stocks. We’re talking specifically about JPMorgan Chase, Goldman Sachs, Citigroup, Bank of America and Morgan Stanley, which, together, control approximately 90 percent of the hundreds of trillions of dollars (notional/face amount) in derivatives held by all 4,900 banks and bank holding companies in the U.S. We’re also talking about the foreign banks that are significant derivative counterparties to these and other banks — such as Deutsche Bank, Credit Suisse, Nomura and Barclays. The chart above shows how these banks performed yesterday … Continue reading →

By Pam Martens and Russ Martens: February 16, 2022 ~ Yesterday, Senator Pat Toomey (R-PA), the Ranking Member of the Senate Banking Committee, orchestrated a boycott among his Republican colleagues on the Committee. Republicans refused to attend the scheduled vote at 2:15 p.m. yesterday for President Biden’s nominees to serve on the Federal Reserve. Without the presence of Republicans, the Committee lacked a quorum and could not vote. The nominees scheduled for a vote included Jerome Powell, for his second term as Fed Chair; Lael Brainard for Vice Chair; Sarah Bloom Raskin for Vice Chair for Supervision; Lisa Cook for Fed Governor; and Philip Jefferson for Fed Governor. Sandra Thompson, nominated to be Director of the Federal Housing Finance Agency, was also scheduled for a vote. Toomey’s main issue is with Sarah Bloom Raskin, who would be the Fed’s point person on supervision of the megabanks on Wall Street. The fear … Continue reading →

By Pam Martens and Russ Martens: February 15, 2022 ~ If you’re wondering why inflation is running hotter than it has in 40 years and why St. Louis Fed President James Bullard has broken with protocol and is openly criticizing the Fed on television for falling behind the curve on inflation, here’s a key part of that story. The Fed’s Federal Open Market Committee (FOMC) made its first announcement that it would begin “tapering” the amount of its purchases of Treasurys and Mortgage-Backed Securities (MBS) on November 3 of last year. On that date, according to the Fed’s own H.4.1 filing, it held $8.063 trillion in debt securities. As of last Wednesday, that figure had risen to $8.395 trillion or an increase (not decrease) of $332 billion in the span of just three months. The Fed’s practice of buying up debt securities from Wall Street firms in order to add cash … Continue reading →

By Pam Martens and Russ Martens: February 14, 2022 ~ The stock market indices that get all the headlines have failed to capture the brutal deterioration that has been occurring for months among the individual stock components of those indices. In early February, Bank of America reported that 46 percent of Nasdaq’s component companies were more than 50 percent below their 52-week highs. And the deterioration in breadth began long before February. On December 28, 2021, Wall Street On Parade ran this headline: A Tale of Two Markets: S&P 500 Notches Its 69th Record Close as the Bottom Falls Out of the Nasdaq. We noted in the article that “On December 3 there were 585 new 52-week lows on the Nasdaq stock market versus 12 new 52-week highs. To look at it another way, 48.75 times more stocks were setting new 52-week lows than were reaching new 52-week highs. That doesn’t sound like the … Continue reading →