Regulators Searching MF Global for Millions in Missing Customer Funds

Do you know where your account funds or assets owned through ETFs really are?  Do the regulators and overseers of the markets?  Do they care, or just look the other way?

NYT Dealbook
Regulators Investigating MF Global
By BEN PROTESS, MICHAEL J. DE LA MERCED and SUSANNE CRAIG

Federal regulators have discovered that hundreds of millions of dollars in customer money have gone missing from MF

Gold Daily and Silver Weekly Charts - The Golden Bowl

Is this the long awaited gut check for the longs?

A natural pullback after such a strong rally.

Let's see where it goes next.





"Related Disciplines"

SP 500 and NDX Futures Daily Charts - MF Global Declares Bankruptcy

A strong October as one of the most dangerous of market trading months goes.

Keep an eye on Europe.

This market is triple black diamond, full of hidden risks, much of it caused by corruption and lax regulation.

Reprise: The Causes of the Financial Crisis and the Obsessive Folly of Greed

"There will come a moment when the most urgent threats posed by the credit crisis have eased and the larger task before us will be to chart a direction for the economic steps ahead. This will be a dangerous moment. Behind the debates over future policy is a debate over history—a debate over the causes of our current situation. The battle for the past will determine the battle for the present. So

Gold Daily and Silver Weekly Charts

I was out most of the day.

The markets were quiet, digesting the recent developments in the US domestic economy, but especially with the European debt situation.

See you Monday.

SP 500 and NDX Futures Daily Charts

Gold Daily and Silver Weekly Charts - A Possible Breakout on Debt Monetization in Europe

The 'gut check' in metals was very short-lived, as the precious metals rallied with the melt up in financial assets on the debt monetization plans out of Europe to save their banks.   It was 'risk on.'

What next? We may have some follow on, but continued upside depends on additional QE3 from the Fed, as well as the actions by all the world's central banks to monetize the private banking debt

SP 500 and NDX Futures Daily Charts - Time To Go On Bubble Watch

A massive rally in US equities today led by financials as there was relief that Europe will be bailing out the sovereign debt of some of their members, and most importantly of all, the large European and US banks.

The US GDP came in well. Intraday commentary was provided, and it was a hollow victory as household income continued to decline.

I think the stock rally may have more to go, but

The US GDP Report

One picture is worth a thousand words...

Buffaloed Tim and Howdy Bernanke

Gold Daily and Silver Weekly Charts - La Douleur du Monde

Another nice up day in the metals running a bit counter to commodities.

Gold finished around the big resistance of 1720. Today was a quiet expiration and it may be that the new holders of futures, compliments of their 'in the money' calls, will be given a gut check tomorrow or the next day.

But the news and the headlines from Europe are so dominant in this market that this is the primary

SP 500 and NDX Futures Daily Charts - Hope Floats, and So Does This Market

A bit of a drift higher with a short squeeze based on a report (rumor) that China will ride in on a white horse and bail out Europe by buying their euro bonds.

This is a very mixed market and headline driven. So we wait for the next headline which is what it will take to fuel a sustained rally if it is favorable and substantial.

Bill Black: What I'd Demand of the Fed - Fire Bernanke and Geithner

I think this is a superb list, but a bit misdirected, because as is obvious from my title, the advice ought not to go to the Fed, but to the government in Washington. Timmy is Ben's colleague and quasi-boss, and the problems are intertwined.

That takes nothing from Bill Black who would be an appropriate choice to head one of the big regulatory agencies. And it is unlikely that Obama would

The Ghosts of Modern Monetary Theory

«Le papier-monnaie revient finalement à sa valeur intrinsèque - Zéro.»

Voltaire

Turk and Keiser Discuss the French Experience with L'illusion de la Monnaie Fiduciaire

American Psycho Redux

"Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one."

