Of robots and programs….
Comments »Monthly Archives: May 2012
Today’s Heat Map and A/D Lines
The Treasury Ignores TARP Spending Recommendations; “Unreasonable or Unallowable Charges.” May Have Occurred
1/32 Cherokee is Enough for Elizabeth Warren to Claim Minority Status
People will do anything to further their career. Shame on Warren who is a Harvard grad and is 0.03125% minority….
Comments »Domino’s Pizza, $DPZ, Profits Fall Flat
Union Workers Walk at Caterpillar
Union workers were not satisfied with contract negotiations and walked off the job at a plant in Joliet….
Comments »Land Owners Want Transparency With Natty Gas Wells
Apparently land owners can not find out about violations that occur on their properties. The violations range from minor to serious, but it is transparency that is important to them.
Comments »Grantham: Now’s the Time to Invest in Natural Gas
“Natural gas prices plunged to a 10-year low beneath $2 per million Btus earlier this month, and investment gurus such as Jeremy Grantham of GMO say that makes the commodity a screaming buy.
“Everyone who has a brain should be thinking of how to make money on this in the longer term,” Jeremy Grantham writes in a report obtained in The New York Times….”
Comments »Chrysler Enjoys a 20% Jump in Sales for April
“Chrysler Group’s U.S. new-vehicle sales rose 20 percent last month, marking the best April performance in four years, as the industry headed for another strong performance.”
Comments »HUSSMAN: This Is One Of The Worst Times To Buy Stocks In History
“Fund manager John Hussman is as bearish as ever.
Although he admits that timing the market is difficult, he suggests, strongly, that now is one of the worst times in history to buy stocks:
We presently identify market conditions as being in the most negative 1% of historical data based on the average expected return/risk characteristics associated with similar conditions, on a wide range of horizons ranging from 2 weeks to 18 months.
One of these troubling “market conditions” is valuation. Stocks are still very expensive when measured against normal profit margins.”
Comments »Krugman Insists The Fed is ‘Reckless’ for Not Pursuing Higher Inflation
ISM Index: Prior 53.4, Market Expects 53, Actual 54.8
FINRA Cracking Down on Leveraged ETF’s
| For Release: Contacts: |
May 1, 2012 Michelle Ong (202) 728-8464 Nancy Condon (202) 728-8379
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| Citigroup Global Markets, Inc Action Morgan Stanley & Co., LLC Action UBS Financial Services, Inc Action Wells Fargo Advisors, LLC Action |
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FINRA Sanctions Four Firms $9.1 Million for Sales of Leveraged and Inverse Exchange-Traded Funds
WASHINGTON — The Financial Industry Regulatory Authority (FINRA) today announced that it has sanctioned Citigroup Global Markets, Inc; Morgan Stanley & Co., LLC; UBS Financial Services; and Wells Fargo Advisors, LLC a total of more than $9.1 million for selling leveraged and inverse exchange-traded funds (ETFs) without reasonable supervision and for not having a reasonable basis for recommending the securities. The firms were fined more than $7.3 million and are required to pay a total of $1.8 million in restitution to certain customers who made unsuitable leveraged and inverse ETF purchases.
FINRA sanctioned the following firms:
- Wells Fargo – $2.1 million fine and $641,489 in restitution
- Citigroup – $2 million fine and $146,431 in restitution
- Morgan Stanley – $1.75 million fine and $604,584 in restitution
- UBS – $1.5 million fine and $431,488 in restitution
Brad Bennett, FINRA Executive Vice President and Chief of Enforcement, said, “The added complexity of leveraged and inverse exchange-traded products makes it essential that brokerage firms have an adequate understanding of the products and sufficiently train their sales force before the products are offered to retail customers. Firms must conduct reasonable due diligence and ensure that their representatives have an understanding of these products.”
ETFs are typically registered unit investment trusts (UITs) or open-end investment companies whose shares represent an interest in a portfolio of securities that track an underlying benchmark or index. Leveraged ETFs seek to deliver multiples of the performance of the index or benchmark they track. Inverse ETFs seek to deliver the opposite of the performance of the index or benchmark they track, profiting from short positions in derivatives in a falling market.
FINRA found that from January 2008 through June 2009, the firms did not have adequate supervisory systems in place to monitor the sale of leveraged and inverse ETFs, and failed to conduct adequate due diligence regarding the risks and features of the ETFs. As a result, the firms did not have a reasonable basis to recommend the ETFs to their retail customers. The firms’ registered representatives also made unsuitable recommendations of leveraged and inverse ETFs to some customers with conservative investment objectives and/or risk profiles. Each of the four firms sold billions of dollars of these ETFs to customers, some of whom held them for extended periods when the markets were volatile.
Leveraged and inverse ETFs have certain risks not found in traditional ETFs, such as the risks associated with a daily reset, leverage and compounding. Accordingly, investors were subjected to the risk that the performance of their investments in leveraged and inverse ETFs could differ significantly from the performance of the underlying index or benchmark when held for longer periods of time, particularly in the volatile markets that existed during January 2008 through June 2009. Despite the risks associated with holding leveraged and inverse ETFs for longer periods in volatile markets, certain customers of these firms held leveraged and inverse ETFs for extended time periods during January 2008 through June 2009.
In settling these matters, the firms neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.
FINRA’s investigation was conducted by Robert Moreiro, Elena Kindler, Chun Li, Ron Sannicandro, Joseph Darcy, Elizabeth Da Silva and Patrick Hendry.
The Fed Criticizes The Largest Banks Over Risk Models and Dividends
“The Federal Reserve criticized how some of the 19 largest U.S. banks calculated potential losses and planned dividends in this year’s stress tests, people with knowledge of the process said.
The critiques will be part of feedback letters sent to the lenders this week that cover everything from data collection to risk measurement, said three of the people, who declined to be identified because communications with the Fed are private. Flaws included marking down all housing prices at the same rate, rather than matching them to specific regions, and planning dividendsthat could drain needed capital….”
Comments »Chesapeake, $CHK, Soars on Independent Chairman Appointment
Hugh Hendry: One More Market ‘Washout’ Will Yield Once-in-Lifetime Opportunity
“Hedge fund manager Hugh Hendry expects there will be one more “washout” in the market that will create once in a generation buying opportunity for risk assets.
Hendry also believes the Chinese stock market is effectively a casino that only benefits insiders, and the rest of us have no reason to invest in it.
“This might be the year everyone else notices this; the year panic over Chinese economic growth comes to replace the market’s morbid fascination with the travails of the European continent and the year in which we see that the U.S. is not giving way to China in terms of global economic leadership,” Hendry wrote in a letter to clients that was published in part by the Business Insider.
“There is a near consensus that China will supplant America this decade,” says Hendry. “We do not believe this.”
“We are more bullish on U.S. growth than most,” Hendry says. “The momentous nature of recent advances in shale oil and gas extraction and America’s acceptance of the unpleasantness of debt and labor price restructuring looks to us as if it is creating yet another historic turning point.”
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