insider trading - How Gold Price Is Manipulated During The "London Fix"

Bloomberg begins:

"Every business day in London, five banks meet to set the price of gold in a ritual that dates back to 1919. Now, dealers and economists say knowledge gleaned on those calls could give some traders an unfair advantage when buying and selling the precious metal. The London fix, the benchmark rate used by mining companies, jewelers and central banks to buy, sell and value the metal, is published twice daily after a telephone call involving Barclays Plc, Deutsche Bank AG, Bank of Nova Scotia, HSBC Holdings Plc and Societe Generale SA."

"The fix dates back to September 1919, less than a year after the end of World War I, when representatives from five dealers met at Rothschild’s office on St. Swithin’s Lane in London’s financial district. It was suspended for 15 years, starting in 1939. While Rothschild pulled out in 2004 and the discussions now take place by telephone instead of in a wood-paneled room at the bank, the process remains much the same." <more info>

That much is known. What is certainly known is that any process that involves five banks sitting down (until recently literally) and exchanging information using arcane methods (such as a telephone), on a set schedule that involves a private information blackout phase, even if temporary, and that does not involve instant market feedback, can and will be gamed. "Traders involved in this price-determining process have knowledge which, even for a short time, is superior to other people’s knowledge,” said Thorsten Polleit, chief economist at Frankfurt-based precious-metals broker Degussa Goldhandel GmbH and a former economist at Barclays. “That is the great flaw of the London gold-fixing."

There are other flaws.

"Participants on the London call can tell whether the price of gold is rising or falling within a minute or so, based on whether there are a large number of net buyers or sellers after the first round, according to gold traders, academics and investors interviewed by Bloomberg News. It’s this feature that could allow dealers and others in receipt of the information to bet on the direction of the market with a high degree of certainty minutes before the fix is made public, they said."

"There’s no evidence that gold dealers sought to manipulate the London fix or worked together to rig prices, as traders did with Libor. Even so, economists and academics say the way the benchmark is set is outdated, vulnerable to abuse and lacking any direct regulatory oversight. “This is one of the most concerning fixings I have seen,” said Rosa Abrantes-Metz, a professor at New York University’s Stern School of Business whose 2008 paper, “Libor Manipulation?” helped spark a global probe. “It’s controlled by a handful of firms with a direct financial interest in where it’s set, and there is virtually no oversight -- and it’s based on information exchanged among them during undisclosed calls.”

Next, Bloomberg conveniently goes into the specifics of just how the gold price is manipulated first by the fixing banks, then by their "friends and neighbors" as news of the fixing process unfolds.

"At the start of the call, the designated chairman -- the job rotates annually among the five banks - gives a figure close to the current spot price in dollars for an ounce of gold. The firms then declare how many bars of the metal they wish to buy or sell at that price, based on orders from clients as well as their own account. "

"If there are more buyers than sellers, the starting price is raised and the process begins again. The talks continue until the buy and sell amounts are within 50 bars, or about 620 kilograms, of each other. The procedure is carried out twice a day, at 10:30 a.m. and 3 p.m. in London. Prices are set in dollars, pounds and euros. Similar gauges exist for silver, platinum and palladium."

"The traders relay shifts in supply and demand to clients during the calls and take fresh orders to buy or sell as the price changes, according to the website of London Gold Market Fixing, which publishes the results of the fix."

Caminschi and Richard Heaney, a professor of accounting and finance at the University of Western Australia, analyzed two of the most widely traded gold derivatives: gold futures on Comex and State Street Corp.’s SPDR Gold Trust, the largest bullion-backed exchange-traded product, from 2007 through 2012.

"At 3:01 p.m., after the start of the call, trading surged to 47.8 percent above the average for the 20-minute period preceding the start of the fix and remained 20 percent higher for the next six minutes, Caminschi and Heaney found. By comparison, trading was 8.7 percent higher than the average a minute after publication of the price. The results showed a similar pattern for the SPDR Gold Trust."

“Intuitively, we expect volumes to spike following the introduction of information to the market” when the final result is published, Caminschi and Heaney wrote in “Fixing a Leaky Fixing: Short-Term Market Reactions to the London P.M. Gold Price Fixing.” “What we observe in our analysis is a clustering of trades immediately following the fixing start.”

"The researchers also assessed how accurate movements in gold derivatives were in predicting the final fix. Between 2:59 p.m. and 3 p.m., the direction of futures contracts matched the direction of the fix about half the time."

"From 3:01 p.m., the success rate jumped to 69.9 percent, and within five minutes it had climbed to 80 percent, Caminschi and Heaney wrote. On days when the gold price per ounce moved by more than $3, gold futures successfully predicted the outcome in more than nine out of 10 occasions. “Not only are the trades quite accurate in predicting the fixing direction, the more money that is made by way of a larger price change, the more accurate the trade becomes,” Caminschi and Heaney wrote. “This is highly suggestive of information leaking from the fixing to these public markets.”

Which is precisely why nothing will change. Sadly, that is also widely known.

So did Bloomberg put together an exhaustive article in which virtually everything was known a priori? it turns out the answer is no: I learned one thing.

London Gold Market Fixing Ltd., a company controlled by the five banks that administers the benchmark, has no permanent employees. A call from Bloomberg News was referred to Douglas Beadle, 68, a former Rothschild banker, who acts as a consultant to the company from his home in Caterham, a small commuter town 45 minutes south of London by train. Beadle declined to comment on the benchmark-setting process.

regards,

oscarjp

the all sell the Yen and inflation in Germany

hello,

All forecasts of large financial institutions, recently forecast a further weakening of the yen against the dollar (up to 105-120). Openly admit to selling the yen also managing the largest funds. (eg George Soros earned in the previous "rally" 1 billion USD).

