STOCK MARKET WATCH -- Monday, 28 September 2015

[Tansy_Gold]

[font size=3]STOCK MARKET WATCH, Monday, 28 September 2015[font color=black][/font]

SMW for 25 September 2015

AT THE CLOSING BELL ON 25 September 2015
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Dow Jones 16,314.67 +113.35 (0.70%)
[font color=red]S&P 500 1,931.34 -0.90 (-0.05%)
Nasdaq 4,686.50 -47.98 (-1.01%)


[font color=green]10 Year 2.16% -0.02 (-0.92%)
[font color=black]30 Year 2.95% 0.00 (0.00%) [font color=black]


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[font color=red]Partial List of Financial Sector Officials Convicted since 1/20/09 [/font][font color=red]
2/2/12 David Higgs and Salmaan Siddiqui, Credit Suisse, plead guilty to conspiracy involving valuation of MBS
3/6/12 Allen Stanford, former Caribbean billionaire and general schmuck, convicted on 13 of 14 counts in $2.2B Ponzi scheme, faces 20+ years in prison
6/4/12 Matthew Kluger, lawyer, sentenced to 12 years in prison, along with co-conspirator stock trader Garrett Bauer (9 years) and co-conspirator Kenneth Robinson (not yet sentenced) for 17 year insider trading scheme.
6/14/12 Allen Stanford sentenced to 110 years without parole.
6/15/12 Rajat Gupta, former Goldman Sachs director, found guilty of insider trading. Could face a decade in prison when sentenced later this year.
6/22/12 Timothy S. Durham, 49, former CEO of Fair Financial Company, convicted of one count conspiracy to commit wire and securities fraud, 10 counts of wire fraud, and one count of securities fraud.
6/22/12 James F. Cochran, 56, former chairman of the board of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and six counts of wire fraud.
6/22/12 Rick D. Snow, 48, former CFO of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and three counts of wire fraud.
7/13/12 Russell Wassendorf Sr., CEO of collapsed brokerage firm Peregrine Financial Group Inc. arrested and charged with lying to regulators after admitting to authorities he embezzled "millions of dollars" and forged bank statements for "nearly twenty years."
8/22/12 Doug Whitman, Whitman Capital LLC hedge fund founder, convicted of insider trading following a trial in which he spent more than two days on the stand telling jurors he was innocent
10/26/12 UPDATE: Former Goldman Sachs director Rajat Gupta sentenced to two years in federal prison. He will, of course, appeal. . .
11/20/12 Hedge fund manager Matthew Martoma charged with insider trading at SAC Capital Advisors, and prosecutors are looking at Martoma's boss, Steven Cohen, for possible involvement.
02/14/13 Gilbert Lopez, former chief accounting officer of Stanford Financial Group, and former controller Mark Kuhrt sentenced to 20 yrs in prison for their roles in Allen Sanford's $7.2 billion Ponzi scheme.
03/29/13 Michael Sternberg, portfolio mgr at SAC Capital, arrested in NYC, charged with conspiracy and securities fraud. Pled not guilty and freed on $3m bail.
04/04/13 Matthew Marshall Taylor,fmr Goldman Sachs trader arrested, charged by CFTC w/defrauding his employer on $8BN futures bet "by intentionally concealing the true huge size, as well as the risk and potential profits or losses associated."
04/04/13 Matthew Taylor admits guilt, makes plea bargain. Sentencing set for 26 June; faces up to 20 years in prison but will likely only see 3-4 years. Says, "I am truly sorry."
04/11/13 Ex-KPMG LLP partner Scott London charged by federal prosecutors w/passing inside tips to a friend in exchange for cash, jewelry, and concert tickets; expected to plead guilty in May.
08/01/13 Fabrice Tourré convicted on six counts of security fraud, including "aiding and abetting" his former employer, Goldman Sachs
08/14/13 Javier Martin-Artajo and Julien Grout charged with wire fraud, falsifying records, and conspiracy in connection with JP Morgan's "London Whale" trade.
08/19/13 Phillip A. Falcone, manager of hedge fund Harbinger Capital Partners, agrees to admit to "wrongdoing" in market manipulation. Will banned from securities industry for 5 years and pay $18MM in disgorgement and fines.
09/16/13 Javier Martin-Artajo and Julien Grout officially indicted on charges associated with "London Whale" trade.
02/06/14 Matthew Martoma convicted of insider trading while at hedge fund SAC (Stephen A. Cohen) Capital Advisors. Expected sentence 7-10 years.
03/24/14 Annette Bongiorno, Bernard Madoff's secretary; Daniel Bonventre, director of operations for investments; JoAnn Crupi, an account manager; and Jerome O'Hara and George Perez, both computer programmers convicted of conspiracy to defraud clients, securities fraud, and falsifying the books and records.
05/19/14 Credit Suisse, which has an investment bank branch in NYC, agrees to plead guilty and pay appx. $2.6 billion penalties for helping wealthy Americans hide wealth and avoid taxes.
09/08/14 Matthew Martoma, convicted SAC trader, sentenced to 9 years in prison plus forfeiture of $9.3 million, including home and bank accounts
08/03/15 Former City (London) trader Tom Hayes found guilty of rigging global Libor interest rates. Each fo eight counts carries up to 10 yr. sentence.
08/21/15 Charles Antonucci Sr, former pres. Park Ave. Bank sentenced to 2.5 years in prison for bribery, fraud, embezzlement, and attempt to steal $11MM in TARP bailout funds, as well as $37.5MM fraud on OK insurance company. To pay $54MM in restitution and give up additional $11MM.
09/21/15 Volkswagen CEO Martin Winterkorn apologizes for VW cheating on air quality standards with emission testing avoidance device. Stock drops 20%, fines may total $18B.
09/22/15 Stewart Parnell, CEO Peanut Corp. of America, sentenced to 28 years in prison for selling salmonella-tainted peanut butter that killed nine.





