- $600 Billion In Trades In Four Years: How Apple Puts Even The Most Aggressive Hedge Funds To Shame (ZeroHedge, Jan 27, 2013):
Everyone knows that for the better part of the past year Apple, Inc. (“AAPL”, or “The Company”) was the world’s biggest company by market cap, with Exxon finally regaining that title on Friday, following AAPL’s latest price drop in the aftermath of its disappointing earnings. Most know that AAPL aggressively uses all legal tax loopholes to pay as little State and Federal tax as possible, despite being one of the world’s most profitable companies.Many also know, courtesy of our exclusive from September, that Apple also is the holding company for Braeburn Capital: a firm which with a few exceptions (Bridgewater; JPM’s CIO prop trading desk) also happens to be one of the world’s largest hedge funds, whose function is to manage Apple’s massive cash hoard, with virtually zero requirements, and whose obligation is to make sure that AAPL’s cash gets laundered legally and efficiently in a way that complies with prerogative #1: avoid paying taxes.
What few if any know, is that as part of its cash management obligations, Braeburn, and AAPL by extension, has conducted a mindboggling $600 billion worth of gross notional trades in just the past four years, consisting of buying and selling assorted unknown securities, or some $250 billion in 2012 alone: a grand total which represents some $1 billion per working day on average, and which puts the net turnover of some 99% of all hedge funds to shame!
Finally, what nobody knows, except for the recipients of course, is just how much in trade commissions AAPL has paid over the past four years on these hundreds of billions in trades to the brokering banks, many (or maybe all) of which may have found this commission revenue facilitating AAPL having a “Buy” recommendation: a rating shared by 52, or 83% of the raters, despite the company’s wiping out of one year in capital gains in a few short months.
The Perfectly Legal Tax Evasion Scheme
- Egyptian Stocks Plunge 9.6% As ‘Islamofascism’ Rises; Clashes Escalate (ZeroHedge, Nov 25, 2012):
Egyptian stocks cliff-dived by their most since the Arab Spring in January 2011 as Morsi’sreach-for-omnipotence sends concerned ripples through the nation that they have replaced ‘military fascism’ with so-called ‘islamofascism’. Tensions are rising once again in Tahrir Square, but as Russia Today notes in this clip, the new regime is somewhat more heavy-handed than the previous one in its control of protesters. Critically, the Musilm Brotherhood’s opposition forces, who have been quite divided recently, are joining to fight the common enemy as clashes between pro-Morsi and anti-Morsi forces are erupting. Perhaps just as worrisome as the social unrest is the fact that Egypt’s Stock Exchange Director Said Hisham Tawfiq fears “Egypt announces bankruptcy within 3 months in the case of the continuation of the current situation,” though we note Egypt CDS are near 16-month lows.
The EGX50 dropped a massive 9.5% today as markets are stunned my Morsi’s move…
and from Russia Today:
- US infrastructure on brink of thermodynamic breakdown (PressTV, Sep 14, 2012):
Federal Reserve Chairman Ben Bernanke has warned that the country’s unemployment situation “remains a grave concern” as the hiring process in the job market stays sluggish.
“Fewer than half of the eight million jobs lost in the recession have been restored and at 8.1 percent, the unemployment rate is nearly unchanged since the beginning of the year and is well above normal levels,” Bernanke told reporters on Thursday, AFP reported.
Bernanke also pointed out that the Federal Reserve does not have the means to offset the economic shock from the public spending cuts and tax hikes, scheduled for the end of 2012.
Press TV has conducted an interview with Webster Griffin Tarpley, author and historian from Washington, to further talk over the issue. the following is an approximate transcript of the interview.
Press TV: The Fed has announced that it will resume its policy of pumping more money into the economy. Will that be enough to stave off the unemployment?
Tarpley: No, it cannot. Right now we have an economic depression in the United States and around the world and the real unemployment in this country is much higher than the Federal Reserve seems to want to admit. It is about 30 million people minimum that are out of work which is significantly more than the government estimates.
The problem with the Federal Reserve is that they see their task as saving failed banks; we have to call them ‘zombie banks’ because they are bankrupt entities that sit there; they absorb government and Federal Reserve resources; they do not provide investment; they do not create jobs; there is no plan and equipment or capital goods investment going on.
