Explaining the October Flash Crash in the British Pound

For better or worse, that statement applies to the financial world as well. It is said today that 75% of all financial market volume is automated, though there are lower and higher estimates out there depending on the report.
The bottom line is that algorithmic trading is the dominant market player – and this has benefits and drawbacks for average investors. On the upside, markets are less volatile and presumably more rational because they are driven by computers instead of fallible humans.
On the other hand? Sometimes algos just go rogue and do something unpredictable.
When the British pound flash crashed earlier this month, it was exactly this latter thing that happened.
Explaining the October Flash Crash in the British Pound
The following infographic from Top 10 Forex VPS shares a play-by-play breakdown of how the British pound crashed a whopping 8% in just two minutes.
It’s interesting because it helps give a sense of how the piping works behind these trading algorithms. It’s also a cautionary tale of algos gone wild, showing how market momentum can be swung in a particular direction even without your average market participants being involved.

This post was published at GoldSeek on 25 October 2016.

Why the Jobs Aren’t Coming Back

The candidates in the current campaign – or any campaign – are all promising to ‘bring back good jobs’ to ‘create good jobs.’ When asked how they would do that, they are all a little light on details.
About a year ago, Joe Biden was in Michigan to celebrate the opening of a new manufacturing plant that made ‘small metal clamps’ used in all kinds of industries to hold wiring, hoses. Etc. in place. The largest market is the auto industry but they are sold to hundreds of other manufacturers. Depending on size, shape, and material, these parts sell for a few pennies or less. You have to make a lot of these parts to have any substantial billing numbers.
This new plant is fully automated and runs 24/7/365 with just 14 people. Joe was quite happy saying ‘manufacturing is returning to America.’
However, there is a backstory. That plant had been around for years. It had employed 600 people on two shifts. Then, the Chinese began to undercut the pricing, and the plant was no longer profitable and closed. Two years later, it reopened as a fully automated plant and regained the business because it could now manufacture cheaper than the Chinese.
There are several stories inside the main story.

This post was published at Wolf Street by James Murray ‘ October 25, 2016.

Richmond Fed Confirms Weakest Economic Trend Since 2008

For the first time since 2012, the Richmond Fed business surveyr has been in contraction (below 0) for 3 straight months (and 4 of the last 5). Worse still, the six-month average of the business survey has not deteriorated this fast since Q2 2008. While the underlying components were mixed, inventory levels dropped (bad for GDP), average workweek tumbled (bad for incomes), and new orders re-plunged.
This is the worst drop in the six-month average of the Richmond Fed survey since Q2 2008…

This post was published at Zero Hedge on Oct 25, 2016.

What Wall Street Expects From Apple Today, And Why It Is So Critical For The Entire Tech Sector

In the past two quarters, AAPL found itself in an unfamiliar position. The world’s largest company by market, has been – over the past few years – also the biggest contributor to S&P500 and tech sector earnings, and as long as AAPL’s earnings were rising every quarter, this was not a problem. However, starting in Q4 of 2015, Apple found itself in the unenviable position of posting earnings which declined from a year ago. The drop was so acute in Q1 and Q2 that, AAPL alone was responsible for pushing the entire tech sector into the red on a Y/Y basis.
Which brings us to today’s upcoming AAPL earnings announcement, where according to consensus, AAPL is set to report a 3rd straight quarter of annual earnings declines. According to FactSet, for the calendar third quarter (fiscal fourth quarter for Apple), the current mean EPS estimate is $1.66, compared to year-ago actual EPS of $1.96. The last time Apple reported three consecutive quarters of year-over-year earnings declines was Q1 2013 through Q3 2013 (fiscal Q2 2013 through Q4 2013 for Apple).
What may come as a surprise to readers, is that as a result of this projected decline in EPS, Apple is expected to be the largest detractor to expected earnings growth for the S&P 500 Information Technology sector for Q3 2016. The blended (combines actual results for companies that have reported and estimated results for companies yet to report) earnings growth rate for the Information Technology sector is 4.2%. Excluding Apple, the blended earnings growth rate for the sector would improve to 10.9%.