Charles Mackay
The US is remarkable, not for any unusual distribution of psychopaths amongst its people, but rather for the high regard and admiration in which the more articulate and successful psychopaths and sociopaths among their ranks are

A Nation Run Not By Shopkeepers, But By Con Men, Protection Rackets, and Swindlers

"And remember, where you have the concentration of power in a few hands, all too frequently men with the mentality of gangsters get control. History has proven that."

Lord Acton
Income inequality such that it suppresses the middle class is a practical policy problem for what I hope are obvious reasons of inadequate demand and economic stagnation.  As the US currently has one of the most extreme

Gold Daily and Silver Weekly Charts - Comex Option Expiration Tomorrow

It was 'risk off' today as domestic economic news was weak and Euro-optimism was subdued.

There was intraday commentary on today's somewhat unusual rally in gold and silver here.

The economy in the US continues to weaken, and the political leadership seems preoccupied with doing more trickle down favors for their wealthy contributors.

There was an interesting divergence as gold and silver

SP 500 and NDX Futures Daily Charts

Markets took a pause today on less optimism on Europe and domestic US recovery.

Keep an eye on the sovereign debt situation in Europe because that is a primary short term driver of this market.

Amazon missed and lowered after the bell, and so is getting hammered a bit in the late trade.

The US economy is not recovering and the plans being put forward for change are not likely to help anyone

Net Asset Value of Certain Precious Metal Trusts and Funds

The Next Two Dates to Watch for Comex Option Expiration in the Metals

Keep an eye out for the next two Comex option expirations in the metals, both tomorrow 26 October but in particular the December expiry on 22 November. Perhaps not so much tomorrow but the days after. And of course December is a key month. I see resistance at 1720 that may prove to be important.

And never forget how the metals markets were ruthlessly slammed down into the October expiration

Gold Has a Go to the Upside as Stocks Slump on Euro Fears - Flight From Fraud

"The desire of gold is not for gold. It is for the means of freedom and knowledge."

Ben Davies

Gold and silver diverged from US equities today as fresh jitters over the Euro bailout put a damper on stocks.

Keep the $45+ rally in context of the current trading range however as is shown below. It has not yet broken out.

If you are trading with Level II market view in something like the miners

Gold Daily and Silver Weekly Charts - La Douleur

Markets were cheered by a better than expected economic activity report from China and good earnings from CAT. Europe was forgotten for the day.

Gold and Silver had decent gains as the dollar slumped.

The trend is not clear here and the breakouts are still pending.

SP 500 and NDX Futures Daily Charts

Big up day but on light volumes.

CAT earnings provided the domestic push, and better than expected data from China cooled fears of global recession.

The punters were whistling pass the graveyard on Euro debt today.

Let's see if they can break stocks out from here and make it stick ahead of the European meeting on Wednesday.

NFLX guided lower and was punished after the bell.

Gold Daily and Silver Weekly Charts - La Douleur Plunges to New Post War Low in Yen

It was 'Risk On' today as stocks rallied and went out on their highs and gold followed.

The US Dollar dropped to a post WW II low against the Yen on talk of QE3. I suspect strongly that someone in Treasury shared some prospective monetary actions with their Asian counterparts today. Apparently they are not so sanguine about the benign affects of modern monetary theory, even of the more benign

SP 500 and NDX Futures Daily Charts - Risk On, VIX Down, Hopes for QE3

Wax on and Wax off for option expiration.

The Risk Trade was On today on words from the Fed's Yellen amongst others hinting at a new round of QE3 from the Fed. Expectations are high that Europe will bail out its banks via the PIGS sovereign debts, in the manner that the US bailed out the Wall Street banks both directly, and indirectly via AIG.

If you have Level II trading you may notice that

Nassim Taleb on the Moral Hazard and Broken Economic Structure of the Western Crony Capitalists

I have had this link up, but I wanted to feature it here because so many have missed it, or missed the key message which is that the economic system is broken and that there can be no sustained recovery unless this is repaired.

When even so-called liberal economists decried the resistance to TARP, and categorized concerns about moral hazard as a kind of economic Puritanism, I knew things were

US Dollar Plunges to Post WW II Low Against the Japanese Yen

Bloomberg attributes the plunge of the Dollar against the Yen to concerns that the Fed will soon engage in QE3.