In addition, the shares are purchased on the Tokyo Stock Exchange. In the past two weeks, the stock market recorded an inflow of 19.6 billion USD - the highest since mid-April. Hence, no wonder almost 10 percent increases this month.

If they all sell Yen, who buys it? Moments in which the market is in such a state of euphoria usually before the "heart attack".

Inflation rate from German Länder y/y:

Brandenburg: 1.3%; before 1.2%;
Hesse: 1.1%; before 0.9%;
Bavaria: 1.0%; before 1.0%;

Baden-Württemberg: 1.3%; before 1.2%;
Saxony: 1.4%; before 1.1%.

Preliminary data regarding inflation for November in Germany:

- CPI 1.3% vs. 1.2%, expected 1.2%
- HICP 1.6% vs. 1.2%, expected 1.3%
- The difference between the HICP and CPI is the highest since March
- July prices, in terms of both baskets, basically did not change.

regards,

oscarjp

Conference Board and central budget deficit

welcome,

About the inflation in recent times says a lot. Low inflation in the euro area in October was the direct cause of rate cuts by the ECB, and the relatively low inflation in the U.S. (although higher than in Europe) is an excuse for the Fed to keep QE at the maximum level. This week the inflation will remain in the interest of investors: we will in fact very important preliminary data regarding the inflation for November: on Thursday for Germany and on Friday for the euro zone. They are so crucial because it will determine whether the concept of a negative deposit rate (a rumor last week caused quite a thump on a pair of euro) real in the immediate future. The market expects a minimum growth inflation for euro zone (to 0.8%), so if inflation unexpectedly fell, the euro would be under strong pressure.

The central budget deficit in Portugal reached after October 7.7 billion EUR. This means that amounted to a little over 4.7% of GDP, compared to 4.4% in the corresponding period last year. The deflationary tendencies in southern European countries may mean new problems in the public finances, despite the policy of the ECB. The growing deficit in Portugal seems to be the confirmation.

Today we know the data on the implementation of the Spanish central budget after October. The deficit amounted to 3.61% of GDP - by 0.28 percentage points more than the year before. After September (3.58%) performance was the same as last year, so the growth in the Spanish public finances is unfavorable - a fact before which warned on the occasion of the risks of deflation in Europe. 

These are risks to which no one pays attention.

It is worth noting that the spreads of Spanish and Italian bonds slightly increase. Total spread rose yesterday to 483bps - the highest in November, though still some 270bps (!) Less than the year before.

Consumer confidence in the U.S. - Conference Board (November): 70.4; expected 72.2; previous 71.2. Lowest since April. The deterioration of consumer sentiment worried, because it could mean worse prospects for recovery in consumer demand.

This week will be most important activity data - the Chicago PMI Index - Wednesday 15:45 (Warsaw time). Later, the Americans are going for a long weekend (Thanksgiving Day), and the attentions of investors moves to Europe, where we have data regarding inflation.

regards,

oscarjp

AT of fSP500 Index

hello,

Morning, this Morning, I created for my client current analysis of futures contract for the SP500 Index with of course my recommendation (chart 1 and chart 2 below). Unfortunately, I am very, very sorry but I could not publish immediately my analysis because it was a special for the customer who paid money for analysis. It often happens, that a lot of my analysis I would like to show with proud on blog, unfortunately can not be at once published. There would be wrong if I posted it on the blog as soon as I'd send it.

chart 1. fSP500 H1, 2013-11-21

But at the moment at the end of the day I can post on my blog with a comment. Currently, we completed wave - the correction number four and Index started to continue our strong momentum move to new heights. Unfortunately, it is also bad news. It is the last wave of growth of the first, second and third row. What consequence will be a correction minimum of 7-9 percentage as I mentioned a few posts earlier <link>

chart 2. fSP500 M15, 2013-11-21

How long you should continue wave number five? Unfortunately, how long it will last I do not know, but sure enough, I can say that will end at the levels from 1825 to 1830. At present, contracts are at the level of 1794 points. For 1830 points or my level lacks the 36 points. This is exactly two percent.

chart 3. fSP500 M15, 2013-11-21

If you have any questions or would like to receive a daily analysis of what I do for my clients and I use at work every day please contact me.

best regards,
oscarjp

The information contained in this publication is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Any opinion offered herein reflects oscarjp-chrimatistikos current judgment and may change without notice. Users acknowledge and agree to the fact that, by its very nature, any investment in shares, stock options and similar and assimilated products is characterised by a certain degree of uncertainty and that, consequently, any investment of this nature involves risks for which the user is solely responsible and liable.

Minutes FOMC & interesting informations (very important(!))

hello,

One of the interesting and often ignored by the market information is a change in property prices in Chinese cities. In October, the price dynamics in the primary market amounted to 12.4% y/y, while in the secondary market 16.4% (!), In both cases establishing records. It must be added that such a high price increase can not be explained by the base effect (it is even negative), which only underlines how unhealthy situation on the property market, which is responsible for about 15% of China's GDP (!). It is worth mentioning that one of the statements the party plenum was to accelerate the implementation of the property tax, which can lead to the bursting of the "bubble", and even a hard landing of the Chinese economy (in extreme circumstances of exceptional to the global recession). Therefore, the joy of the markets after the announcement of reforms, including setting up further the possibility of borrowing by local governments (officially, unofficially for a long time because they do) and loosening the one-child policy, it seems strongly myopic.