This post was published at Zero Hedge on Oct 25, 2016.

OCT 25/GOLD STANDING FOR DELIVERY IN OCT INCHES CLOSER AND CLOSER TO 30 TONNES/GLD ADDS 3.27 TONNES TO ITS INVENTORY/THE BRITISH POUND HAS ANOTHER FLASH CRASH TODAY/WIKILEAKS EXPOSES A COVER UP W…

Gold $1271.90 up $9.90
Silver 17.74 UP 18 cents
In the access market 5:15 pm
Gold: 1274.50
Silver: 17.77
THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON
The Shanghai fix is at 10:15 pm est and 2:15 am est
The fix for London is at 5:30 am est (first fix) and 10 am est (second fix)
Thus Shanghai’s second fix corresponds to 195 minutes before London’s first fix.
And now the fix recordings:
Shanghai morning fix OCT 25 (10:15 pm est last night): $ 1267.47
NY ACCESS PRICE: $1264.50 (AT THE EXACT SAME TIME)
Shanghai afternoon fix: 2: 15 am est (second fix/early morning):$ 1272.13
NY ACCESS PRICE: 1267.00 (AT THE EXACT SAME TIME)
HUGE SPREAD TODAY!! 5 dollars
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
London Fix: OCT 25: 5:30 am est: $1269.30 (NY: same time: $1268.90: 5:30AM)
London Second fix OCT 24: 10 am est: $1267.40 (NY same time: $1267.60 , 10 AM)
Shanghai premium in silver over NY: 70 cents.
It seems that Shanghai pricing is higher than the other two , (NY and London). The spread has been occurring on a regular basis and thus I expect to see arbitrage happening as investors buy the lower priced NY gold and sell to China at the higher price. This should drain the comex.
Also why would mining companies hand in their gold to the comex and receive constantly lower prices. They would be open to lawsuits if they knowingly continue to supply the comex despite the fact that they could be receiving higher prices in Shanghai.

This post was published at Harvey Organ Blog on October 25, 2016.

Shadow Banking Is Back, And This Time There Is No Hope – Episode 1110a

The following video was published by X22Report on Oct 25, 2016
Consumer confidence continues to decline. Twitter will be laying off 8% of its workforce. Credit card deliquencies are on the rise. According to Case Shiller, home prices have it the highs of 2006. Shadow banking is back and this time it is not going to end well. People are now closing their accounts at Well Fargo because of their illegal activity. It is confirmed Obamacare premiums will rise over 25%.

Apple Slides After Missing Revenue, China, ASPs Despite Better iPhone Sales, Guidance

After a torrid rally in Apple stock in the past three months that took its stock from under $100 some 20% higher, traders wondered how much more upside was left in the stocks, and if the surge could continue. And so, moments ago, Tim Cook tried hard to deliver, if not so much in the current quarter where revenue and ASPs missed, and EPS beat by just one penny, then certainly with his guidance for what the company expects in the year’s final quarter, however judging by the stock’s performance he failed. This was also the first time Apple posted an annual profit decline since 2001, as the two thirds of revenue it gets from the iPhone exposed it to waning smartphone demand.
‘Our strong September quarter results cap a very successful fiscal 2016 for Apple,’ said Tim Cook, Apple’s CEO. ‘We’re thrilled with the customer response to iPhone 7, iPhone 7 Plus and Apple Watch Series 2, as well as the incredible momentum of our Services business, where revenue grew 24 percent to set another all-time record.’
The numbers did not quite agree: for Q4, Apple reported Q4 revenue of $46.9 billion, which declined 9% Y/Y and which was also below the consensus estimate of $47 billion in the quarter in which the new iPhone was introduced, with the company selling 45.5 million iPhones in the quarter, down 5% Y/Y but above the 45 million expected. Earnings of $9 billion declined 19% Y/Y from the $11.1 billion reported a year ago.

This post was published at Zero Hedge on Oct 25, 2016.

