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FX is quite literally, a rigged game. Not like the stock market, well not exactly. FX has been, a game of ‘how many numbers am I holding behind my back?’ and the guess is always wrong! As we explain in Splitting Pennies Understanding Forex – FX is rigged. But that doesn’t mean there isn’t opportunity! One just needs to understand it.

From Law 360:

French bank BNP Paribas was fined $350 million by the New York State Department of
Financial Services for lax oversight in its foreign-exchange business that
allowed “nearly unfettered misconduct” by more than a dozen employees involved
in exchange rate manipulation, officials announced Wednesday.

From 2007 through 2013, a trader on the bank’s New York desk, identified in the
consent order as Jason Katz, ran a number of schemes with more than a dozen
BNPP traders and salespeople on key foreign exchange trading desks to
manipulate prices and spreads in several currencies, including the South
African rand, Hungarian forint and Turkish lira, officials said.

He called his group of traders a “cartel” and they communicated in a
chat room called “ZAR Domination,” a reference to the rand’s trading
symbol, according to the consent order. The group would push up the price of
the illiquid rand during New York business hours when the South African market
was closed, moving the currency in whichever way they chose, and thus
depressing competition, officials said.

Katz also enlisted colleagues at other banks to widen spreads for orders in
rands, increasing bank profits and limiting competition at the customer’
expense, the order says. Some of the traders engaged in illegal coordination
and shared confidential customer information, officials said. As part of a
cooperation agreement with prosecutors, Katz pled guilty in Manhattan federal court in
January to one count of conspiracy to restrain trade in violation of the
Sherman Act.

…click on the above link to read the rest of the article…

Deutsche Bank Confirms Silver Market Manipulation In Legal Settlement, Agrees To Expose Other Banks

April 14, 2016

Deutsche Bank Confirms Silver Market Manipulation In Legal Settlement, Agrees To Expose Other Banks

Back in July of 2014, we reported that in an attempt to obtain if not compensation, then at least confirmation of bank manipulation in the precious metals industry, a group of silver bullion banks including Deutsche Bank, Bank of Nova Scotia and HSBC (later UBS was also added to the defendants) were accused of manipulating prices in the multi-billion dollar market.

The lawsuit, which was originally filed in a New York district court by veteran litigator J. Scott Nicholson, a resident of Washington DC, alleged that the banks, which oversee the century-old silver fix manipulated the physical and COMEX futures market since January 2007. The lawsuit subsequently received class-action status. It was the first case to target the silver fix.

Many expected that this case would never go anywhere and that the defendant banks would stonewall indefinitely: after all their legal budgets were far greater than the plaintiffs.

Which is why we were surprised to read overnight that not only has this lawsuit against precious metals manipulation not been swept away, but that the lead defendant, troulbed German bank Deutsche Bank agreed to settle the litigation over allegations it illegally conspired with Bank of Nova Scotia and HSBC Holdings Plc to fix silver prices at the expense of investors, Reuters reported citing a court filing by law firm Lowey.

Terms were not disclosed, but the accord will include a monetary payment by the German bank.

It goes without saying, that there would have been neither a settlement nor a payment if the banks had done nothing wrong.

…click on the above link to read the rest of the article…

Even The Average Joe Gets It: “They’re Winding Us All Up For A Minsky Moment”

February 24, 2016

Even The Average Joe Gets It: “They’re Winding Us All Up For A Minsky Moment”

With global central bank policy in disarray following the Fed’s now admitted “policy error” of tightening just as the US and global economy are heading for recession, while the rest of the world desperate to cut to ever more negative rates, not to mention Japan’s abysmal foray into NIRP, there was hope that this weekend in Shanghai the G-20 would “bail us out” and unveil some miraculous rescue for risk takers at least one more time.

However, as Jack Lew explained earlier today, this won’t happen, leaving traders in a state of limbo and cognitive shock – after all if not even the central banks have your back, then who does?

Still something has to happen, or otherwise the world will careen into a deflationary, NIRP collapse and the Fed’s 25bps “recession buffer” will have absolutely no impact before the US itself plunged into economic contraction.