Night weakening of the dollar was caused statement of Ben Bernanke, who stated that:

◦ Fed is obliged to maintain a highly accommodative monetary policy as long as you need it.
◦ Interest rates may still remain around zero, even after the QE is completed. Perhaps even after the unemployment rate falls below 6.5%.
◦ The rate of decrease QE is not strictly defined. Everything will depend on the Fed's views on the economic situation in the U.S..

Very dovish comments ...

Economic data:

Core CPI in U.S. m/m actual: 0.1%; expect: 0.1%; previous: 0.1%

CPI in U.S. y/y actual: 1.0%; expect: 1.0%; previous: 1.2%

The ECB said today a very strong voice that can consider -0.1% rate of deposit if you need further loosening! <more info>

Bullard (FED) on Bloomberg TV: cutting QE3 "on the table" already at the next meeting:
◦ The economy looks much better than in recent years
◦ The only question is whether the growth rate as the last is maintainable in the long term
◦ to reduce the chance of QE3 next month (!)
◦ You can not compare the current situation in the markets for bubbles from the 90's and 2000

◦ Europe will come completely out of the recession in 2014
◦ I see a chance to grow more than 3% in the U.S. next year
◦ Lower limit of the inflation rate of 1.5% is justified
◦ Data for October very good
◦ I am not sure whether the Fed will reduce QE3 in December
◦ The increase in the stock markets are quite strong this year :)

Bloomberg: 5% of respondents expected to cut QE3 in December!

Reuters: Fed QE3 in March will reduce by $ 10 billion

Minutes FOMC: <more info>

Many members said that if the the data will be very good, QE will be limited in the coming months, some members pointed out that markets need to prepare for it in speeches.

Was a discussion about whether to enter the statement to say that the shutdown could mean problems for the recovery, but decided not to in order not to increase the problem.

Inflation consistently below 2% would be detrimental to the recovery in the U.S.

The Committee considered various options to strengthen forward guidance - but on a theoretical level - Lowering the deposit rate, the additional terms of the unemployment rate reached 6.5%, the lower limit for inflation etc.;

comments are welcome (always)

regards,
oscarjp

insider trading - where is the line of propriety ? part 3

hello,

"The Wall Street Journal", analyzing forecasts for U.S. companies from the public market, observed 1468 cases since 2005 in which the company published a so-called. growth forecasts, announcing that their results will be better than previously expected, and later within 120 days decreased the same forecast. According the informations from SEC (Securities and Exchange Commission is U.S.) show that in 755 of these cases the CEO or board members of these companies sell shares between increasing and lowering of forecasts, ie, favorable to the sale.

In 2389 insiders who sold shares between changes in forecasts, about 74 percent would get less money for them if they waited for the transaction to lower forecasts. Stock prices lost by an average of 10.8 percent between the date of sale and the date of publication lowering forecasts.

According to the SEC, unfortunately there is have no methods, on the basis of these data difficult to determine if the seller knew before the transaction of upcoming bad information :)

regards,

oscarjp

my targets for all

hello,

For a long time I wondered whether to publish the following entry. The reasons were many but I do not want to make them. Below I present charts of the most liquid Indexes on the world, inter alia: SP500, DAX, FTSE100. The main objective of all these charts show, was to raise awareness my reader that the trend is known to all Indexes and we should prepare to the correction.

The graphs showed possible according to my analysis of the levels where the market may start correction. Of course, it is impossible that all the markets began to fall just as I showed. Most important is the SP500 and DAX Index the others Indexes are correlated with these both. In the table at the bottom, also presented the percentage Indexes still need to achieve your targets.

I did not take into account any incoming economic data in the coming days. This is a purely technical analysis.

chart 1. fSP500 Index

chart 2. fFTSE100 Index

chart 3. fCAC40 Index

chart 4. fDAX30 Index

chart 5. fWIG20 Index

chart 6. fDJIA Index

table 1. Rate of return for medium and high targets

regards,
oscarjp

The information contained in this publication is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Any opinion offered herein reflects oscarjp-chrimatistikos current judgment and may change without notice. Users acknowledge and agree to the fact that, by its very nature, any investment in shares, stock options and similar and assimilated products is characterised by a certain degree of uncertainty and that, consequently, any investment of this nature involves risks for which the user is solely responsible and liable.

12. Summary of the trades (November 1st, 2013 - November 15th, 2013)

hello,

In the past two weeks I have focused much attention on the forex market and specifically on EUR/USD but not only, special request my readers I have published an analysis of pair USD/PLN where I decided to invest a small trade. The trade was closed on Friday evening before the end of the week, realizing a profit.

Summary of trades

Below you will find links refer to my earlier posts with my recommendations.

trade 1

trade 2 and 3

Regrading EUR/USD market, last days showed strengthening of the euro against the U.S. dollar. It is worth noting that on Thursday and Friday, especially on Friday, 8th November at the daily chart, it is clear a very large volume of futures contracts. I marked it in red on the chart 1 and 2. It seems like a big commitment of any investment bank or hedge fund. Thus, levels of 3355 will be very difficult to overcome. But do not think that's impossible.

chart 1. EUR/USD D1, 2013-11-17

chart 2. EUR/USD H1, 2013-11-17

Regarding my recommendation, namely, stop loss was set at the level of 3570. In the case of re-testing 3300 levels will be gradually lowered the stop loss and the next level is 3500.