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[font size=3][font color=red]This thread contains opinions and observations. Individuals may post their experiences, inferences and opinions on this thread. However, it should not be construed as advice. It is unethical (and probably illegal) for financial recommendations to be given here.[/font][/font][/font color=red][font color=black]

[Demeter]

1. Good parody

Been watching the eclipse...it's not finished, but I am. I hate falling asleep on the keyboard. 3 hours is enough.

[Demeter]

2. Boehner's exit fans Wall Street fears

AND THERE'S GOOD REASON TO BE AFRAID

http://www.politico.com/story/2015/09/john-boehner-resigns-wall-street-react-214070

Wall Street is quietly freaking out over House Speaker John Boehner’s surprise decision to resign from his post at the end of next month. The growing fear is that while Boehner will almost certainly avoid a government shutdown next week as his final act, chaos could easily return in December as another government funding fight will align with the need to raise the nation’s borrowing limit. And it would happen just as the Federal Reserve is likely to begin raising interest rates and with a new speaker — likely House Majority Leader Kevin McCarthy — under heavy pressure from the right not to cut any deals with President Barack Obama and congressional Democrats.

“This risk of a shutdown and major debt ceiling fight in December has now dramatically increased,” said Isaac Boltansky of Compass Point Research and Trading. “Boehner’s retirement should be a very concerning signal for markets. We will now have a new cast of characters running things, and McCarthy is going to be pulled very hard to the right.”

The list of Wall Street concerns also includes a possible end to the Export-Import Bank, which McCarthy opposes. Markets rose on Friday following Boehner’s announcement and a speech from Fed Chair Janet Yellen offering some clarification of the central bank’s plans for when and how to raise rates. But financial experts who follow Washington say relief over the likely avoidance of a shutdown fight next week will be short-lived and could give way to heavy volatility and market losses by December.

“Winter is coming,” said Chris Krueger of Guggenheim Securities, referencing the tease line for “Game of Thrones,” the popular HBO show. “There is much more risk of a real accident occurring around the need to raise the debt limit. Whoever is speaker and whip and in the rest of leadership will determine a lot of it. But under any circumstances, conservatives in the Freedom Caucus and the tea party movement are going to have an awful lot of juice.”

The fear among Wall Street executives and investors is that McCarthy or any new speaker will not, as their first major act later this year, be able to cut a deal on government funding and the debt limit that passes the House with mostly Democratic votes. Boehner was able to pull this off on multiple occasions but never without pain and threats to his speakership. Now it will be up to a new leadership team that will also face pressure from GOP presidential candidates including Sen. Ted Cruz of Texas to push hard to achieve policy goals like defunding Planned Parenthood in return for lifting the borrowing limit and keeping the government open.

“First of all, this means that Ex-Im is in very serious trouble,” one senior Wall Street executive who works in Washington said of Boehner’s departure. “And I don’t see how as his first act McCarthy is going to be able to cut a deal and pass something that funds the government and raises the debt limit with mostly Democratic votes. He’s going to have to make some assurances to conservative Republicans that he won’t do that. It’s very scary.”

THINK HOW MUCH MORE PANIC WILL ENSUE IF MCCARTHY ISN'T ELECTED TO SPEAKER, BUT SOMEONE LESS PRINCIPLED IS! ASSUMING THERE IS SUCH A PERSON....

[Demeter]

3. MORE FEARS

The continuing resolution likely to pass next week would only fund the government through early December. The nation hit its $18.1 trillion borrowing limit in March, and the Treasury Department has been using accounting maneuvers to avoid default since then. Treasury Secretary Jack Lew has said these measures could continue through late October and urged Congress to increase the debt ceiling before then. The Congressional Budget Office in August said Treasury would likely run out of room to avoid default through mid-November or early December, exactly the timing for the end of a possible continuing resolution funding the government.

Fitch Ratings this week said “immediate potential ratings consequences" would ensue if the government appears headed to a major fight later this year to avoid the first ever U.S. default on outstanding debt. In 2011, Standard and Poor’s downgraded U.S. debt from its triple-A rating amid a bruising fight over the debt limit. It was the first such downgrade in U.S. history and led to market chaos while damaging a fragile economic recovery. Five years later, the U.S. economy is stronger — growing at 3.9 percent in the second quarter with 5.1 percent unemployment — but remains very susceptible to shocks. Markets are already on edge following a slowdown in China and uncertainty around when the Fed might raise interest rates.