One proposal comes from BBG trader Richard Breslow, who like most others, is sick and tired of the constant market manipulation, endless central bank jawboning, and who like us, is hoping that one day markets will once again be free and efficient, not for any other reason but because as Breslow notes, even the average Joe gets it: “if you really want to see people spend and invest there has to be some belief this won’t all end in tears.”

His full note:

Parole For Prisoners With A Dilemma

If the U.S. wants to really do some good at the G-20, they should try to get their heads around the concept of embracing a stronger U.S. dollar. That would be showing a commitment to global leadership, both economic and moral, which has been long absent. It’s a bet on a stronger global economic tide raising all boats.

…click on the above link to read the rest of the article…

Bank of America Explains How Central Banks Rigged And Manipulated The Market

January 3, 2016

Bank of America Explains How Central Banks Rigged And Manipulated The Market

It used to be the provenance of “conspiracy theorists” – alleging that central banks have manipulated, rigged or otherwise broken the “efficient market.” That is no longer the case.

As we previously showed, now even the big banks admit it.

However, since for some unknown reason the broader media has yet to catch on to this concept which exonerates the “tinfoil” crowd and makes a mockery of the “bull market” of the past 7 years while posing some very troubling questions about how it all ends, here again is Bank of America explaining not only how “central banks have unfairly inflated asset prices” with the “market aware the price of risk is not correct”, but why the biggest risk to the financial system is a “loss of confidence in this omnipotent CB put”

And the cherry on top comes from JPMorgan which declares “Mission accomplished – QE drives up equity valuations”

Sources: “Fragility is the new volatility” by Benjamin Fowler, Global Equity Derivatives Rsch, Bank of America, December 9, 2015; “Eye on the Market Outlook 2016” by J.P.Morgan Private Bank

Market Manipulation Confusion

November 13, 2015

Market Manipulation Confusion

QUESTION: You say that long-term manipulations are impossible while short-term manipulations have been the focus of the bankers. Do you mean to say that not even governments can manipulate the economy perpetually? Are central banks buying US equities to manipulate the US stock market higher? It would seem that the Fed would then be accused of creating a bubble. What is going on?

Thank you.

ANSWER: Ever since Marx, the Age of “New Economics” as Volcker put it came to an end with the collapse of Bretton Woods and the Crash of 1974. Of course governments have tried to manipulate society and the economy. All governments operate out of their self-interest and they impose punishment as their weapon. They have falsified the statistics, revised them routinely especially CPI because they learned that everything was indexed to CPI so if you reduce the CPI you cut benefits without having to confront the people. After 1980, they removed real estate and replace it with rents using the argument that the former was investment not cost of living.

The entire game of manipulating society is to maintain their power. They historically will do whatever they need to do to achieve that goal. They routinely manipulate the truth using the press. Nobody will report that the Clintons not merely removed ALL restraints against the banks from Intrastate Banking to Glass-Steagall, but they also make student loans non-dischargable in bankruptcy at the bankers’ request so they could securitize them. Nobody will bring that up about Hillary because she is the favorite of the press. They attack Ben Carson and Trump all the time.

There is a HUGE difference from claiming these private people or governments CANmanipulate everything indefinitely and realizing that no matter who they are they CANNOT perpetually manipulate society or the economy. If the former is true, then there would be no crash and burn; just a flat-line. Sorry, people may not like that statement, but there is no proof that ANYTHING has been perpetually suppressed indefinitely.

…click on the above link to read the rest of the article…

Blatant Gold/Silver Manipulation Reflects The Complete Corruption Of The U.S. System

October 31, 2015

Blatant Gold/Silver Manipulation Reflects The Complete Corruption Of The U.S. System

The morning of the FOMC announcement on Wednesday (Oct 28) gold was up $14 overnight, close to $1080 and the cartel’s dreaded 200 day moving average. The “premise” was that the market was expecting another rate hike deferral.