Some of the plunge was obviously technical, as sellers ran the stops and forced further selling. The currency market makes the stock market look good at the extremes of moves.

I suspect strongly that the Fed is much more involved in the European bailout than meets the eye.   And

Gold Daily and Silver Weekly Charts - Risk Off on Euro, Metals Hit As Usual

It was a 'risk off' day as euro jitters provided an excuse for a bear raid on metals, and weakness in stocks, particularly the tech sector.

The US Dollar Failed to rally, which all other things considered is remarkable.

Tomorrow is a stock option expiration day.

This is a difficult market. Be very careful if you must trade.









"Keep An Eye Out For Predators"

From light and

SP 500 and NDX Futures Daily Charts - Risk Off On Euro Concerns

Tomorrow is stock option expiration.

The US celebrated the lynching of Gadhafi.

Philly Fed came in much better than expected.

Microsoft met expectations after the bell.

Euro debt concerns are the 'Big Tickle.'

Scorn in the USA - #OWS As Viewed By the Pampered Princes of the Beltway

Gold Daily and Silver Weekly Charts - Risk Off - Maneuvering Ahead of Position Limits

Short term trend remains intact.

This is a stock option expiration week.

Equity volumes remain very thin.

SP 500 and NDX Futures Daily Charts - Risk Off - Option Expiration Week

Wax on, wax off.

As a reminder, this is a stock options expiration week.



The Real Class Warfare

Woodrow Wilson and Barack Obama

In looking for analogues to the record of Barack Obama as President, many look to Hoover. But I think Woodrow Wilson offers some interesting comparisons.

Here is an exerpt from the collection of Wilson's campaign speeches from the election of 1912 in his book, The New Freedom. Compare this alternative he offers to Theodore Roosevelt's Progressive Party with his actual performance once in

This Is the Gold Bull Market

Here is something from my 'private stock.'

This is the picture of a quiet flight to quality.

If you must trade, buy strength and sell weakness, and not the other way around when driven by greed and fear.

But for almost everyone, it is better to see the trend and ride its crest, perhaps hedging a little at the extremes, while the fundamentals that created it are intact.

What are the

Gold Daily and Silver Weekly Charts - Metals Hit By Bear Raid Then Recover On Rumored Euro Deal

If you had a calm trading day today then you probably were not trading.

Gold and silver were smacked down fairly hard in a two step operation around the NY open this morning in a blatantly obvious bear raid. Stocks also sold off quite sharply.

But then the markets started to recover, if one knows what to look for. I responded by taking down my short stock positions, and added substantially to

SP 500 and NDX Futures Daily Charts - Reports of Euro Bailout - Apple Misses!

This is the news report that rallied US stocks this afternoon.

And we might suspect that this is the root cause for the major bear raid on gold that occurred earlier today.

The Guardian UK
France and Germany Agree to €2 Trillion Euro Rescue Fund
By David Gow in Brussels

France and Germany have reached agreement to boost the eurozone's rescue fund to €2tn (£1.75tn) as part of a "

Net Asset Value of Certain Precious Metal Trusts and Funds

Gold Daily and Silver Weekly Charts

'Cap and trade' is already here in the metals markets, at least during the London-NY trading day.

They cap the rallies and then trade the market down, in a sweeping manner to churn and burn.

I came into today long bullion and short broad stocks, with a little bit of a heavier foot on the short side, so it 'worked.' I did lighten up a bit but still went into the close with the same paired

SP 500 and NDX Futures Daily Charts - Hard Time Killing Floor Blues - VIX Up

A down day but not so much as a whisper of panic in the markets, more like the sound of a wash and rinse, as prices stayed carefully within their trading channels.

Earnings are coming in somewhat mixed, with the financials looking to accounting tricks to soften the blow of their downsizing from prior bloated levels.

VIX was elevated a bit, and we may have another leg down ahead of us.