Yellen on Thursday night offered some clarity, saying the Fed still plans to hike rates later this year to ensure that a tightening labor market does not lead to a quick increase in inflation that the central bank would have a hard time fighting once it starts. And Wall Street thinks the most likely timing for a Fed hike is at its gathering Dec. 15-16, the next meeting with a news conference scheduled. The Fed could theoretically hold off even longer if Washington descends into crisis, but even that could create further market panic. Markets are also worried about a potential health scare for Yellen, who faltered during her Thursday night speech. The Fed said she was simply dehydrated...The ray of hope on Wall Street is that for a last act next month, Boehner hammers through a deal with Democrats that raises the debt limit, extends the Export-Import Bank and funds the government through 2017.

"The first question is, does Boehner fall on his sword and make a deal to defer every one of these issues to after the 2016 election as the act of an elder statesman concerned about the economy and the future of the country?" said David Kotok, chief investment strategist at Cumberland Advisors. "If he's not able to do that, it would be tragic and certainly raise major risks for markets and the economy."

I'M BETTING ON TRAGEDY...THE FIRST TIME IS TRAGEDY, THE SECOND TIME, FARCE....

THAT'S KARL MARX, ON HISTORY REPEATING ITSELF.

[Demeter]

11. Stronger U.S. second-quarter growth backs case for Fed hike

http://uk.reuters.com/article/2015/09/25/uk-usa-economy-idUKKCN0RP1GC20150925

The U.S. economy expanded more than previously estimated in the second quarter on stronger consumer spending and construction, backing the case for an interest rate rise before the end of the year despite data sounding a note of caution for September.

The Commerce Department said on Friday gross domestic product rose at a 3.9 percent annual pace in the April-June quarter, up from the 3.7 percent pace reported last month.

The data supports the case that the U.S. economy may be gaining enough strength to withstand an increase in benchmark interest rates from record low levels despite growing concerns about the global economy.

Still, many economists are expecting a cooler pace of growth in the third quarter, a view bolstered by separate data showing slower growth in services and a drop in consumer sentiment in September...

[Demeter]

14. The More Yellen Talks Up Inflation, the Less Traders Believe Her

http://www.bloomberg.com/news/articles/2015-09-27/the-more-yellen-talks-up-inflation-the-less-traders-believe-her

The bond market isn’t buying what Federal Reserve Chair Janet Yellen is selling on inflation.

While she reiterated last week that the Fed expects inflation to gradually rise back near 2 percent, long- and short-term market forecasts for price gains have plunged to their lowest levels since 2009. That’s even though oil prices have rebounded almost 20 percent since late last month.

“We’ve had so many years of accommodative policy, I think the market is losing faith in the Fed,” said Priya Misra, the head of global interest-rate strategy in New York at TD Securities, one of the 22 primary dealers that trade with the central bank. “You’re not really seeing the impact of policy end up in inflation.”

Falling energy prices have contributed to keeping inflation low, a trend that should be transitory, according to Yellen. But she cited another force behind cooling inflation -- the stronger dollar, which depresses import prices, as shown in a chart accompanying her speech...

ASK MAX KEISER LIKES TO SAY: "YOU CAN'T TAPER A PONZI SCHEME!"

[Demeter]

19. 7 Budget & Tax Related Reasons We May Be Headed Towards A Government Shutdown

http://www.forbes.com/sites/kellyphillipserb/2015/09/24/7-budget-tax-related-reasons-we-may-be-headed-towards-a-government-shutdown/



On Sunday, Forbes contributor Stan Collender boosted his estimate of the chance that there will be a government shutdown from 67% to 75%. With the new fiscal year just days away – beginning on October 1 – we still don’t have an appropriations bill.

The last time we were in this position was in 2013. On September 30, 2013, after Congress couldn’t agree on a spending bill, the country headed into the first government shutdown in 17 years. Since funds weren’t available to government agencies to keep the lights on, on October 1, 2013, the shutdown kicked in, forcing 800,000 federal workers out of work – including those at Internal Revenue Service (IRS) – and closing national parks and monuments.

As before in 2013, it would be great if we could boil down the disagreements over spending into one.big.thing but there are a number of complex issues at stake. The easy answer is, of course, that Congressional leaders can’t agree on a spending plan. Here’s what’s standing in the way:

1. Sequestration. Democrats want to eliminate forced sequestration caps that were pushed through in 2012. Both Democrats and Republicans are generally on board with the idea of eliminating the across the board cuts but they disagree on how to best do it. Democrats want to keep increases in defense spending even with domestic spending while Republicans want only to increase military spending.
   
   
2. Carried Interest. Repeal of the controversial tax break for carried interest has become a political target. The tax break allows investment managers to treat profits as capital gain rather than ordinary income. The Treasury Department has estimated that a complete repeal would bring in $18 billion over the next ten years. While originally touted by Democrats, a number of Republicans have endorsed the repeal over the last few weeks, including presidential hopefuls Jeb Bush and Donald Trump.
   
