Archive for category: WALL STREET ON PARADE

Brace Yourself for Federally-Insured Bank Failures Caused by Crypto

By Pam Martens and Russ Martens: August 1, 2022 ~ Last Thursday, during a Senate Banking Committee hearing, Senator Elizabeth Warren apparently grabbed the attention of federal regulators when she stated that Voyager, the crypto platform that filed for bankruptcy protection in early July, was promoting itself as being FDIC-insured. FDIC stands for Federal Deposit Insurance Corporation and is the federal agency that oversees federal deposit insurance for the nation’s regulated banks and savings associations. Crypto trading platforms and their lending operations are not federally regulated; they are frequently tied to criminal activity; they are increasingly going bust and/or filing for bankruptcy protection and locking customers out of making withdrawals of their liquid funds and/or their crypto. Letting crypto get anywhere near a federally-insured bank would undermine public confidence in FDIC-insurance and undermine public confidence in the safety and soundness of all federally-insured banks in the U.S. And yet, federal bank … Continue reading →

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Wall Street Megabanks’ Multi-Billion Dollar Blunders Suggest Money Controls as Good as George Bailey’s Uncle Billy

By Pam Martens and Russ Martens: July 29, 2022 ~ What do you get when you mix federally-insured banks with Wall Street trading casinos? You get the potential for catastrophic risks for the U.S. taxpayer and astronomical riches for the CEOs of the banks and the hedge fund titans they serve. Why is this Faustian bargain tolerated by Washington lawmakers – especially after the greatest financial collapse since the Great Depression in 2008? Because the Wall Street fat cats throw a lot of money into the political campaigns of members of Congress, ensuring that no matter how many times these Frankenbanks make outrageous blunders involving billions of dollars, Congress will conduct a superficial investigation and move on. Below we examine outrageous money blunders by Barclays, Citigroup, JPMorgan Chase and Morgan Stanley – all of which have the earmarks of the brand of money incompetence as George Bailey’s Uncle Billy in Frank … Continue reading →

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Atlanta Fed’s Model Forecasts GDP to Contract by -2.1 Percent in Second Quarter; Morgan Stanley Says S&P 500 Could Drop Another 22 Percent If that Happens

By Pam Martens and Russ Martens: July 5, 2022 ~ The Department of Commerce’s Bureau of Economic Analysis (BEA) will release its advance estimate for U.S. Gross Domestic Product (GDP) for the second quarter of 2022 at 8:30 a.m. on July 28. All eyes on Wall Street will be glued to that number as a gauge of where stock prices are headed. As of this morning, the highly respected number crunchers at the Atlanta Fed’s GDPNow model are forecasting a contraction of -2.1 percent in U.S. economic growth in the second quarter. (That’s the real GDP growth/seasonally adjusted annual rate.) The Atlanta Fed’s GDPNow modelers will update their forecast five more times, based on additional economic data releases, before the advance estimate for second quarter GDP is officially released by the BEA on July 28. GDP contracted at a -1.6 percent annualized rate in the first quarter. Two quarters of negative … Continue reading →

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Five U.S. Megabanks Have Lost $300 Billion in Market Cap in One Year; Crypto Is in Meltdown this Morning; and the Fed Will Hike Rates Further on Wednesday

By Pam Martens and Russ Martens: June 13, 2022 ~ Welcome to Monday morning and market hell. As of 8:47 a.m. (ET) this morning, Dow futures are down 553 points; Bitcoin futures have lost 17 percent of their value on the news that cryptocurrency lender, Celsius Network, has frozen withdrawals. The 5-year Treasury note has spiked to yield 3.38 percent, a 50-basis point increase in a month, leading to an inverted yield curve against the 10-year Treasury note, which is trading at 9:01 a.m. (ET) this morning at a yield of 3.27 percent. (An inversion signals a rising recession risk.) All of this comes as the Fed has signaled that it will announce another interest rate hike this Wednesday, following the two-day meeting of its Federal Open Market Committee (FOMC). Stocks are developing a habit of tanking one day after Fed Chair Jerome Powell holds his FOMC Wednesday afternoon press conference, … Continue reading →

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Fed Data Shows a Half Century of Moderate Growth in the Fed’s Balance Sheet through Two World Wars – Then a Seismic Explosion Under Bernanke, Yellen and Powell