The

Weekend Reading

Two Presidential addresses to the country on prior occasions of national crisis, division, and turmoil.

"...On the occasion corresponding to this four years ago all thoughts were anxiously directed to an impending civil war. All dreaded it, all sought to avert it. While the inaugural address was being delivered from this place, devoted altogether to saving the Union without war, insurgent

Weekend - Down Home

"So, you can laugh at or disparage the demonstrators all you want. You can call them spoiled, silly or sophomoric. You can single out the fringe and think it’s representative of the whole. But that won’t change the fact that this demonstration has touched a nerve. A rag-tag group is standing up where the government, regulators, media and business elites have rolled-over and played dead. They are

Gold Daily and Silver Weekly Charts - La Douleur du Monde

Stephen Leeb: Gold, China's Long Game, Currency and Resource Wars (audio)

SP 500 and NDX Futures Daily Charts

"Tricks and treachery are the practice of fools, that don't have brains enough to be honest."

Benjamin Franklin

This is about as far as it goes before breaking out, and the volumes had better pick up because they are too thin to sustain a new bull leg just yet.

The G20 are meeting over the weekend and expectations for a comprehensive solution to the European debt crisis are high.

More of

Gold Daily and Silver Weekly Charts

Capping the metals all day, but they could not make it stick.

SP 500 and NDX Futures Daily Charts - JPM Posts Weak Results, Boosted by Trading and Accounting

While the SP and broad indices slumped today on JPM's weak numbers, which pulled down the financials, the NDX never really gave it up all day, no doubt in anticipation of Google's numbers which were released after the bell.

Who needs money when you have Google Plus and ad clicks?




Jamie Dimon speaks to Blythe and her traders to rally the troops after posting lackluster third quarter results

What Is the Message From #OccupyWallStreet?

The next time someone asks that question, send them a link to this.



The Banks must be restrained, and the financial system reformed, with balance restored between Corporations and the people, before there can be any sustained recovery.

Gold Daily And Silver Weekly Charts - La Douleur du Monde

It was 'risk on' as money came out of the dollar and went back into equities and the metals.

The Fed begins its Operation Twist bond purchases tomorrow or so I hear.

Its all about Europe sovereign debt at the moment.

Gold is running on the inflation rails now and not on the risk adversity safe haven trade. That may change but for now it is what it is.

SP 500 and NDX Futures Daily Charts

Thin volume 'risk on' rally as stocks faded into the close from the highs but kept some gains.

The markets are primarily eyeing the sovereign debt situation and discounting domestic results and economy, at least for now.

SP Dec Futures Intraday - Operation Twist Begins

Although this could break out and keep going, I have held the thought that this is just a short squeeze within the context of a broad trading range from 1100 to 1220. It should be noted that the futures tend to be a little 'sloppy.' These moves up and down in a broad channel are what is known as a 'wash and rinse' or 'wax on, wax off.'

There is a potential triple top at 1215.

If the futures

Gold Daily and Silver Weekly Charts

Gold was strong overnight but was stepped on quite hard about 9 AM London time as is often the case. The east buys and the west sells.

Nothing has broken out yet. So we wait a bit and bide our time.

I am running some moderate gold bullion and a light silver addition on the ability to hold 32. A small hedge short broad stocks goes with it. No miners yet in the portfolio.

SP 500 and NDX Futures Daily Charts - US 3Q Earnings Season Begins Today

The US kicks off third quarter earnings season after the bell as Alcoa reports.

The markets remain thinly traded and headline driven.

Net Asset Value of Certain Precious Metal Trusts and Funds

Adjusted Monetary Base Less Excess Bank Reserves

Thanks to my friend Gary at NowandFutures.com for this chart.

I like to think of the expansion of the monetary base as it has been implemented this time, versus 1933 , as a large animal passing through the body of a python.

Who knows what might come out after the banks are done digesting it.

In the second version of the chart below I have merely added a simple trendline.