   
3. Highway Trust Fund. The Highway Trust Fund has been losing money for years – but that wasn’t always the case. In 2005, the Highway Trust Fund actually had a surplus of $10 billion: now, it will need almost $15 billion each year in additional gas tax receipts to make up the hole. How to tackle the problem long-term has become a question that Congress can’t agree on: the Senate passed a multi-year extension this summer but the House has yet to agree.
   
   
4. Cadillac Tax. The controversial Cadillac Tax, part of Obamacare, continues to plague members of Congress. Intended to be imposed on high-cost plans and related perks exceeding certain limits ($10,200 for a single person or $27,500 for a family per year with higher amounts for specific demographics), concerns have been raised about the numbers of taxpayers who might be affected. Some in Congress want to repeal the Cadillac Tax, which will go into effect in 2018, while others just want to bump the caps.
   
   
5. Medical Device Tax. Yes, you’ve seen this before. The fight over the medical device tax was also a key issue leading up to the 2013 government shutdown and for good reason: repealing the medical device tax has been a rallying cry since 2010. Medical device companies have been pushing hard for repeal of the 2.3% excise tax on medical devices, which run the gamut from pacemakers to artificial hips to cardiac stents, couching the tax as an “innovation killer.” So why won’t Congress get rid of it? The tax is expected to raise nearly $29 billion in revenue and Congress can’t find an offset.
   
   
6. Planned Parenthood. Conservatives in the Senate insist that they won’t sign any bill that includes funding for the organization which recently made news over allegations relating to its abortion practices. To try and contain the damage, Senate Majority Leader Mitch McConnell (R-KY) committed a bill to the Senate Committee on Appropriations with an amendment that would fund the government through early December and defund Planned Parenthood. The bill is not expected to pass. A backup bill would fund the government without touching the funding for Planned Parenthood.
   
   
7. Timing. Sen. McConnell’s solution to the Planned Parenthood problem (see #6 above) doesn’t sit well with Democrats, who have indicated that they would not vote for any bill that only provided short-term funding. Any bill to avoid a shutdown should, Democrats insist, be for the full term.

This is a quick and dirty summary of some of the budget issues in a possible run up to the shutdown. It’s not meant to be a blow-by-blow account of what’s gone on to date (that would take pages) nor is it an exhaustive list of all of the related tax provisions keyed to the shutdown. It’s meant to give you a flavor of some of the major talking points surrounding the appropriations bills. As the details get worked out, I’ll have more.

[Demeter]

4. Swiss watchdog opens bank probe into precious metal collusion

http://www.reuters.com/article/2015/09/28/us-precious-manipulation-swiss-idUSKCN0RS0DX20150928?feedType=RSS&feedName=topNews

The Swiss competition regulator has opened an investigation into possible collusion in the precious metals market by several major banks, it said on Monday, the latest in a string of manipulation probes. Switzerland's WEKO watchdog said its investigation, the result of a preliminary probe, was looking at whether UBS, Julius Baer, Deutsche Bank, HSBC, Barclays, Morgan Stanley and Mitsui conspired to set bid/ask spreads.

"It (WEKO) has indications that possible prohibited competitive agreements in the trading of precious metals were agreed among the banks mentioned," WEKO said in a statement. A WEKO spokesman said the investigation would likely conclude in either 2016 or 2017, adding that the banks were suspected of violating Swiss corporate rules. The banks face financial penalties if WEKO finds them guilty of wrongdoing, the spokesman said. He declined to comment on the size of any possible penalty from the probe.

The WEKO investigation is the latest in a long line of probes into manipulation of the precious metals and foreign exchange markets. Last year, Switzerland's financial regulator FINMA said it had found a "clear attempt" to manipulate precious metals price benchmarks during a cross-market investigation into trading at UBS. As part of ongoing obligations imposed by FINMA, UBS is seeking to automate at least 95 percent of its global foreign exchange and precious metals trading by the end of 2016. In May, four major banks pleaded guilty to trying to manipulate foreign exchange rates and, with two others, were fined nearly $6 billion in another settlement in a global investigation into the $5 trillion-a-day market.

A Julius Baer spokesman said the bank was cooperating with authorities. In a statement, Deutsche Bank said it was cooperating with requests for information from "certain regulatory authorities" over precious metal benchmarks but declined to comment further. Representatives for UBS, Barclays, Morgan Stanley and HSBC declined to comment. Mitsui was not immediately available for comment.

[Demeter]

5. Some euro zone banks don't comply with governance standards: ECB's Lautenschlaeger

http://www.reuters.com/article/2015/09/28/us-eurozone-banks-regulations-idUSKCN0RS0S120150928?feedType=RSS&feedName=businessNews

The European Central Bank has found that a number of banks under its watch do not comply with international governance best practices, such as separating the audit and risk functions, an ECB executive board member said on Monday.