If while reading my posts you have any questions or would like to share your opinion, you are cordially invited to write comments

regards,

oscarjp

The information contained in this publication is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Any opinion offered herein reflects oscarjp-chrimatistikos current judgment and may change without notice. Users acknowledge and agree to the fact that, by its very nature, any investment in shares, stock options and similar and assimilated products is characterised by a certain degree of uncertainty and that, consequently, any investment of this nature involves risks for which the user is solely responsible and liable.

United Kingdom in the spotlight

hello again,

Two days ago we show inflation data from several European economies including the UK. CPI inflation in the UK in October was 2.2%, against expectations of 2.5%. If the downward trend is maintained, the Bank of England will be in a very comfortable situation. Data from the British economy recently significantly pierced expectations and further declining inflationary pressures.

Publications from the UK in recent times positively surprised after the period in which it was seen chilling moods, the British economy is behaving in this respect similar to the U.S.. Industrial PMI, which we show last week was 56 points. and is still at the highest level of 2.5 years. Even earlier, the reading service PMI pointed to 62.5 points. that is, the most in the past 16 years.

This is very positive news for the British economy because the services in this country are responsible for 3/4 of the gross domestic product. If we look at the employment sub-index was 56.2, and he also was the best of 16 years. This entry in the fourth quarter suggests that the readings from the UK again can start positively surprise. Moreover, this set of data means that the improvement in the labor market at the end of the year should be strong and cautious assumptions BoE to decline in the unemployment rate are becoming less relevant. The BoE forecast a three quarter unemployment rate of 7.9% + / - 0.1 points. percent. However, in the last three months of unemployment was 7.7%. MPC forecast that the unemployment rate falls below 7% until mid-2016. (against a decline in unemployment below 7% BoE will not lower interest rates).

Current projections of the Bank of England to this day even before the publication of the new.

The inflation projection:

chart 1. CPI inflation projection

Unemployment rate:

chart 2. Unemployment projection

chart 3. Cumulative probability of unemployment

BoE report:

◦ Unemployment may fall below 7% in 3Q 2015.!
◦ The risk of weak GDP growth increases, the risk of persistent high unemployment falls
◦ Inflation in 1q 2015 has come down below 2%
◦ 4q GDP growth in 2013 is projected at 0.9%
◦ unemployment has fallen in recent months, stronger than expected


Carney (BOE):

◦ Increase fastest in 6 years
◦ growth based on consumption and the real estate market, investment and exports remain weak
◦ Inflation can bounce slightly in the coming months, but in the long term will remain permanently low
◦ bank forecasts are conservative
◦ The 7% unemployment rate will not lead to an automatic increase in interest (something like FED)


New projections BoE from 2013-11-13

The inflation projection:

chart 4. new CPI inflation projection

Unemployment rate:

chart 5. actualized unemployment projection

chart 6. new cumulative probability of unemployment

BoE projections have been revised in line with expectations. The unemployment rate is expected to fall below the earlier 7%. In the August report, MPC assumed decline in the unemployment rate below the target in 2016, the new projection unemployment is likely to reach the target level in the 3k 2015. This implies that the central bank of England may raise interest rates sooner than previously had founded, and this implies the growth of quotations of the British pound.

Were also reduced expectations for CPI inflation to be in the quarters lower than previously assumed. Mark Carney sees the greatest threat to the growth of UK GDP.

The Bank of England inflation report said in part that he was too pessimistic relative to the economy, especially the labor market. Pointing to a fairly significant probability of reducing the unemployment rate to 7% next year, given the market's suggestion that theoretically, it is possible to increase interest rates in 2014.

The market has already priced it anyway - the market is currently discounting almost three interest rate increase by the end of 2015, what's interesting is, in principle, has not changed. Projection, along with better data prevented only reduce speculation about increases to a lot of lower inflation (as of yesterday, inflation is 2.2%, the market expected 2.5%).

Does this mean that the Bank of England agrees with the expectations of the market? Not necessarily. President Carney insisted yesterday that the achievement of the unemployment rate of 7% does not necessarily mean increases. Therefore, a further increase in FRA rates, at least to a significant degree, it does not seem justified at this moment.

regards,
oscarjp

EUR/USD & USD/PLN current technical analysis - short update

hello,

In reference to the post from yesterday <EUR/USD & USD/PLN current technical analysis> regarding USD/PLN I decided to replace the "stop los"s to "take profit" by lowering it to levels capable of producing a profit. Such a decision was taken to later in the week to quietly observe the market and possibly lower the take profit increase profits - chart 1

chart 1. USD/PLN M30, 2013-11-13

However, in relation to the EUR/USD, the market reached the level indicated by me. But not without temporary nerve namely the market decided to test the levels of 1.3400  before they reach the 1.3470. At present, trade was closed and I would not expect further strengthening of the euro against the U.S. dollar - chart 2

chart 2. EUR/USD H1, 2013-11-13

In addition, I would like to point out that the SP500 futures are currently at historic high, and this is the last straight before 7 - 9 percent correction. In the next few days I will present a current technical analysis of fSP500 with the possibility to start the correction according my opinion.

trade safe,

oscarjp.chrimatistikos

The information contained in this publication is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Any opinion offered herein reflects oscarjp-chrimatistikos current judgment and may change without notice. Users acknowledge and agree to the fact that, by its very nature, any investment in shares, stock options and similar and assimilated products is characterised by a certain degree of uncertainty and that, consequently, any investment of this nature involves risks for which the user is solely responsible and liable.

insider trading - where is the line of propriety ? part 2

As a continuation of the cycle about illegal activities in the financial markets by investment banks and hedge funds, to present information that appeared today on Bloomberg. The most important of these:

Credit Suisse, JPMorgan Chase and other investment banks are considering limiting the ability of their traders to chat electronically with other banks amid a series of investigations of potential manipulation of the foreign exchange market.