Absent lending and

Gold Daily and Silver Weekly Charts - La Douleur du Monde - Dec Gold Futures

Silver and especially gold had nice rallies today as it was 'risk on' with Sarkozy and Merkel crooning a lullaby to the equity markets. The dollar retreated sharply from its zenith. It has not yet broken uptrend.

I wonder if the metals liquidation is over, and if the hands that remain are strong and relatively unleveraged. We will not know until the stock market corrects again and we see

SP 500 and NDX Futures Daily Charts

A big rally on Wall Street today as the bond market was closed for Columbus Day. In other words the adults stayed home. So stocks had their way on hopes that Merkel and Sarkozy would come up with a feasible plan to take the French and German bank debts on to the public balance sheets, or at least whichever part is not served up as a haircut to bondholders and bank shareholders.

The US is

Missteps to Mayhem: Inside the Financial Mayhem Machine and the Policy Stalemate Today

I think this is an important essay from Michael Burry, excerpted below, about the financial crisis, and so I share some extended excerpts with a link to the original. Keep in mind that this is one perspective from a particular point of view.

For a more comprehensive and balanced view of the causes and progress of the financial crisis I highly recommend Econned, by Yves Smith. I have given

Modern Economics: The Money Masters and Modern Economic Theory - Credibility Trap

Yesterday it was Yves Smith who took Paul Krugman to task. And I defended him in that instance in the comments. But now alas it's my turn, and I don't take this up lightly.  So I must think it is important.

And I do.  Because a false premise is being used to justify a false conclusion and by extension a matter of serious public policy in an ongoing debate. And people are in the streets about

Gold Daily and Silver Weekly Charts - Anglo-American Bullion Banking Cartel at Risk

"Get ready for the Pan Asian Gold Exchange, scheduled to open in June, 2012 in Kunming City, Yunman Province...Pan Asian will allow Chinese to speculate in gold futures contracts or buy physical gold through an account with a bank or broker. All 320 million customers of the giant Agricultural Bank of China will simply be able to use their Renminbi, the Chinese currency, from their bank accounts

SP 500 and NDX Futures Daily Charts - Plus ça change...

The markets were under three primary influences today.

An FDIC memorandum concerning the details of the Volcker Rule which will be voted on next week was leaked, and it has some strong prohibitions about insured banks engaging in proprietary trading. The bank lobbyists were on full alert, and the politicos will be buzzing in the Capital this weekend. Try the steak and lobster at The Palm

The Seduction of Science in the Service of Power: An Essay on the State of Economics

"Tyranny is always better organized than freedom."

Charles Peguy
This essay by John Kay excerpted below is a very nice summary of the problem we have in modern economics. It is a bit dry to the layman, but it touches on the distortions that crept in to economic thought and their intellectual sources and in particular the operational rather than political means.

I do not think it was

The US September Non-Farm Payrolls Report in Pictures

A remarkably 'clean' report with the only anomalies being a lower than normal Birth-Death imaginary jobs adjustment from the BLS, which subtracted 43,000 jobs, and a seasonality adjustment that appeared a little on the high side.

An exogenous factor was the addition of 45,000 striking telecommunication workers who returned to their jobs. So the organic jobs growth was weak.

"Nonfarm payroll

Jon Stewart: Mainstream Media Coverage of 'Occupy Wall Street'

The next two years will be a bonanza for satirists.

I have concluded from my reading of history that the greatest periods of change, the turning points, are best marked by and most notable for the remarkable inability, and sometimes tragic failure, of contemporary observers to understand them.

They do not see their causes, and fail to mark their progress and direction, in the time at which

Gold Daily and Silver Weekly Charts

"When nothing seems to help, I go and look at a stonecutter hammering away at his rock, perhaps a hundred times without as much as a crack showing in it. Yet at the hundred and first blow it will split in two, and I know it was not that blow that did it, but all that had gone before."