DV01 Update: A 1% Rise In Yields Will Lead To $2.1 Trillion In Govt Bond Losses

With ultra-long dated bonds flying off the shelf – as confirmed by the just issued inaugural 70 year bonds issued by Austria – fixed income investors continue to load up on record duration risk, which reminds us not only of a post we penned in June explaining just how massive the MTM losses would be as a result of a 1% rise in yields, suggesting that the Fed is trapped (daned if it doesn’t hike rates, causing massive MTM losses if it does), but to Ray Dalio’srecent presentation before the NY Fed in which he said the following:
… it would only take a 100 basis point rise in Treasury bond yields to trigger the worst price decline in bonds since the 1981 bond market crash. And since those interest rates are embedded in the pricing of all investment assets, that would send them all much lower.

This post was published at Zero Hedge on Oct 25, 2016.

SocGen Presents The “Toxic” Difference Between QE In The US And Japan

One of our favorite strategists, SocGen’s Andrew Lapthorne, has penned an interesting piece looking at a core distinction between the US and Japanese QE, and how the former will ultimately prove “toxic” whereas Japan’s monetary experiment, while just as unprecedented, will confine its damage largely to the central bank’s balance sheet.
Lapthorne starts off by reminding readers that since equity markets peaked in June 2014, UK and Eurozone equities are down by 27% and 20% respectively in US dollar terms based on MSCI indices. In sharp contrast the US is up almost 10% and Japan has risen 6%. He then points out that “the resilience of US and Japanese equity markets will be, in part, down to QE and other central bank policies influencing the equity market. Some see this as a success;we, on the other hand, are worried about its consequences.”
The reason why the SocGen strategist is worried, is because while the mechanisms by which BOJ and Fed money printing find their way into the equity market appear similar, in reality “they are not”, and thus the end game to QE may have very different outcomes.

This post was published at Zero Hedge on Oct 25, 2016.

Sputtering Startups Weigh on U.S. Economic Growth (Startups Shrink Since The Great Recession)

Unlike the Rolling Stones ‘Start Me Up,’ the US version should be ‘Slow Me Down.’
According to Jeffrey Sparshott of the Wall Street Journal, the American economy has long relied on fast-growing young companies to fuel job growth and spread the latest innovations. As recently as the 1980s and 1990s, a small number of young firms disproportionately contributed to U. S. employment growth, helping allocate workers and resources to burgeoning segments of the economy.
But government data shows a decades long slowdown in entrepreneurship. The share of private firms less than a year old has dropped from more than 12% during much of the 1980s to only about 8% since 2010. In 2014, the most recent year of data, the startup rate was the second-lowest on record, after 2010, according to Census Bureau figures released last month, so there’s little sign of a postrecession rebound.

This post was published at Wall Street Examiner on October 25, 2016.

The Current Message of Yield Curves: Inflation or Deflation?

With the state of post-Op/Twist systemic dysfunction, there are no absolutes, but…
Generally, a rising yield curve (after years of Goldilocks and her favored declining curve) would signal changes in financial markets. But it is not as simple as stating ‘the curve is rising… it’s bearish!’ or ‘the curve is rising… it’s bullish!’. It is potentially both of those things and it will have different implications for different markets and asset classes.
First, here is the state of yields and the yield curve currently, on the big picture view. Trends are down in the deflationary continuum on the biggest picture for all items, but have been neutral on the 5yr and somewhat up on the 2yr ever since Goldilocks gulped the bears’ porridge in 2013. The yield curve is in a downtrend.

This post was published at GoldSeek on 25 October 2016.

Gold Daily and Silver Weekly Charts – Dollar Looking Toppy – Hell Freezes Over

The US dollar popped a bit higher today but then gave it all back in the afternoon.
That helped the precious metals denominated in the buckeroo a bit.
Gold managed to stick a close over 1270. Another 20 points or so higher would be better still.
Silver was tagging along for the ride. This is not a particularly active month for silver.
There was another disgorgement of their house gold position by Macquarie yesterday. I have not gone back and added them all up, both the buys and the sells, but it looks from an eyeball estimate that they have been getting beaten up over that very public position they had taken, and have already given the greater part of it back.