I friend called me that morning and I told him to not get excited because when the FOMC policy decision hits the tape, they will annihilate gold and push the S&P 500 up toward 2100. I was only 10 pts off on the S&P call, as the S&P 500 closed at 2090, up an absurd 24 points. Gold was taken to the cleaners:

What’s incredible is not one mainstream media analyst or reporter questions this market action. If the premise behind the gold sell-off was a “hawkish” FOMC statement and the threat of a rate hike in December (yawn), then the exact same premise should have cause a big sell-off in stocks. Since when does the threat of tighter monetary policy not hit the stock market?

Just to recount the play-by-play in gold, the moment the FOMC announcement hit the tape, the Comex computer system was bombarded with sell orders. At this point in the trading day, the ONLY gold/silver market open is the Comex computer Globex system. In the first 30 minutes 29.6k contracts were unloaded – 2.6 million paper ounces. In the entire hour after the announcement 50.5k contracts were unloaded – 5.1 million ounces. Note that the Comex is showing around 200k ounces to be available for delivery.

The blatant, unfettered manipulation and intervention in the gold and silver market is sponsored by the Fed and the U.S. Treasury, executed by the big bullion banks and fully endorsed by the CFTC.

…click on the above link to read the rest of the article…

Conspiracy “Fact” – VIX Manipulation Runs The Entire Market

September 19, 2015

Conspiracy “Fact” – VIX Manipulation Runs The Entire Market

Ever since Simon Potter’s 2012 arrival as head of The NYFed’s trading desk, the manipulation of VIX (and thus its reflexive levered tail wagging the algo-driven dog of the indices) has been front-and-center day-after-day in the so-called US equity ‘market’. Since the introduction of VIX ETFs there has been an almost inexhaustible supply of conspiracy theory coincidental evidence of a mysteriously well-capitalized market participant always willing to step on the neck of any volatility-spike, thus protecting poor market participants from any prospective plunge. While only fring-blogs have noticed this in the past, now The FT admits that not only was recent volatility in markets exacerbated by VIX ETFs (thus confirming the tail-wagging-dog analogy), and further, the nature of the link between VIX ETFs and VIX Futures (rebalancing) enables frontrunning which serves to reinforce any trend into the close and thus manipulate the markets.

Since Simon Potter’s arrival at The NY Fed in 2012… the rather amusing correlation between the collapse in net VIX futures non-commercial spec interest (yes, the traded VIX, which courtesy of the New Normal’s relentless synthetic reflexivity has a huge impact on the trillions in underlying assets: think massive leverage) as per the CFTC’s weeklycommitment of traders report, and the arrival of Brian Sack’s replacement as head of the NY Fed’s trading desk, Simon Potter, the same former UCLA Econ PhD who recently delivered a very ornate speech explaining central bank interactions with financial markets “through the prism of an economist.” Now at least we know how said “interactions” look outside of “Market Manipulation for Econ PhD Dummies” and in practice.

So-called VIX-terminations have bcome ubiquitous…

…click on the above link to read the rest of the article…

China “Punishes” Hundreds For “Maliciously” Manipulating The Market

August 31, 2015

China “Punishes” Hundreds For “Maliciously” Manipulating The Market

The deadly chemical blast in the Chinese port of Tianjin was a preventable catastrophe in which more than 100 people lost their lives thanks in part to what looks like the political connections of the warehouse’s owners and although an upfront, transparent investigation and honest assessment of the environmental impact is likely the only way to safeguard the public and ensure it doesn’t happen again, no one believes the Chinese government has the will to conduct such an investigation.

But whatever you do, do not say any of the above if you live in China.

Similarly, China’s stock market collapse was an entirely preventable financial catastrophe caused by the unchecked accumulation of margin debt and the encouragement of speculation, and the bursting of the equity bubble which began in June has been nothing short of a debacle that’s led to international condemnation and accusations that, even in a centrally planned world, Beijing’s particular brand of intervention is so egregious as to stray outside the bounds of manipulated market decorum.

But if you live in China, don’t say that either.