Tags: Banking, Barack Obama, Ben Bernanke, Bonds, cds, Debt, Derivatives, Derivatives market, Economy, Fed, Federal Reserve, Global News, Government, Obama administration, Politics, Quantitative Easing, U.S., Webster Tarpley
- Buffett Joins Team Whitney; Sees Muni Pain Ahead As He Unwinds Half Of His Bullish CDS Exposure Prematurely (ZeroHedge, Aug 20, 2012):
Just under two years ago, Meredith Whitney made a much maligned, if very vocal call, that hundreds of US municipalities will file for bankruptcy. She also put a timestamp on the call, which in retrospect was her downfall, because while she will ultimately proven 100% correct about the actual event, the fact that she was off temporally (making it seem like a trading call instead of a fundamental observation) merely had a dilutive impact of the statement. As a result she was initially taken seriously, causing a big hit to the muni market, only to be largely ignored subsequently even following several prominent California bankruptcies. This is all about to change as none other than Warren Buffett has slashed half of his entire municipal exposure, in what the WSJ has dubbed a “red flag” for the municipal-bond market. Perhaps another way of calling it is the second coming of Meredith Whitney’s muni call, this time however from an institutionalized permabull. Continue reading »
YouTube Added: 01.08.2012
Tags: Adolf Hitler, Al-Qaeda, Al-Qaida, Alex Jones, Bank of England, Banking, Barack Obama, Cancer, cds, Civil rights, Constitution, Derivatives, Derivatives market, DHS, Dictatorship, Drones, Economy, EU, Europe, Facebook, Fascism, FDA, Fed, Federal Reserve, Fertilizer, Genetically Modified Organisms, Global News, GMO, Goldman Sachs, Government, High Frequency Trading, Homeland Security, HSBC, India, Israel, JPMorgan, Law, Libor, Martial Law, Max Keiser, Mitt Romney, Monsanto, New World Order, Obama administration, Police, Police State, Politics, Quantitative Easing, Rainwater, Roundup, Roundup Ready, Society, Suicide, Terrorism, Terrorists, U.K., U.S., Wall Street, Water
- The Financial Crisis Was Foreseeable … Thousands of Years Ago (ZeroHedge, July 20, 2012):
We’ve known for 2,500 years that prolonged war bankrupts an economy.
Tags: cds, Central Bank, Debt, Derivatives, Derivatives market, Economy, Fed, Federal Reserve, Financial Crisis, Global News, Government, Great Depression, Military, Politics, Quantitative Easing, War
- Criminal Inquiry Shifts To JPMorgan’s Mispricing Of Hundreds Of Billions In CDS: Is Dimon The Next Diamond? (ZeroHedge, July 16, 2012):
On the last day of May, when we first learned via Bloomberg that there was even the scantest likelihood that JPM may have been massaging its CDS marks within the (London-based of course) CIO organization – the backbone of hundreds of billions in notional exposure, and thus a huge counterfeited benefit to trader bonuses and corporate earnings – we wrote, “The Second Act Of The JPM CIO Fiasco Has Arrived – Mismarking Hundreds Of Billions In Credit Default Swaps“ in which we explained precisely how this activity would and did take place, precisely why other traders caught doing the same are on the verge of being thrown in jail, precisely why everyone else does it, and precisely why the biggest CDS self-reporting and client/banker owned-organization (this is where images of Libor should appear), MarkIt, may well be implicated in everything – very much in the same way that the BBA is the heart of Lie-borgate. Because unlike all other allegations of impropriety, most of which rely on Level 2 and Level 3 assets whose valuations are in the eye of the oh so very sophisticated beholder (in this case JPM) who has complex DCFs and speaks confidently when explaining marks to naive, stupid outsiders (in other words baffles with bullshit), when it comes to one of the last places where Mark to Market is still applicable and used: the OTC CDS market, and where daily P&L records are kept, it will take any regulator, enforcer, or criminal investigator precisely 1 minute to find out if there was fraud, or gambling, going on here.
Then lo and behold, none other than JPM admitted minutes before releasing its Q2 earnings that it had been doing precisely what Zero Hedge accused it of doing nearly 2 months earlier (but of course Jamie Dimon had no idea, no idea, what the media accused his firm of doing), and in doing so exposed itself to just as much litigation risk as Barclays in the Lie-borgate scandal, while further throwing a monkey wrench into the CDS market, where all the other banks (who had been doing just the same), will no longer be able to pick off the bid/ask spread in the process crushing CDS trader bonuses, and resulting in billions in foregone imaginary profits.
Most importantly, it opened up the firm to a criminal investigation. Which as Reuters reports, is precisely what has now happened.