This post was published at Jesses Crossroads Cafe on 25 OCTOBER 2016.

Podesta Email Reveals That Facebook COO “Wants Hillary To Win Badly”

It should come as no great surprise to anyone that Silicon Valley’s tech billionaires are “in the tank” for Hillary. That said, emails like the one below from Facebook’s Chief Operating Officer, Sheryl Sandberg, will never cease to be shocking, particularly because she oversees the operations of a social media giant that wields incredible power and influence over news media presented to America’s young voters.
Of course, the “cozy” relationship between Sandberg and Podesta is even more disturbing in light of the fact thatformer new curators for Facebook admitted that the company routinely suppressed conservative news on its news feed. Per a previous post we wrote back in June:

This post was published at Zero Hedge on Oct 25, 2016.

Asian Metals Market Update: October-25-2016

Trade very carefully. I believe silver should rise over twenty percent by next Diwali. Gold’s rises for the next year will be dependent on the ability to break and trade over $1400 with $1132 as the key support for 2017. Crude oil should rise to $63 and $82 in the next year. As long as crude oil trades over $36 downside risk will be limited for crude oil in the next year. Natural gas despite fundamental bearishness looks attractive.
Gold and silver are in a neutral zone and can move three percent either side. Gains in the US dollar are preventing the rise. Trade very carefully. Do not make any losses. I always ask traders and investors not to take too many risk before any celebration in one’s life like Diwali and other festivals, birthdays, marriage etc. I would like everyone to have a smiling face on celebratory days of the year. I have seen some of my closest friends incurring massive trading losses just a day before their marriage which affected their married life for a few years. Higher spending power brings happiness in one family life. Risk is there in everything second of our lives. I am only against excessive risk taking.
COMEX GOLD DECEMBER 2016 – current price $1264.55
Bullish over $1258.20 with $1271.30 and $1277.80 as price target
Bearish below $1249.70 with $1256.40 and $1246.30 as price target.
Neutral Zone between: $1249.70-$1258.20

This post was published at GoldSeek on 25 October 2016.

‘Clever’ Clinton Camp Mocks Trump Supporters With DIY Tin Foil Hats

After Project Veritas just exposed Hillary’s genius idea to launch the “Donald Ducks Releasing His Tax Returns” campaign, we get the following “Trump Tin Foil Hat” for all of the “alt-right” conspiracy theorists out there. This is actually a very clever idea, we’ve seen it executed with amazing results in numerous high school student body elections.

This post was published at Zero Hedge on Oct 25, 2016.

Michael Moore: “Trump’s Election Will Be The Biggest Fuck You Ever Recorded In Human History”

Some fascinating comments from the overtly liberal, Hillary-supporting Michael Moore, who in a recently leaked speech comes perilously close in a speech explaining why on November 8, what is left of middle America will look to cast its vote for Donald Trump for one reason:
Americans might be penniless, they might be homeless, they might be fucked over and fucked up it doesn’t matter, because it’s equalized on that day – a millionaire has the same number of votes as the person without a job: one. And there’s more of the former middle class than there are in the millionaire class. So on November 8 the dispossessed will walk into the voting booth, be handed a ballot, close the curtain, and take that lever or felt pen or touchscreen and put a big fucking X in the box by the name of the man who has threatened to upend and overturn the very system that has ruined their lives: Donald J Trump.
He concludes:

This post was published at Zero Hedge on Oct 25, 2016.

Tepid Demand For 2Y Paper: Bid-To-Cover Slides, Primary Dealers Hold More Than Half

Following hot on the heels of Austria’s record 70 Year bond issue, there was some concern if today’s 2Y Treasury auction would not fall flat on its face when the results printed at 1pm. However, it appears that just as there was demand for duration, so there was interest in “safety” paper, and as a result, the just concluded 2Y auction priced at 0.855%, 0.1bps inside the When Issued, which was also the highest yield on 2Y paper since May.

This post was published at Zero Hedge on Oct 25, 2016.