Over the last two months there were signs that Beijing would soon resort to outright, sweeping censorship as it relates to both the stock market and the Tianjin blast. For instance, in July, phrases like “rescue the market” were reportedly banned and in the wake of the Tianjin disaster, hundreds of social media accounts were shut down for spreading “blast rumors.”

…click on the above link to read the rest of the article…

In Latest Market-Rigging Scandal, ITG Busted For Frontrunning Clients In Its Dark Pool

July 29, 2015

In Latest Market-Rigging Scandal, ITG Busted For Frontrunning Clients In Its Dark Pool

Last year, first in the aftermath of NYAG’s lawsuit against Barclays followed promptly by Michael Lewis’ “Flash Boys” (which over a year later is still a better seller than “GS Elevator’s” attempt to be this generation’s Tucker Max) exposing High Frequency Trading for being nothing more than a sophisticated gimmick enabling market rigging and bulk order frontrunning while pretending to “provide liquidity”, the revulsion against HFTs hit a fever pitch that forced Virtu to postpone its IPO.

Several months later, because the market kept going higher, people quickly forgot why they were angry at a bunch of vacuum tubes, and Virtu not only re-IPOed (adding another year without a single trading day loss to its roster) but it was taken public by that “humanitarian” protagonist of Flash Boys, Goldman Sachs itself (which was so aghast at the scourge that is HFT it almost, almost, ended its own dark pool and HFT ambitions… before it decided to double down on HFT).

However, since the market is once again on the verge of a terminal liquidity seizure with its associated side-effects (see China for details), the authorities needed to remind the “market” just who the scapegoat will be when the next crash finally does come. Which is why earlier today in an unexpected “preliminary second quarter guidance” release, ITG, owner of the Posit dark pool, was just busted with a $22.6 million potential SEC settlement for what appears to have been blatant frontrunning of company clients in its own prop trading pod.

From the release:

During the second quarter of 2015, ITG commenced settlement discussions with the Staff of the Division of Enforcement of the SEC (the “SEC Enforcement Division”) in connection with the SEC’s investigation into a proprietary trading pilot operated within ITG’s AlterNet Securities, Inc. (“AlterNet”) subsidiary for sixteen months in 2010 through mid-2011.

…click on the above link to read the rest of the article…

Banks Rig Treasury Market

July 26, 2015

Banks Rig Treasury Market

Boston’s public sector pension fund accuses all of the biggest US banks – the so-called “primary dealers” which transact directly with the United States Treasury Department and “have a special obligation to ensure the efficient function” of the American treasury bond market – of colluding to manipulate the $12.5 trillion U.S. Treasury market. The complaint alleges:

Defendants employed a two-pronged scheme to manipulate the Treasury securities market. First, Defendants used electronic chatrooms, instant messaging, and other electronic and telephonic methods to exchange confidential customer information, coordinate trading strategies, and increase the bid-ask spread in the when-issued market to inflate prices of Treasury securities they sold to the Class. Second, Defendants used the same means to rig the Treasury auction bidding process to deflate prices at which they bought Treasury securities to cover their pre-auction sales. Recent reports confirm that traders at some of these primary dealers “talked with counterparts at other banks via online chatrooms” and “swapped gossip about clients’ Treasury orders.

By engaging in this unlawful conduct, Defendants maximized the spread not only for transactions in the when-issued market, but also between their buy (auction) price and sell (when-issued) price.

***

This conduct lined the pockets of Defendants while raising prices to investors trading Treasury securities in the when-issued market, investors trading Treasury security-based futures and options, and investors transacting in instruments benchmarked to the prices of Treasury securities determined at auction, including certain bonds and other asset- backed securities and interest rate swaps.

Given the tight correlation between the Treasury securities prices in the spot market and futures markets, Defendants’ manipulation of the auction prices for Treasury securities also directly and proximately caused injury to individuals and entities that traded in Treasury futures and options on U.S. exchanges, including the Chicago Mercantile Exchange.

High-frequency trading has also long been used to manipulate the treasury market.