"Our initial findings indicate that a number of banks, while meeting national requirements, do not comply with international best practices with regard to governance," Sabine Lautenschlaeger, who represents the ECB's supervisory arm on the bank's board, said in remarks for a speech to be delivered in Milan.

She said the ECB's observations include examples of power concentration in individual board members, a lack of separation between a bank’s risk and audit functions, information asymmetries among board members, and instances where the board does not take enough time to discuss and reflect on individual issues.

"We will require banks to follow up on these findings."

[Demeter]

18. Global regulators reach agreement on bail-in bonds plan for top banks

http://www.reuters.com/article/2015/09/26/fsb-banks-reform-idINL1N11W08W20150926

Global regulators have reached a draft agreement on a rule on stopping banks from being "too big to fail" by requiring them to hold enough equity capital and bonds to avoid taxpayers being called on in a crisis.

The proposed standard is known as total loss absorbency capacity or TLAC and Bank of England governor Mark Carney -- who chairs the global regulatory Financial Services Board (FSB) -- has described it as the last major reform after the 2007-09 financial crisis forced governments to shore up lenders.

The rule will apply to nearly all the 30 big banks that the FSB has deemed to be "globally systemic" such as Goldman Sachs , Deutsche Bank and HSBC.

"At today's meeting FSB members discussed the TLAC impact assessments, and agreed the draft final principles and the updated term sheet," the FSB said in a statement late on Friday....

MORE

...Separately, the FSB also approved the first version of a similar rule for major insurers, the Higher Loss Absorbency standard, which requires them to hold an extra buffer on top of the basic capital requirements.

[Demeter]

6. ECB suspends buying ABS backed by Volkswagen car loans

HOW HUMILIATING! BET THEY CAVE, SHORTLY, BECAUSE GERMANY

http://www.reuters.com/article/2015/09/25/volkswagen-emissions-ecb-idAFF9N0ZF01820150925



The European Central Bank has suspended purchases of Asset Backed Securities backed by car loans from Volkswagen, a person familiar with the matter said on Friday.

The person said that there would be a review before any final decision was made on whether to permanently exclude such paper from the ECB's purchase programme.

[Demeter]

7. Victorious Catalan separatists claim mandate to break with Spain

YES! WHILE THE US CONGRESS IS PUTTING OUR NATION OUT OF BUSINESS BY REFUSING TO DO ITS DUTY, THE EU IS BEING RIPPED APART BY INDEPENDENCE-SEEKING MINORITIES...THE ENTIRE WEST WILL BE PROSTRATE BY NEW YEAR!

http://www.reuters.com/article/2015/09/28/us-spain-catalonia-idUSKCN0RQ0RN20150928

Separatists on Sunday won a clear majority of seats in Catalonia's parliament in an election that sets the region on a collision course with Spain's central government over independence. "Catalans have voted yes to independence," acting regional government head Artur Mas told supporters, with secessionist parties securing 72 out of 135 seats in the powerful region of 7.5 million people that includes Barcelona.

The strong pro-independence showing dealt a blow to Spanish Prime Minister Mariano Rajoy, three months before a national election. His center-right government, which has opposed attempts to hold a referendum on secession, has called the separatist plan "a nonsense" and vowed to block it in court. Spain's constitution does not allow any region to break away, so the prospect remains highly hypothetical.

The main secessionist group "Junts pel Si" (Together for Yes) won 62 seats, while the smaller leftist CUP party got another 10, according to official results. They jointly obtained 47.8 percent of the vote in a record turnout of 78 percent, a big boost to an independence campaign that has been losing support over the last two years. Both had said before the vote that such a result would allow them to unilaterally declare independence within 18 months, under a plan that would see the new Catalan authorities approving their own constitution and building institutions like an army, central bank and judicial system.

Addressing supporters of Junts pel Si in central Barcelona, Mas said a "democratic mandate" now existed to move forward with independence...

[Demeter]

8. Global stocks, dollar subdued at start of heavy data week

http://www.reuters.com/article/2015/09/28/us-markets-global-idUSKCN0RS00R20150928?feedType=RSS&feedName=businessNews

World stocks and the dollar saw cautious starts on Monday to a week that will that provide readings on the health of the U.S. jobs market, China's economy and Europe's efforts to kick-start inflation.

Asian shares were flat overnight following an uninspiring end to last week from Wall Street. Europe's main bourses dipped early on as a 10 percent slump in miner Glencore; the collapse of takeover talks for Vodafone added to the subdued mood.

Spanish financial markets rallied after secessionists in Catalonia on Sunday won a majority of seats in parliament but were not seen to have a clear mandate to push for independence, but with so many global issues swirling this week it was little more than a side show.

Following a further delay to the U.S. Federal Reserve's long-awaited first interest rate rise in almost a decade, markets were already looking to Friday's non-farm payrolls for any insight on whether rates might still rise this year. With that uncertainty checking risk appetite, the world's major currencies were largely treading water though the dollar .DXY was keeping the squeeze on the more strained of its emerging market counterparts.

"The tension will rise as we get towards Friday because it will have implications for what the Fed does and that is all anybody cares about at the moment," said David Bloom, an FX strategist at HSBC in London.