No decisions have yet been made, but the banks are considering prohibiting traders from participating in group chats with employees of several rival banks at the same time.

If the restrictions are put into effect, traders are expected to still be able to speak to clients via chat or individual traders at another bank, just not in a group session featuring several banks at once :)

Barclays and Citigroup are also among the banks said to be considering limits.

Regulators in Britain, the United States, Switzerland and Hong Kong have all announced inquiries into possible manipulation of currency trading by traders in London and elsewhere in recent months.

The use of chat rooms by traders at multiple banks are among the areas being scrutinized by regulators in the foreign exchange investigations, in particular a group of traders nicknamed "the Cartel" and "the Bandits Club."

About a dozen traders have been placed on leave pending the outcomes of the currency trading investigations and the vast majority of the largest banks involved in the foreign exchange market have disclosed that they have been contacted by regulators, including Deutsche Bank, Royal Bank of Scotland, HSBC and Goldman Sachs.

None of the traders have been accused of wrongdoing and the investigations are at an early stage.

A lawsuit also was filed by a Massachusetts retirement system late last month in the United States against seven major banks, accusing them of manipulating foreign currency benchmarks.

Several of the banks have been reviewing the use of so-called mult-idealer chats for some time, in part because of concerns raised during a long-running investigation into the manipulation of the London interbank offered rate, or Libor, a global benchmark interest rate.

Barclays, R.B.S., Swiss bank UBS, the Dutch lender Rabobank and British financial firm ICAP have paid more than $3 billion in the Libor scandal in total. (only)

regards,
oscarjp

EUR/USD & USD/PLN current technical analysis

hello,

EUR/USD

With reference to my recommendation from 27th October <link> and continuing my recommendation from 30th October <link> I think they have not time to close the trades, I still have a short positions. As an update, I decided to refresh my technical analysis - chart 1.

chart 1. EUR/USD M30, 2013-11-12

At present, we observe a fairly extensive correction with the 3470-3480 target level. I assume it will be a classic correction of A-B-C. At least for the moment, as indicated waves.

The main factors that have a positive effect on my analysis are:

1. Troika visitors in Greece, still can not come to agreement on the budget for next year. According to Troika budget hole next year will be nearly 3 billion euros, and government officials talk about 500 mln. At stake is the payment of the next tranche of aid of € 1 billion. The situation in Greece is already quite taut and the two parties can not reach a compromise. It is no wonder Greek politicians as the economy of the country and is already in ruins and the public mood is bad. Hence the lack of willingness to further cuts. Greece still has to achieve primary budget surplus, and right now the main problem is the interest regarding a gigantic debt.

2. Despite the very good data from the U.S. on Friday, markets do not hurry when making conclusion. Conclusion relating QE, it seems there is a chance for considerable volatility in recent months of the year. S&P500 or DAX30 all the time looking for highs. All that is needed for such a move is another similar report from the U.S. labor market - this time for November (it will be announced before the December meeting of the Fed). However, at the moment the market does not take into account the cutting QE in December. And that means potentially big changes, of course, down for the stock markets and gold, and further strengthening of the dollar.

3. The situation in Europe also needs a loose monetary policy, including to quite a weird combination of dangerously low inflation, record high unemployment, a strong euro and weak foreign trade statistics. Two months ago, Mario Draghi said in fact that the market valued interest rate increases while the ECB is to ensure that monetary policy will remain unchanged or will be even looser. Markets ignored his words, so the President of the ECB decided to punish them (in practice, the reduction of the reference rate from 0.5% to 0.25% is almost irrelevant - the biggest banks still lend much cheaper). To market a very clear message - the end the bullish euro.

4. And the last most important point. This Thursday Janet Yellen awaits the first major test as the new head of the Fed. Then start the hearing before the Senate Banking Committee. Yellen will have to answer both questions about the Fed's current policies and trends suggest that the Fed will adopt under her controls. This will be the most important speech Yellen in career as the central banker. The eyes of the world will be facing in the direction of the U.S. Senate, and every word Yellen may affect the market. The market will be waiting for the most questions about QE3, and Janet Yellen has long presented an ultra-dovish views. That Yellen was sworn she needs a few votes from the Republican camp. Democrats certainly will support it, the more that before a large group of people from the party blocked the nomination of Larry Summers. The final swearing Yellen should be a formality.

USD/PLN

Specifically at the request of one of my readers, I put the technical analysis of the USD/PLN - chart 2

chart 2. USD/PLN W1, 2013-11-12

Currently, I believe that we are in the implementation of the last fifth wave strengthening of the Polish zloty. I set a stop loss close to recent highs at 3.1550 level - chart 3.

In the near future we should not test the 3.11 - 3.10 level which will allow us to lower the stop loss and continue to quietly observe the behavior of the market.

chart 3. USD/PLN Trade H4, 2013-11-12

If there are any new questions or would like to know more details about the last recommendations and technical analysis. Please don't be shy and feel free to write. Sure I'll answer all your questions.


trade safe,
oscarjp

The information contained in this publication is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Any opinion offered herein reflects oscarjp-chrimatistikos current judgment and may change without notice. Users acknowledge and agree to the fact that, by its very nature, any investment in shares, stock options and similar and assimilated products is characterised by a certain degree of uncertainty and that, consequently, any investment of this nature involves risks for which the user is solely responsible and liable.

insider trading - where is the line of propriety ?

article come from Bloomberg

Goldman Sachs Group Inc., JPMorgan Chase & Co. and Bank of America Corp. are among Wall Street firms still catering to SAC Capital Advisors LP after the hedge fund agreed to plead guilty to insider trading charges.