…click on the above link to read the rest of the article…

In Latest Market Rigging Scandal, Wall Street Now Sued For Treasury Market Manipulation

July 24, 2015

In Latest Market Rigging Scandal, Wall Street Now Sued For Treasury Market Manipulation

“Defendants used electronic chatrooms, instant messaging, and other electronic and telephonic methods to exchange confidential customer information, coordinate trading strategies.”

“Traders at some of these primary dealers talked with counterparts at other banks via online chatrooms and swapped gossip.”

Sound familiar?

Those quotes are from a 61-page complaint filed in the Southern District of New York wherein Boston’s public sector pension fund accuses all US primary dealers (the cabal of usual suspect dealer banks that transact directly with Treasury and “have a special obligation to ensure the efficient function” of what was formerly the deepest, most liquid market on the planet) of colluding to manipulate the $12.5 trillion US Treasury market.

The alleged scheme (tipped here last month) was remarkably simple and involved precisely the same sort of conspiratorial, chatroom shenanigans employed by the very same banks who, at various times, have colluded to rig FX, gold, various -BORs, ISDAfix, and pretty much everything else.

In short, the banks simply conspired to keep the spread between the when issued price and the price at auction as wide as possible, thus inflating their profits at the expense of everyone else where “everyone else” includes institutional investors and hedge funds all the way down to retirees and Main Street in general. From the complaint:

Defendants employed a two-pronged scheme to manipulate the Treasury securities market. First, Defendants used electronic chatrooms, instant messaging, and other electronic and telephonic methods to exchange confidential customer information, coordinate trading strategies, and increase the bid-ask spread in the when-issued market to inflate prices of Treasury securities they sold to the Class. Second, Defendants used the same means to rig the Treasury auction bidding process to deflate prices at which they bought Treasury securities to cover their pre-auction sales. Recent reports confirm that traders at some of these primary dealers “talked with counterparts at other banks via online chatrooms” and “swapped gossip about clients’ Treasury orders.

…click on the above link to read the rest of the article…

Are Big Banks Using Derivatives To Suppress Bullion Prices?

July 9, 2015

Are Big Banks Using Derivatives To Suppress Bullion Prices?

We have explained on a number of occasions how the Federal Reserves’ agents, the bullion banks (principally JPMorganChase, HSBC, and Scotia) sell uncovered shorts (“naked shorts”) on the Comex (gold futures market) in order to drive down an otherwise rising price of gold. By dumping so many uncovered short contracts into the futures market, an artificial increase in “paper gold” is created, and this increase in supply drives down the price.

This manipulation works because the hedge funds, the main purchasers of the short contracts, do not intend to take delivery of the gold represented by the contracts, settling instead in cash. This means that the banks who sold the uncovered contracts are never at risk from their inability to cover contracts in gold. At any given time, the amount of gold represented by the paper gold contracts (“open interest’) can exceed the actual amount of physical gold available for delivery, a situation that does not occur in other futures markets.

In other words, the gold and silver futures markets are not a place where people buy and sell gold and silver. These markets are places where people speculate on price direction and where hedge funds use gold futures to hedge other bets according to the various mathematical formulas that they use. The fact that bullion prices are determined in this paper, speculative market, and not in real physical markets where people sell and acquire physical bullion, is the reason the bullion banks can drive down the price of gold and silver even though the demand for the physical metal is rising.

…click on the above link to read the rest of the article…

Will Puerto Rico Cause An Inadvertent “Black Swan” Derivatives Melt-Down?

July 2, 2015

Will Puerto Rico Cause An Inadvertent “Black Swan” Derivatives Melt-Down?

I really had not been paying much attention to the Puerto Rico debt situation. After all, $72 billion in debt that might go bad – big deal. The Fed can print up $72 billion in credit lines with the push of a button.

But a friend of mine happened to mention to me today (Monday) that MBIA’s stock was down over 23% and Assured Guaranty’s stock was down over 13%. That woke me up.

MBI guarantees $4.5 billion in par amount of Puerto Rico muni paper. As of it’s latest 10-Q (March 31, 2015), MBI showed a book value of $3.9 billion. Puerto Rico alone could more than wipe out MBI’s net worth. But that’s only a portion of the story. The bigger part of the story is buried off-balance sheet in the footnotes in opaque financial structures called Variable Interest Entities (VIE’s). Remember those from 2008? I remember them vividly.