[Demeter]

9. Oil prices slip as demand outlook eclipses supply falls

AND YET, LOCAL GASOLINE PRICES ARE BACK AT $2.43 OR MORE, NEVER HAVING GOTTEN BELOW $2.14

http://www.reuters.com/article/2015/09/28/us-markets-oil-idUSKCN0RS00Y20150928?feedType=RSS&feedName=businessNews

Oil prices fell on Monday, paring some of last week's 2 percent rally, despite evidence of slowing U.S. production and a fourth weekly increase in U.S. investor holdings of crude futures. High oversupply and concern about demand growth in key areas of consumption such as emerging markets have stripped 50 percent off the value of a barrel of oil over the last year and kept the price below $50 a barrel for most of the past nine weeks. The crude price is set for an 11 percent fall in September, its 11th monthly decline out of the last 15 months.

September has rarely been a month of strength for the oil market. In the last 15 years, the price has racked up a gain in September on only four occasions. Most analysts have cut their forecasts for oil this year and next, but there is a feeling that the current downturn in prices may have run its course, even with the misgivings about the outlook for demand next year.

"We've been discussing the possibility that oil needs to move down to $30, but I think that is only if you run out of storage capacity and given that (there is) still quite substantial storage capacity, in my view you still have flexibility," said Bjarne Schieldrop, chief commodity analyst at SEB.

"Increasing stocks will increase the need for a higher contango," he said, adding: "If you look on the forward curve, buyers are increasingly (present) at the front end of the curve after having been burned heavily by ... longer-dated contracts."

The contango, or premium, at which longer-dated contracts trade above prompt Brent futures hit its highest since the start of the year earlier this month at $8 a barrel, but has since contracted to below $7...

[Demeter]

10. Sarao Extradition Hearing Delayed as U.S. Expands Charges

http://www.bloomberg.com/news/articles/2015-09-25/sarao-extradition-hearing-delayed-as-u-s-expands-time-period

The U.S. Justice Department expanded its charges against Navinder Singh Sarao, the British trader accused of contributing to the 2010 flash crash in America, alleging his criminal behavior went on for longer than in the original complaint. The amended indictment was revealed Friday at a London court, where an extradition hearing for Sarao was scheduled. The hearing was delayed until February because of the widened charges and the illness of one of Sarao’s lawyers.

Sarao was arrested in April at his house in London’s Hounslow neighborhood and spent the next four months in prison as his lawyers tried to negotiate his bail. Prosecutors allege he made $40 million over four years by spoofing CME Group Inc.’s stock futures market. They say he made a $900,000 profit on May 6, 2010, when a trading frenzy known as the flash crash saw almost $1 trillion briefly wiped from the value of U.S. equities. American authorities allege Sarao contributed to the mayhem.

Sarao was notified of the amended charges Thursday night. One of his lawyers, Joel Smith, said he was “disappointed” that the U.S. hadn’t given more notice. Sarao would be “irrevocably hamstrung” if the hearing went ahead Friday without time to review the changes, especially because of his lead counsel’s absence, Smith said. Lawyers for the U.S. complained about the five-month delay, calling it “depressing” that the hearing would take place nearly a year after Sarao’s arrest.

Prison sentences in the U.S. are often far longer than in the U.K. Sarao’s charges could add up to a 380-year sentence if convicted. While these kinds of sentences are rarely imposed, any jail time he served would still be away from his home country.

Sarao’s lawyers had been planning to undermine U.S. claims by arguing that his actions weren’t a crime in the U.K. and, as a British citizen, any trial should take place here...

[Demeter]

12. HOTEL WARS! Xi, Putin Stay at Chinese-Owned Waldorf Obama Snubbed

http://www.bloomberg.com/news/articles/2015-09-25/xi-and-putin-stay-at-the-chinese-owned-waldorf-obama-snubbed

Chinese President Xi Jinping leaves the White House, where he discussed the theft of commercial secrets, and heads to New York to check in tonight at the Waldorf Astoria, where his privacy is sure to be guaranteed by the hotel’s new Chinese owners.

On Sunday, Xi will be joined by Russia’s Vladimir Putin, who also picked the Waldorf for his first stay in Manhattan in a decade, according to diplomats preparing for the Eurasian leaders’ address to the annual seven-day session of the United Nations General Assembly.

The occupancy of two such high-profile figures, whose countries routinely vote in tandem at the UN Security Council, comes as the U.S. instead switches loyalties after a decades-long tradition of staying at the storied hotel built on a former cemetery. President Barack Obama and his entourage will relocate to South Korean-owned Lotte New York Palace Hotel for UNGA week.

The Hilton Worldwide Holdings Inc. sold the midtown hotel in 2014 to Beijing-based Anbang Insurance Group Ltd. for $1.95 billion. For now, the 42nd floor of Waldorf Towers still serves as the official residence for the U.S. ambassador to the UN...