The banks, which also include Morgan Stanley, continue to provide trading and prime-brokerage services to SAC, said people briefed on the matter, who requested anonymity when discussing specific clients. The hedge-fund firm, run by billionaire Steven A. Cohen, agreed yesterday to pay $1.8 billion -- a record penalty for insider trading -- to settle allegations it illicitly reaped hundreds of millions of dollars since 1999.

“The presumption is that if JPMorgan should resign the business, then someone else would do it,” said Roy Smith, a finance professor at New York University’s Stern School of Business and a former Goldman Sachs partner. “These people all say we serve our clients, so if our clients get into trouble, we serve them as long as we can.”

Banks are weighing the potential damage to their reputations and finances if they continue dealing with Stamford, Connecticut-based SAC, one of Wall Street’s largest trading clients. While SAC agreed to stop managing money for outsiders, it may continue investing Cohen’s personal fortune of about $9 billion.

Choosing Carefully

JPMorgan, the largest U.S. lender, said last month it chose to reduce risk by stepping away from certain clients, including 500 foreign banks, and individuals who may be linked to money- laundering. The company, led by Chief Executive Officer Jamie Dimon, 57, is negotiating a $13 billion settlement to end investigations into its mortgage bond-sales.

SAC Capital was granted court approval in August to continue operating until the cases were resolved. Yesterday’s deal is contingent upon the approval of U.S. District Judge Laura Taylor Swain, who’s presiding over the criminal case, and U.S. District Judge Richard Sullivan, who’s overseeing the civil money-laundering case.

Goldman Sachs CEO Lloyd C. Blankfein told CNBC in September that regulators encouraged banks to maintain business relations with SAC because withdrawing that liquidity would “vaporize a firm.” Goldman Sachs gets more than half its revenue from trading.

‘Existential Decision’

“They’ve been indicted,” Blankfein, 59, said in the Sept. 18 interview. “They haven’t been convicted. We are a big liquidity provider, we’re a major prime broker. That would be quite an existential decision for them if all the liquidity providers withdrew liquidity on the basis of an indictment which they’re contesting.”

Spokesmen for Goldman Sachs, JPMorgan and Morgan Stanley, which are all based in New York, as well as Charlotte, North Carolina-based Bank of America declined to comment.

Cohen’s firm takes “responsibility for the handful of men who pleaded guilty and whose conduct gave rise to SAC’s liability,” Jonathan Gasthalter, a spokesman for SAC, said in an e-mailed statement. “The tiny fraction of wrongdoers does not represent the 3,000 honest men and women who have worked at the firm during the past 21 years.”

Gasthalter said SAC has never “encouraged, promoted or tolerated insider trading.”

‘Zero Tolerance’

In July, Manhattan U.S. Attorney Preet Bharara called SAC Capital “a veritable magnet for market cheaters.” The hedge- fund firm had “zero tolerance for low returns but seemingly tremendous tolerance for questionable conduct,” he said.

Cohen, 57, who wasn’t charged in the indictment, faces an administrative action filed by the U.S. Securities and Exchange Commission for allegedly failing to supervise the firm’s activities.

Prosecutors said he encouraged SAC employees to obtain trading information from corporate insiders while ignoring indications that it was illegal.

Yesterday’s agreement provides “no immunity from prosecution for any individual and does not restrict the government from charging any individual for any criminal offense,” the government wrote in the court filing.
A representative of SAC will plead guilty on its behalf in Manhattan federal court as early as Nov. 8, said a person familiar with the matter.

The criminal case is U.S. v. SAC Capital Advisors LP, 13- CR-00541, U.S. District Court for the Southern District of New York (Manhattan). The civil case is U.S. v. SAC Capital Advisors LP, 1:13-cv-5182, U.S. District Court, Southern District of New York (Manhattan).

regards,

oscarjp

Preliminary U.S. GDP up to 2.8% & Non-Farm Employment Change Up +204K

Hello,

Yesterday we met a great data from the U.S. Preliminary GDP for the third quarter was up 2.8%, while economists predicted growth of only 1.9%. The unemployment rate rose as expected from 7.2% to 7.3%.

U.S. GDP for the third quarter: 2.8% Consensus: 1.9% previously: 2.5%

Today, morning the decision by rating agency S&P the long-term rating was downgraded for France to AA from AA +. The rating outlook remains stable.

With such a good labor market data for October (+204 K) and considerable upward revisions in the previous two readings QE3 likely to be limited in December strongly increasing. If we add a very high readings ISM index and the Chicago PMI, unchanged from the September FOMC Statement and the assumption of reading the next payrolls above 180k it can be argued that the consensus market expectations for QE3 restrictions may soon move in March 2014 to December 2013 (!)

The data certainly favor the fact that a consensus could be moved to December. The only question is whether Ben Bernanke has the courage to decide to limit QE3. He is a man who, through his actions brought the market into a period of cheap money. The only question is whether the courage to take the first step towards a return to normality ...

Where did the increase of employment in the United States by as much as +204 thousand:
19 thousand. This increase of employment in factories

44 thousand. This increase of employment in the retail sector (retailers)

54 thousand. an increase of employment in the goods and services used in their free time (leisure industry)

95 thousand. This increase of employment in other sectors of the private

-8 Thousand. This decline of employment in the government sector

Today we have at the end of the European session speech Lockhart, a member of the Fed.
most significant themes:
- If employment growth continues, it should be limited QE3;
- Today's data encourage the reduction of QE3.


nice weekend,
oscarjp

ECB cut the rate and Czech Central Bank FX intervention

ECB's Draghi explains his "All-in' Rate-Cut move

ECB likes to surprise at every conference of President Draghi, on the market is happening a lot - volatility :) It was no different this time. The European Central Bank surprised everyone by making the interest rate cut at today's meeting. This decision was said, but in the context of the December meeting.