From Reuters’ Matt Goldstein and Jennifer Ablan: Continue reading »
- Define Irony: “The J.P.Morgan Guide To Credit Derivatives” By Blythe Masters (ZeroHedge, July 13, 2012):
As readers enjoy JPM squirm his way through the JPM conference call (webcast live) explaining how it is that he not only was fooled by the CIO traders to the tune of billions, but more importantly to mismark hundreds of billions in CDS over the years, here is some delightful irony: “The J.P.Morgan Guide To Credit Derivatives” By Blythe Masters. Because it is truly ironic that the firm which created CDS will be the one responsible for destroying them.
- Spain May Not Be Uganda, But Germany Is Chile (ZeroHedge, June 18, 2012):
While we discussed the definitive new world geography last week, it appears the CDS market has decided to add a new parallel for us, Germany is now Chile (in terms of 10Y restructuring and devaluation risk). As a reminder, Germany’s credit risk has risen by almost 50% in the last 3 months to record highs, and has converged higher towards Europe’s GDP-weighted average sovereign risk in the last 2-3 weeks.
and as a reminder – here is Germany’s 10Y CDS (interestingly we rallied modestly today – perhaps on the back of Merkel’s restatement that there will be no new aid package – or more risk transfer)… Continue reading »
- Five Days Since The Spanish “Bailout”: You Are Here (ZeroHedge, June 18, 2012):
With few (if any) natural buyers of Spanish debt (especially given the lack of CDS-cash basis now), Spanish bonds continue to crumble lower in price and higher in yield/spread. For the first time ever, 10Y Spanish bond yields have passed 575bps over Bunds – currently trading at 7.15% yield. Since the post-banking-bailout open, Spanish bond spreads have soared a remarkable 114bps and whether this is seen as the fulcrum security or Italian bonds (which are also deteriorating rapidly this morning), it would appear that just as Spiegel reports today from the G-20, via a senior EU official: “If Germany Doesn’t Make A Move, Europe Is Dead”.
European sovereign bond spread movements post Spanish bailout
- The U.S. Economy By The Numbers: 70 Facts That Barack Obama Does Not Want You To See (Economic Collapse, June 7, 2012):
Why is the economy going to collapse? Have you ever been asked that question? If so, what did you say? Sometimes it is difficult to communicate dozens of complicated economic and financial concepts in a package that the average person on the street can easily digest. It can be very frustrating to know that something is true but not be able to explain it clearly to someone else. Hopefully many of you out there will find the list below useful. It is a list of 70 numbers that show why we are headed for a national economic nightmare. So why does the title of the article single out Barack Obama? Well, it is because right now he is the biggest cheerleader for the economy. He is attempting to convince all of us that everything is just fine and that the economy is heading in a positive direction. Well, the truth is that everything is not fine and things are about to get a whole lot worse. Certainly others should share in the blame as well. Congress has been steering the economy in the wrong direction for decades, the “too big to fail” banks have turned Wall Street into a pyramid of risk, leverage and debt, and the Federal Reserve has more power over the financial system than anyone else does. Our economy has been in decline for quite a while now, and soon we are going to smash directly into an economic brick wall. Unfortunately, a lot of Americans are in denial about this. A lot of people out there doubt that an economic collapse is coming. Well, if you know someone that believes that the U.S. economy is going to be “just fine”, just show them the list below.
The following are 70 facts that Barack Obama does not want you to see…. Continue reading »
Tags: Banking, Barack Obama, Bonds, cds, Collapse, Debt, Derivatives, Derivatives market, Dollar, Economy, Fed, Federal Reserve, Global News, Government, Obama administration, Politics, Society, U.S., White House
- When The Derivatives Market Crashes (And It Will) U.S. Taxpayers Will Be On The Hook (Economic Collapse, May 29, 2012):
Warren Buffett once said that derivatives are “financial weapons of mass destruction”, and that statement is more true today than it ever has been before. Recently, JP Morgan made national headlines when it announced that it was going to take a 2 billion dollar loss from derivatives trades gone bad. Well, it turns out that JP Morgan did not tell us the whole truth. As you will see later in this article, most analysts are estimating that the losses will eventually be far larger than 2 billion dollars. But no matter how bad things get for JP Morgan, it will not be allowed to fail. JP Morgan is the largest bank in the United States, so it is essentially the “granddaddy” of the too big to fail banks. If JP Morgan gets to the point where it is about to collapse, the U.S. government and the Federal Reserve will rush in to save it. Because of this “security blanket”, banks such as JP Morgan feel free to take outrageous risks. Today, JP Morgan has more exposure to derivatives than anyone else in the world. If they win, they win big. If they lose, U.S. taxpayers will be on the hook. Not only that, but thanks to Dodd-Frank, U.S. taxpayers are on the hook for bailing out the major derivatives clearinghouses if there is ever a major derivatives crisis. So when the derivatives market crashes (and it will) you and I will be left holding a gigantic bill. Continue reading »
More here: An $8bn Loss Or Was JPMorgan ‘Unhedged, Long-And-Wrong’ Post-LTRO2? (ZeroHedge, May 22, 2012):
So, in summary, it appears that the CDS data confirms what we suspected.