OBAMA COULDN'T FIND A US-OWNED HOTEL? MAYBE HE SHOULD JUST HOLE UP IN AIRFORCE 1

[Demeter]

13. Secure Location CONCERNS

While the Hilton will manage the property for the next century under the terms of its sale, Anbang’s ownership and call for a major renovation raised concerns about whether the Waldorf would remain a secure location for sensitive and classified government conversations, according to two U.S. officials, who asked not to be named citing sensitivity of the matter.

Indian Prime Minister Narendra Modi and Pakistan’s Nawaz Sharif are staying at the Waldorf, which is just a few blocks east of the UN campus.

German Chancellor Angela Merkel and Brazilian President Dilma Rousseff, whose personal phone calls have been spied on by the U.S. National Security Agency, instead chose lodgings farther north from Turtle Bay in east Midtown.

Merkel will be getting her beauty sleep at the Mandarin Oriental in Columbus Circle, and Rousseff at the Plaza Athenee in Lenox Hill.

THIS DOESN'T LOOK ANYTHING LIKE DETENTE...

[Demeter]

15. EU Needs Transaction Tax for Refugee Plan, UN Official Says

GOOD LUCK SQUEEZING IT OUT OF UNCLE SCROOGE

http://www.bloomberg.com/news/articles/2015-09-25/eu-needs-financial-transaction-tax-to-help-migrants-un-official

The European Union should levy a tax on financial transactions to fund a “Marshall Plan” to deal with the continent’s worst refugee crisis since World War II, United Nations Under-Secretary-General Philippe Douste-Blazy said.

The bloc could raise 59 billion euros ($66 billion) a year with a 0.1 percent tax on trades of stocks and bonds and a 0.01 percent tax on the trades of derivative contracts, Douste-Blazy said in a phone interview from Hungary on Friday.

“It’s very important that the 28 countries of the EU agree on this financial tax, which is tiny, microscopic,” said Douste-Blazy, a former French foreign minister. Without adequate funding, the EU faces a “dangerous rise in racism and xenophobia.”

...Eleven EU members, including France and Germany, are working on plans for a common transaction tax. Others including the U.K. have refused to sign up to the proposals.

MORE BLEATING AT LINK

[Demeter]

16. Wolf Richter: This is When Bonds Go Kaboom!

http://wolfstreet.com/2015/09/27/junk-bonds-distresses-debt-ratio-spiking-spreads/

It’s getting tougher out there for our QE and ZIRP-coddled corporate junk-bond heroes.

Unisys, whose revenues and profits decline year after year and whose stock dropped from over $400 a share during the prior tech bubble to $13 a share now, withdrew its offer to sell $350 million of bonds on Friday.

The “current terms and conditions available in the market were not attractive for the company to move forward,” it said. According to S&P Capital IQ’s LCD, the five-year senior secured notes due in 2020, rated BB/Ba2, had been guided at around 8%. But buyers were leery, and they demanded more yield. They wanted to be rewarded just a little more for the substantial risk they were taking. So the notes failed to price, and Unisys withdrew the offering.

Unisys isn’t an oil company, or a mining company, or a coal company – sectors that have been eviscerated by the commodities rout and are having trouble issuing any debt at all. Unisys is a tech company.

But Unisys wasn’t the only one: It was the 15th bond offering withdrawn so far this year, according to LCD, though two of them – Fortescue Metals and Presidio – were able to pull them off later. In total, nearly $4 billion in bond offerings were withdrawn this year...

AND THE WHEELS OF FINANCE BEGIN TO SEIZE UP

[Demeter]

17. 1.5 Million American Families Live on $2 a Day — How the Poorest Get By

http://www.alternet.org/15-million-american-families-live-2-day-these-authors-spent-years-finding-out-why

If she did not make plasma deposits twice a week at a donation center in Tennessee, Jessica Compton and her family would have no income. If not for a carton of spoiled milk, Modonna and Brianna Harris’ refrigerator would be barren. The Harris and Compton families’ stories are just two accounts of devastating poverty documented in sociology professors Kathryn J. Edin and H. Luke Shaefer’s book, $2.00 a Day: Living on Almost Nothing in America.

The book, released in September, documents the rise of 1.5 million American families, including 3 million children, who subsist on as little as $2 per person per day. It reads like a Dickens novel. Edin and Shaefer spent years immersed in the lives of financially deprived families, combing through the budgets of welfare recipients and surveys of poor people’s cash flows. Additionally, they set up study sites in diverse locations like metropolitan Chicago and rural Mississippi to find out where and how severe poverty was concentrated.

The stories of physical, sexual, and emotional abuse seemed like the norm rather the exception.

In a media environment where the experiences of the poor are often neglected, the book’s revelations about the depth and pervasiveness of poverty in the United States have been startling for many—including its two authors. YES! Magazine spoke with co-author H. Luke Shaefer about what poverty truly looks like in America, the stigmas attached to it, and just what can be done to eradicate it...

[Demeter]

20. John Boehner exits: Who is Kevin McCarthy?

http://www.csmonitor.com/USA/Politics/2015/0926/John-Boehner-exits-Who-is-Kevin-McCarthy

...So who is Kevin McCarthy?