The economic recovery in the euro area remains at risk, lending is at a low level, and inflation remains low - the reasons for the decision of the ECB. In fact justification for cutting interest rates is logical, what is more, the ECB suggested that interest rates in Area remain unchanged or lower level for a long time. Thus, in theory, the decision is not a surprise, but hardly anyone expected it will cut right now. The ECB decided that there should hesitate to take decisions and effectively terminated its key interest rate today.

ECB Monetary policy decisions

The most important expression:

- euro area growth risks remain `On the downside',

- Rates may be even lower!, as the european economy it needs to,
- euro area inflation risks are `broadly balanced' - ECB sees no risk of deflation in the euro zone,

- growth in loans remains weak,
- market conditions potentially negative for economy,

- The current LTRO extended until the end of June 2015!
- unemplyment remains high,
- euro area may face prolonged period of low inflation,

- We discussed a reduction in the deposit rate, we are technically ready for its introduction, we want to leave behind the more part of the instruments (!),

- The most important monetary aggregates show a weakness in lending; aggregate M3 is supported only by the sizable inflow of foreign capital to Euro area.

Market rumor: Approximately 25% of the members of the ECB against rate cut today.

-----------------------------------------------------------------------------------------------

Czech Republic enters currency wars with first FX intervention in 11 years.

- Koruna weakens 4.67% VS EUR as Central Bank oks intervention
- Czech Central Bank said to buy Euros in market

Some more from Bloomberg:

- Czech central bank board approves start of currency interventions at monetary-policy meeting today, bank says in statement on its website,

- Bank says will intervene to keep koruna to near 27/EUR in statement announcing decision,
- Bmark 2-wk repo rate left at what bank calls “technical zero” of 0.05%,
- All 19 analysts in Bloomberg survey forecast bmark interest rate will be kept unchanged.

The history of the settings of the main instruments of monetary policy and the Bank Board minutes are available at: 

link 1 - The main instruments of monetary policy

link 2 - CNB Board decisions

Official note: 

The CNB Bank Board decided at its meeting today to keep interest rates unchanged. The two-week repo rate was maintained at 0.05%, the discount rate at 0.05% and the Lombard rate at 0.25%.

Repo rate: The CNB’s key monetary policy rate, paid on commercial banks’ excess liquidity as withdrawn by the CNB in two-week repo tenders.

Discount rate: A monetary policy rate which as a rule represents the floor for short-term money market interest rates. The CNB applies it to the excess liquidity which banks deposit with the CNB overnight under the deposit facility.

Lombard rate: A monetary policy interest rate which provides a ceiling for short-term interest rates on the money market. The CNB applies it to the liquidity which it provides to banks overnight under the lending facility.

regards,

oscarjp

bragging traders from Goldman Sachs, not only

hello,

Today, we met a lot of interesting and very important information. It is impossible to write them all, that why I decided to write a quite interesting news, showing who we are really dealing with, who is the other side of our trades. Namely, the results of the traders from Goldman Sachs.

Goldman Sachs Group Inc., which had the steepest drop in trading revenue among Wall Street’s largest banks, posted losses from that business on 15 days during the third quarter, up from two a year earlier.

Traders made more than $100 million on four days in the three months ended Sept. 30, down from seven days in the year- earlier period. None of the losses were more than $50 million and none topped the bank’s so-called value-at-risk, an estimate of potential trading losses.

Goldman Sachs generated $2.86 billion from its trading division in the third quarter, a 32 percent decrease from the year-earlier period.

Bank of America Corp. posted daily losses twice during the quarter, including a $21 million misstep. 

JPMorgan had no loss days YTD; made more than $200m in 3 days YTD. Sept. 30 mortgage repurchase liability $2.18b vs $2.48b q/q.

Morgan Stanley discloses in 10-Q filing it lost money trading on 7 days in 3Q, made $50m-$75m in net trading rev. on 18 days.

The results, as the most impressive. Regarding provision for reserves because of possible legal losses made ​​by the investment banks in more detail in future posts.

regards,

oscarjp

United Kingdom accelerates; small trade with achieve of TP

hello,

United Kingdom accelerates, exactly, yesterday and today we met very good data from the UK. Optimism in the economy of the country is significantly higher than in the economies of the European Union. Retail (Services) PMI index for the UK was up by 62.5 points. This is the best reading in 16 years! This is very positive news for the British economy since the services in this country are responsible for 75 percent of the gross domestic product.

If we look at the employment sub-index was 56.2, and he also was the best in 16 years. Moreover, this set of data means that the improvement in the labor market at the end of the year should be much better than predicted by the BoE.

Today, we continue the good data:

Industrial Production in September (quite old):  2.2% y/y, expect: 1.7% y/y and 0.9% m/m, expect: 0.7% m/m

Manufacturing Production in October: 1.2% m/m, expect: 1.2% m/m

In addition, it is worth noting today, reading industrial orders in the German economy (in September): 3.3% m/m, excpect: 0.6% m/m, previous: -0.3% m/m

Very good data from Germany resulted a quick appreciation of the euro against dollar, which I was trade on the forex with TP close to the 3540 level. Both trades reached levels indicated by me. Fast trades and fast profit booked. Regardless of today's trades, My recommendation for EUR/USD from 27th October is still actual. <link>

chart 1. EUR/USD M15, fast trade 2013-11-06

regards,
oscarjp

after the RBA meeting, AUD/USD recommendation

hello,

Bank of Australia, of course, has left its key interest rate unchanged (2.5%), but the Australian dollar fell after the meeting of the bank because its chief Glenn Stevens said that the pair AUD/USD is too high.