- A large (~$120bn) tail-risk tranche credit hedge was placed.
- The hedging of that hedge became very onerous but surprisingly profitable as markets rallied day after day with no give-back.
- This led to a greedy trader lifting some of the original tranche (and the HY short side) and leaving himself much more naked long to the market into LTRO2 – which marked the top. Losses escalated through April (~$2.5bn or so).
- Dimon went public (with some of the details).
- Last week, the rest of the tranche was dumped (we suspect) at a large cost (perhaps ~$5.5bn) leaving, we suspect…
- A potential ~$8bn loss and a heavy IG9 long credit position hedged (with major basis risk – difference in dynamics between the legs of the trade and the hedge) by various other liquid positions including shorts in HYG, JNK, IG18, and HY18 (and we would suspect equity/financials too).
- “The Truth Gets Out Eventually” (ZeroHedge, May 18, 2012):
Some look at today’s FaceBook IPO flop, the ongoing market rout, and the situation in Europe with disenchantment and disappointment. We, on the other hand, view it with hope: because more than anything, the events of the past few days show that the truth is getting out – the truth that capital markets simply can not exist under the authoritarian rule of central planners, the truth that the stock market is a casino in which the best one can hope for a quick flip, and finally the truth that our entire socio-economic regime, whose existence has been predicated by borrowing from the uncreated wealth of the future, and where accumulated debt could be wiped out at the flip of a switch if things go wrong in the process obliterating the welfare of billions (of less than 1%ers), is one big lie. Continue reading »
- How Did JPMorgan Lose Billions In One Trade? London ‘Whale’ Explained (International Business Times, May 11, 2012):
The now-notorious JP Morgan Chase and Company trading activity the bank says will cost it upwards of $3 billion has yet to be detailed, but analyzing earlier reports of unusual activity by a JP Morgan unit the past few weeks helps bring the sequence of events that led to the huge loss into focus.
It all seemed to start in early April. Hedge fund players in the opaque market for synthetic credit-default swap instruments (CDS) complained to the Wall Street Journal and Bloomberg News that a trader at JP Morgan’s U.K. office was distorting the market with his massive bets.
- Spain Goes Irish On Regions (ZeroHedge, April 16, 2012):
Slowly but surely, the Spanish authorities are gradually socializing the rest of the world to the dismal truth that we have been so vociferously arguing – that their debt levels (or more specifically their debt/GDP ratios) are significantly higher (explicitly) than their current official data suggest. Today’s news, via the WSJ, that the Spanish government may take over some regions’ finances, in an attempt to shore up investor confidence (just as Ireland did with its banks and we know how well that worked out?) is yet another step closer to the ‘realization’ that all that is “contingent” is actually “explicitly guaranteed.” As we noted here, this leaves Spain’s Debt/GDP nearer 135% than its ‘official’ 68.5%. The WSJ notes comments from a top government official that “there will soon be new tools to control regional spending” and that they may take over at least one of the country’s cash-strapped regions this year. As we broke down extensively here, this is no surprise as yet another group of political elite find the truth harder to deal with than the blinkered optimism they face the media with every day and yet as PM Rajoy notes “Nobody can expect that deep-seated problems be solved in just a few weeks”, the irony of the euphoria felt around the world at the optical rally in Spanish spreads for the first few months of the year is not lost as Spain heads back into the abyss ahead of pending auctions and what appears to be more ponzified guarantees of regional finances (as long as they promise to pay it back and have ‘a plan’). The simple truth is, as acknowledged by Rajoy, Spain has lost the trust of financial markets.
It seems that CDS markets have been ahead of the reality in Spain’s true credit situation as it is perhaps a little easier to manipulate a few bonds than an entire sovereign CDS market. The velocity of the most recent move suggests some short-term action by the politicians/ECB soon enough though their failed attempt today suggests the wholesale exit of real money is a hole too big for even the ECB to comfortably fill – and furthermore, as we have noted, every bond the ECB buys via SMP increases the default risk (or more clearly reduces recoveries) on existing bondholders and thus making a situation worse…