Jacob Riis
Gold had another up day with stocks, as it was 'risk on' with renewed hopes for fresh infusions of

SP 500 and NDX Futures Daily Charts - Third Up Day in a Row

"Heroes are not giant statues framed against a red sky. They are people who say: This is my community, and it is my responsibility to make it better. Interweave all these communities and you really have an America that is back on its feet again. I really think we are gonna have to reassess what constitutes a 'hero.'"

Studs Terkel

Big up day, third in a row, ahead of the Non Farm

Time for a Financial Transaction Tax Designed to Fund Financial Industry Regulation

I would like to see a flat financial transaction tax enacted, applicable to any exchange. The tax would be $1 (or £1 or €1 or ¥100 for example) for any trade on any exchange public or private, for any registered security including derivatives, without regard to the size of the trade. I would even consider a lesser amount, say $.25 for example, based on better tax revenue estimates.

The real

Net Asset Value of Certain Precious Metal Trusts and Funds

A nice bounce in the metals with gold up to key resistance.

The trusts and funds are responding as well as the mining companies, ahead of tomorrow's important September Non-Farm Payrolls report.

One notable variant in this is the unusually large premium being given to the Central Gold Trust. This is almost certainly due to a short squeeze as it is one of the least 'liquid' of the closed end

Steve Jobs, February 24, 1955 – October 5, 2011

"...the unforgiven
Fire which Prometheus filch'd for us from heaven."

Lord Byron, Don Juan, Canto I.
"So we went to Atari and said, 'Hey, we've got this amazing thing, even built with some of your parts, and what do you think about funding us? Or we'll give it to you. We just want to do it. Pay our salary, we'll come work for you.' And they said, 'No.' So then we went to Hewlett-Packard, and

Gold Daily and Silver Weekly Charts - Currency Wars - The European Overhang - YE $2,000?

"The U.S. and Europe have always suppressed the rising price of gold. They intend to weaken gold's function as an international reserve currency. They don't want to see other countries turning to gold reserves instead of the U.S. dollar or Euro.

Therefore, suppressing the price of gold is very beneficial for the U.S. in maintaining the U.S. dollar's role as the international reserve currency.

SP 500 and NDX Futures Daily Charts - Headlines and Emotions

Greece is going to default, one way or the other.

The real question is how they will package it, and how big the haircut will be to the debt holders, anywhere from 21 to 50 percent.

Europe is running 'stress tests' again on the banks, obviously to see how they will fare against a range of scenarios.

I think they might buy the news if the haircut is below 50 percent and no banks are taken

Currency Wars: European Debt Crisis and the Next Phase of Global Finance

"The wealthy, not only by private fraud but also by common laws, do every day pluck and snatch away from the people some part of their daily living. Therefore, when I consider and weigh in my mind these commonwealths which nowadays do flourish, I perceive nothing but a certain conspiracy of rich men in procuring their own commodities under the name and authority of the commonwealth.

They

Gold Daily and Silver Weekly Charts - Flight to Safety, at Least for Today

Bounce today on a flight to safety, a concept that is still valid except during option expiration periods and panic liquidations perhaps.

There is a growing difference between the physical market and the paper markets. At some point they will converge.

"So the Western central banks got together, leased out some gold and the bullion banks sold the gold. The central bank gold being unloaded

SP 500 and NDX Futures Daily Charts - Going Out On the Lows

Downside on the stocks which went out on their lows, led by the financial stocks based on fears of contagion from a Greek default.

Currency Wars: Restricting Gold and Silver Sales in France

A few people have asked me about the recent story concerning France banning cash sales of gold and silver. The story originated here but was picked up by quite a few other sites last week. I was waiting to get some additional information before I posted it as well.

This is different from the reports of limits specifically on gold and silver sales in Austria.
"According to the bank

An Important Addition and Clarification to the OCC Report Discussion

As I wanted to look into the gold and silver situation, and the concentrations there amongst the Anglo-Americans I left out an important fact about derivatives in general.

The US OCC report does include not only commercial banks and trusts with US subsidiaries, but also "Bank Holding Companies."

The bank holding company report, while shown at a high level, is not included in the breakdowns of