McCarthy, representative of California, has been around for a while. Huffington Post reports that, “by the mid-'90s, he was chairman of the California Young Republicans and then moved up to be chairman of the Young Republican National Federation. Meanwhile, he became a Bakersfield district director for Rep. Bill Thomas, chairman of the powerful House Ways and Means Committee. From there, he ran to become "Trustee to the Kern Community College District." His has been on a steady political rise. He won a congressional seat in 2006 after being endorsed by retiring House Ways and Means Committee Chairman Bill Thomas. “Since then, McCarthy, now 50, has quickly climbed the ranks – elected as chief deputy whip in 2009, House majority whip in 2011 and then House majority leader in 2014,” NBC News reports...The Los Angeles Times reports that while the son of a fire fighter is more conservative than Boehner, he's worked hard to build relationships in Congress

McCarthy's formula for staying one of the most popular members of the Republican caucus is built on care and feeding of colleagues.

“He's somebody that starts off with workout sessions and bike rides early in the morning with members and finishes late in the evening with either meetings or dinners,” said Rep. Jeff Denham (R-Turlock), another close McCarthy ally....

He carefully avoids drawing lines in the sand on social issues and spending priorities that are the hallmark of more combative politicians like Sen. Ted Cruz, the Texas Republican now running for president.

The lack of a rigid ideology has served McCarthy well in the corridors of the Capitol and on the campaign trail, where he has built close relationships with moderates and tea party stalwarts alike.

In his tenure as the deputy, McCarthy has been loyal to Boehner, for instance, “backing up the outgoing speaker's plan to remove a controversy over "defunding" Planned Parenthood from a stopgap spending bill that's needed to avoid a government shutdown next week. And he supported Boehner last year as one of only 28 Republicans to vote to raise the so-called debt limit without seeking concessions from Obama,” The Associated Press reports.

After Boehner’s announced that he'll step down next month, McCarthy issued a statement calling Boehner a leader and a mentor, according to NBC News.

"It takes profound humility to step down from a position of power, and John's depth of character is unmatched." McCarthy said. "Now is the time for our conference to focus on healing and unifying to face the challenges ahead and always do what is best for the American people."

According to the Boston Globe, republicans will hold their internal leadership elections Oct. 1 to avoid drawing out the process of electing a successor to Boehner.

"I'll tell Kevin, if he's the next speaker, that his No. 1 responsibility is to protect the institution. Nobody else around here has an obligation like that," Boehner told reporters on Friday. "Secondly, I'd tell him the same thing I've just told you. You just do the right thing every day for the right reasons, the right things will happen."

John Feehery, former spokesman for Dennis Hastert, the longest serving Republican speaker of the House is also sold on McCarthy. “I think that McCarthy, once he becomes speaker, will have some honeymoon for a while. And then we’ll be in a general election and the focus will change,” Mr. Feehery told The Monitor.

COMMENT FROM A CALIFORNIAN:

Who is Kevin McCarthy? Kevin McCarthy is a political animal through and through. Under his leadership, Republicans in the California state legislature perfected the art of holding the state budget hostage every year to force tax cuts and policies (usually weakening of environmental protections) which they could not get through the legislature on a vote. It was governance through manufactured chaos. Its no accident that when he went to Congress, the Congressional Republicans began threatening government shut downs to get their way. If he becomes Speaker, we can expect his caucus to continue the practice of creating constant crises as a means of trying to force adoption of policies with little or no public support.

[Demeter]

21. Saudi Arabia Withdrew Billions From Markets, Estimates Show

http://www.bloomberg.com/news/articles/2015-09-28/saudi-arabia-has-withdrawn-billions-from-markets-estimates-show

Saudi Arabia has withdrawn as much as $70 billion from global asset managers as OPEC’s largest oil producer seeks to plug its budget deficit, according to financial services market intelligence company Insight Discovery.

"Fund managers we’ve spoken to estimate SAMA has pulled out between $50 billion to $70 billion from global asset managers over the past six months," Nigel Sillitoe, chief executive officer of the Dubai-based firm, said by telephone Monday. "Saudi Arabia is withdrawing funds because it’s trying to cut its widening deficit and it’s financing the war in Yemen," he said, declining to name the fund managers.

Saudi Arabia is seeking to halt the erosion of its finances after oil prices halved in the past year. The Saudi Arabian Monetary Authority’s reserves held in foreign securities have fallen about 10 percent from a peak of $737 billion in August 2014, to $661 billion in July, according to central bank data. The government is accelerating bond sales to help sustain spending.

"Foreign-exchange reserve depletion, rather than accumulation, is the new reality for Saudi Arabia," Jason Tuvey, Middle East economist at Capital Economics, said in an e-mailed note Monday. "None of this should come as much surprise," given the current-account deficit and risk of capital flight, he said.

FIRST WATER, NOW SAVINGS FRITTERED AWAY...NEXT UP--OIL!

THE SAUDIIS ARE IMPROVIDENT AND PROFLIGATE, AND THE PEOPLE SHOULD RISE UP AND PUT AN END TO THE LOSS OF THEIR COMMON WEALTH.