Sunday, July 8, 2012

Back from vacation.... "shocking" developments

CCI has been silent for the past few weeks due to an extended vacation
(I needed to relieve the "stress" of  

While vacationing, CCI did not pay too much attention to the detail of the markets, but did notice a few macro level developments such as:
- My understanding is Barclays seems to have admitted to somehow manipulated the LIBOR market.  What?  A Market Maker might  manipulate the market for their own profit??..Shocking
- JPM losses due to "the whale" traders,  rogue hedging tactics appear to have continued to grow well past the originally estimated $2b. you think there would be any noise if a rogue trader had made a $2b profit while hedging?   or are we just suppose to be shocked that they actually can lose money?
- More evidence seems to have come to the forefront that CountryWide Mortgage (now BAC) was providing sweet, VIP mortgage deals to politicians in the early 2000s.  What?  You mean politicians might accept favors from the financial services industry in exchange for future considerations that might benefit  key actors in the  financial system.....shocking.
- A potentially disgruntled JPM employee claims that JPM sold more expensive, less effective products just because they were their own and there was more profit in selling those products.....doubly shocking.
- A month after the "efficient and straightforward" execution of the Facebook IPO the stock continues to trade well under the IPO price.  Shockingly.... more retail investor's than usual seemed to receive allocations.
- Central banks around the world continue to announce various agreements, statements, deals, plans, and policies to "protect" the "free" markets.  Using the words "protect" and "free" in the same sentence and no one seems to even think twice about what this really means for the state of the markets.....shocking
- I did not see any mention that any of the customer money that MF Global seems to have lost has been found...shocking

Less shocking is that retail customers  are still being "sold" the same old strategies, asset allocations and products despite that this does not appear to be your grandfather's market.  Common sense still seems to indicate that retail investors might be better served by not blindly following the advice of an industry with a record like the one outlined above. CCI will resume trying  to play a very small part in providing others investment thoughts when starting more specific market postings this week.

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