The VIEs are the off-balance sheet vehicles that triggered the massive chain of counterparty defaults which de facto collapsed the U.S. financial system in 2008. The VIEs are where the credit default swaps and other nebulous forms of OTC derivatives bet slither around.

Companies like MBI and AMBAC underwrite credit “enhancement” guarantees on these massive cesspools of debt – and the associated derivatives that are “wrapped around” the debt structures – and stick them in VIEs. MBI’s 10-K has several pages of footnotes which vaguely describe the contents of its VIEs. The problem is that MBI and its ilk are thinly capitalized relative to the potential size of the liabilities they face if the credit markets become volatile to the downside.

Toxicity plus toxicity does not equal purification. But VIEs that contain off-balance sheet debt and derivative guaranteed equals toxicity cubed, at least. In other words, whatever MBI lists as its “net” credit exposure in its financials, take that number and, at the very least, triple it.

…click on the above link to read the rest of the article…

The Government Fraudulently Reported April Inflation Numbers

May 23, 2015

The Government Fraudulently Reported April Inflation Numbers

There’s no B.S. like the BLS – Dave Kranzler, Investment Research Dynamics

The Bureau of Labor Statistics reported the Consumer Price Index for April this morning. This Ministry of “Truth” published an inflation report that asserts that consumer inflation rose .1% month over month for April. But a further dissection of the numbers shows that the BLS has the price of gasoline falling 1.7% during April.

This is either a politically motivated act of fraud or complete incompetence on the part of the Government statisticians and data gatherers (the Census Bureau).

In fact, the price of gasoline rose over 12% during April – the fastest monthly rise in history:

As you can see, the price of gasoline rose from $1.77 to $2.00 during the month of April. Either the people running the BLS are complete incompetent idiots or have been given strict orders from above – i.e. the White House – to produce politically friendly economic reports. Let’s call the BLS “The Ministry of Disinformation.”

The BLS’ distortion of the data it reports is far greater and fraudulent that ANYONE is willing to admit, investigate or report.

Here’s what they did to gold after that fraud-filled CPI report was released (click to enlarge):

Any questions as to the political motivation behind the Government’s intentional release of fraudulent economic data?

Ten Banks, Including JPM, Goldman, Deutsche, Barclays, SocGen And UBS, Probed For Gold Rigging

February 24, 2015

Ten Banks, Including JPM, Goldman, Deutsche, Barclays, SocGen And UBS, Probed For Gold Rigging

No matter how many times the big banks are caught red-handed manipulating precious metals, some failed former Deutsche Bank prop-trader (you know who you are) will take a vociferous stand based on ad hominem attacks and zero facts that no, what you see in front of you is not precious metal rigging at all but a one-off event that has nothing to do with a criminal banking syndicate hell bent on taking advantage of anyone who is naive and dumb enough to still believe in fair and efficient markets.

The last time this happened was in November when we learned that “UBS Settles Over Gold Rigging, Many More Banks To Follow“, and sure enough many more banks did follow, because in Europe, where the stench of gold market manipulation stretches far beyond merely commercial banks, and rises through the central banks, namely the BOE and ECB, culminating with the Head of Foreign Exchange & Gold at the BIS itself, all such allegations have to be promptly settled or else the discovery that the manipulation cartel in Europe involvesabsolutely everybody will shock and stun the world, which heretofore was led to believe that such things as gold market (not to be confused with Libor or FX) manipulation only exist in the paranoid delusions of a few tinfoil fringe-blogging lunatics.

However, as usually happens, someone always fails to read the memo that when it comes to gold-market manipulation one must i) find nothing at all incriminating if one is a paid spokesman for the entities doing the manipulation such as former CFTC-sellout Bart Chilton or ii) if one can’t cover it, then one must settle immediately or else the chain of revelations will implication everyone.

…click on the above link to read the rest of the article…

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