By Pam Martens and Russ Martens: June 6, 2022 ~ Last month the Federal Reserve Bank of New York released its 2021 annual report from its “Markets Group.” That’s the group that operates a trading floor (complete with speed dials to the trading houses on Wall Street) at the New York Fed, located not far from the New York Stock Exchange, as well as another trading floor on the premises of the Chicago Fed, which is not far from the futures exchanges in Chicago. That report showed that despite all of the recent talk about the Fed dramatically shrinking its balance sheet from its current size of $8.9 trillion, the internal Federal Reserve plan for the balance sheet is actually this: “After declining by about $2.5 trillion from the peak size reached in the first half of 2022, the portfolio stops declining in mid-2025, at which point it is held constant … Continue reading →

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New York Fed Stuns with New Report: At Year End Its Trading Desk Owned 38 Percent of All 10-30 Year U.S. Treasuries

By Pam Martens and Russ Martens: May 26, 2022 ~ On Tuesday, the New York Fed’s trading desk released its annual report showing what it was up to in 2021. The New York Fed is the only one of the Federal Reserve’s 12 regional Fed banks to have a trading desk operation with speed dials to Wall Street’s trading houses, so we’re always interested in reading the “official” version of what’s been happening there. The report is a deeply sanitized version of the facts on the ground. (For example, there is nothing in the report to indicate that the New York Fed has established a second trading floor near the futures exchange in Chicago.) However, there is one paragraph in the newly-released report that took our breath away. It reveals that the New York Fed’s trading operation (officially called the System Open Market Account or SOMA) currently owns 38 percent of … Continue reading →

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Jerome Powell’s Fed in Two Frightening Charts

By Pam Martens and Russ Martens: May 18, 2022 ~ The March 15-16 minutes of the Federal Open Market Committee (FOMC) of the Federal Reserve show that there was agreement, given “elevated inflation and tight labor market conditions,” that the Fed needed to take decisive action to shrink its balance sheet, with FOMC participants reaffirming “that the Federal Reserve’s securities holdings should be reduced over time in a predictable manner primarily by adjusting the amounts reinvested of principal payments….” But Jerome Powell’s Fed did not actually announce a specific plan to shrink its balance sheet until May 4 and stated at that time that the plan would not go into effect until June 1 – almost three months after the FOMC indicated that the Fed should take decisive action. As a result of this stalling, the Fed’s balance sheet has remained at the $9 trillion level since its March 15-16 FOMC … Continue reading →

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Citigroup’s Stock Price Is Still Down 84 Percent from the Year of Crash in 2008

By Pam Martens and Russ Martens: May 13, 2022 ~ On January 2, 2008, the first trading day of the year that would become the biggest Wall Street crash since the Great Depression, Citigroup’s shares closed at $28.92. Yesterday, Citigroup’s shares closed at $4.66 (adjusted for the 1-for-10 reverse stock split the company did on May 9, 2011). That means that shareholders who have hung on to the stock for the past 14 years are still down 84 percent. In terms of assets, Citigroup is the third largest bank holding company in the U.S. with $2.29 trillion in assets as of December 31, 2021. (JPMorgan Chase and Bank of America rank first and second with $3.7 trillion and $3.2 trillion in assets, respectively, as of the same date according to the Office of the Comptroller of the Currency.) Despite the fact that Citigroup blew itself up in 2008 with off-balance-sheet subprime … Continue reading →

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Senator Tells Treasury Secretary Yellen that Crypto Market Is Now Larger than Subprime Market that Triggered Global Financial Crisis

By Pam Martens and Russ Martens: May 11, 2022 ~ As a result of the Dodd-Frank financial reform legislation of 2010, the U.S. Treasury Secretary chairs a key group of banking and Wall Street regulators called the Financial Stability Oversight Council – pronounced F-SOC for short. The idea behind F-SOC was that Wall Street’s insane binges into things like toxic subprime debt and credit default swaps would never again be allowed to sneak up on snoozing government watchdogs, take down the U.S. economy and put the Wall Street megabanks on a long-term feeding tube from the Fed as occurred from 2008 to 2010. Yesterday, the Senate Banking Committee held a hearing to take testimony from Treasury Secretary Janet Yellen on F-SOC’s annual report to Congress and what F-SOC sees as the biggest threats right now to financial stability. There were numerous fireworks during the hearing, including when Senator Tim Scott, a … Continue reading →

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