Moreover, he said that this level of AUD/USD makes it impossible to achieve a balance by the economy of Australia.

Statement by Glenn Stevens, Governor: Monetary Policy Decision

also present the latest analysis of investment banks:

UBS

shot up to 0.9521 early in Asia and was trading around the figure before the RBA decision. There was no major surprise except that the central bank sounded a bit stronger than expected on currency strength and spot slipped to 0.9463. Buy at 0.9410-40 with a stop at 0.9370.

Natixis

"The AUD/USD hit a low point of 0.9422 last week, just above a key short term support at 0.9410 (retracement of 38% of the uptrend between August & October)"

 "Above this support, a rebound is possible in the coming sessions which would be confirmed by a break above an intraday resistance at 0.9550 paving the way to 0.9758 top. Above this threshold, the next medium term resistance lies at 0.9965,"

 "A break below 0.9410 would invalidate this scenario in the short term and would signal the extension of the correction,"

In line with this view, Natixis recommends entering into a fresh technical tactical long AUD/USD at market, with a stop at 0.9409, and a target at 0.9757.

more about short on AUD/USD


Me

A couple of days more and more attention I devote observation pair AUD/USD, but at the moment I think it is not a good time to trade. We are in the process of creating a corrective waves and should be observation behavior of the market.

regards,
oscarjp

The information contained in this publication is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Any opinion offered herein reflects oscarjp-chrimatistikos current judgment and may change without notice. Users acknowledge and agree to the fact that, by its very nature, any investment in shares, stock options and similar and assimilated products is characterised by a certain degree of uncertainty and that, consequently, any investment of this nature involves risks for which the user is solely responsible and liable.

PMI and CPI Flash Estimate

hi,

In this post I would like present special to you an important economic data that have been published between October 31 and November 1, which certainly will be invoked by Mario Draghi at a conference this coming Thursday.

German Retail Sales in September m/m: actual: -0.4%; forecast: +0.5%; previous: -0.2% (revised from 

+0.5%);

German Import Prices m/m: actual: 0.0%; forecast: +0.2%; previous: 0.1%;

French Consumer Spending m/m: actual: -0.1%; forecast: +0.2%; previous: -0.3% (revised from -0.4%);

HICP - CPI Flash Estimate y/y:  actual: +0.7%; forecast: +1.1%; previous: +1.1;

The unemployment rate in Italy: actual 12.5%, Consensus: 12.4%, previously 12.4% (revised from 12.2%);

The unemployment rate in Euro Zone: actual 12.2%, forecast: 12.0%, previously 12.2% (revised from 12.0%);

Thus, unemployment is the highest in the history of the monetary union, and inflation is the lowest since November 2009. The rise in unemployment shows that by the end of the problems in the Euro Zone still has a long way to go. Low inflation increases the chances of subsequent programs - Maybe next LTRO?

The next meeting of the European Central Bank is scheduled for November 7th.

Chicago PMI in October: 65.9 pts.; Consensus: 55 points. , Previously: 55.7 points. The highest reading since April 2011. The main reason for such a large increase was strongly up to 71.1 points subindex production, and to 74.3 points new orders. The improvement was also in the area of ​​employment - here subindex rose to 57.7 points.

China Manufacturing PMI: actual 51.4 pts, forecast: 51.2 pts, previously 51.1 pts;

HSBC China Final Manufacturing PMI: actual 50.9 pts, forecast: 50.7 pts, previously 50.9 pts;

UK Manufacturing PMI: actual 56.0 pts, forecast: 56.3 pts, previously 56.3 pts; (revised from 56.7 pts.);

US Final Manufacturing PMI: actual 51.8 pts, forecast: 51.1 pts, previously 51.1 pts;

US ISM Manufacturing PMI: actual 56.4 pts, forecast: 55.3 pts, previously 56.2 pts;

US ISM Manufacturing Prices: actual 55.5 pts, forecast: 55.1 pts, previously 56.5 pts;




regards,
oscarjp

11. Summary of the trades (October 16th, 2013 - October 31st, 2013)

hi Traders,

During the last two weeks I published just one recommendation. the main reason was still open long positions with an even earlier signals <link>

Since 27th October, I presented my recommendation regarding the EUR/USD where I wrote about the strong euro sell-signal. <more info>

Summary of trades

Signal turned out to be a very good example of earning money in a very short time. At the moment we should watch the market and after each correction, get the "take profit" lower according to yourself investment policy. We have seen the biggest fall down in Thursday and reduced volatility on Friday means that it has a wave number three. So next week we should be witnessing the strengthening of the dollar against major currencies.

I hope that, You used my last recommendations not only on the EUR/USD as well as the fSP500 or even fFTSE100 to earn some money. At the moment all transactions from Summary number 10 <link> has already been closed and profits booked.

Now, I waited for the correction of medium size, after which certainly will be new recommendations. The upward trend in the largest financial markets in the world is not threatened, and I think the year 2014 will be as successful as the passing 2013 but, more about this until December :)

Thanks for all the questions sent to my email. I hope that answers you satisfied. If there are any new questions or would like to know more details about the last recommendations. Please don't be shy and feel free to write. Sure I'll answer all your questions.

trade safe,

best regards,

oscarjp