Category: Politics

So Much For New Market Highs?

President Donald Trump intensified pressure on China to strike a trade deal in Washington this week by threatening to more than double tariffs on $200 billion of the Asian nation’s sales to the world’s largest economy. This is right in time for sell in May and go away!

Continue reading “So Much For New Market Highs?”

Fannie Mae and Freddie Mac Cash Cows Released?

Its amazing how history has a tendency to repeat itself, but this time around if we have no economic slowdown and the government does not have to issue bailouts this could be a great buying opportunity into a cash cow. Continue reading “Fannie Mae and Freddie Mac Cash Cows Released?”

Big News from Trump Soon?

According to Bloomberg, President Donald Trump said he will make a “major announcement” Saturday on the government shutdown and his demand that Congress fund a border wall.

Trump has previously said he’s considering declaring a national emergency to bypass Congress and fund the wall. The president hasn’t budged from his demand that Congress spend $5.7 billion this year on a border wall even as the partial shutdown entered its 28th day on Friday.

White House Press Secretary Sarah Sanders declined to say whether Trump would declare an emergency at his announcement, which he said would be at 3:00 p.m. in Washington. “I’m not going to get ahead of the president,” she said.

Who knows exactly what he will say, but if its good news expect the rally in stocks to continue…

As a follow up according to Bloomberg, President Donald Trump “major announcement” on Saturday will include a proposal to extend protections for so-called Dreamers for three years, in exchange for $5.7 billion in funds for border security, said a person familiar with the proposal.

As well as protections for Dreamers, young people brought to the U.S. illegally as children, the plan would also extend the visas for Temporary Protection Status holders, though it’s unclear for how long.

Trump’s concessions, expected to be outlined in a speech at 4 p.m. on Saturday, are aimed at getting Democrats back to the negotiating table in a bid to end a partial government shutdown now into its fifth week. A stock market boner could be on the horizon!

Wework not working?

When Saudi Arabia and Abu Dhabi successfully dissuaded the SoftBank Vision Fund from buying a majority stake in WeWork for $16 billion, CEO Adam Neumann lobbed a Trump-style smoke bomb at the news cycle by subsequently announcing that the company was changing its name to “The We Company” in recognition of its expanded vision Continue reading “Wework not working?”

Deutsche Bank Woes Again

Bloomberg reports that Germany’s financial regulators would prefer for Deutsche Bank to merge with a European rival rather than a local, and just as troubled, competitor Commerzbank, setting them apart from forces in the government keen on an all-German deal. Either way, they are not thinking of insolvency.

According to Bloomberg, the ECB is favoring a cross-border combination to drive integration in the region’s financial markets, while analysis by German regulator BaFin suggests a preference for a European deal because the two domestic banks – surprise – are currently too weak to benefit sufficiently from a merger without government stimulus.

In other words, merging one Too Big To Fail bank with another would only result in a teetering behemoth that will need an even greater bailout when the next financial crisis hits, but that’s in the future readers not now! And by “sharing” the combined liabilities of the combined entity – which would likely inherit Deutsche Bank’s tens of trillions in gross notional derivatives – with another sovereign, would at least ensure that German taxpayers would enjoy some dilution of the upcoming bailout pain with another European nation at some point in the coming years.

This cross-border merger strategy is also more aligned with the position of Deutsche Bank CEO Christian Sewing, who has asked for patience with his turnaround plan before embarking on any deal. The European preference, meanwhile, is at odds with some German government officials who patriotically want a “national banking champion.” Both banks are key partners of the companies that make up Germany’s export-oriented economy.

Following the report, DBK shares, which have plunged 48% over the past 12 months, jumped as much as 8.2% and were up 6.6% at 7.98 euros at 4:48 p.m. in Frankfurt trading. Commerzbank, inexplicably, also climbed as much as 6.7% even though the news was decidedly negative for it as it would mean it wouldn’t be “even bigger to fail.”

Some more details from Bloomberg:

Late last year, the Finance Ministry asked BaFin for its data on how different merger scenarios could play out for the German banks, said people familiar with the matter.

During a strategy retreat in September, Deutsche Bank executives concluded that a merger with Swiss competitor UBS Group AG was the most favorable option among potential European partners, though they determined that the time isn’t right due to the German lender’s weak share price, people familiar with the matter have said. BaFin’s analysis came to a similar conclusion, the people said.

Meanwhile, the German regulator BaFin has insisted that it would prefer to see both German banking titans improve profitability if they are to pursue a combination. Still, some at the banking watchdog are concerned that mergers could end up working against efforts to ensure banks are no longer too big to fail, which of course is the whole point: with both banks teetering on the verge of collapse, at least according to their stock price, the whole point of the exercise is to make sure someone picks up the tabs when both eventually keel over.

What this means to us here at BTFDClub is Financial Stimulus is on its way and Central Bankers will be working overtime to keep this from failing. So Deutsche Bank may be a bargain at these prices…

Pelosi sends an email

House Speaker Nancy Pelosi on Wednesday asked Donald Trump to delay his State of the Union address – or deliver it in writing – while the government is partially shut down according to Bloomberg.

Pointing to security concerns, Pelosi said that the partial shutdown has crippled both the US Secret Service and the Department of Homeland Security, which may compromise security measures that precede the primetime address, according to Politico.

“Sadly, given the security concerns and unless government re-opens this week, I suggest that we work together to determine another suitable date after government has re-opened for this address or for you to consider delivering your State of the Union address in writing to the Congress on January 29th,” Pelosi wrote in a letter to Trump. 

Publicly, Democrats plan to argue that the parties need to focus on addressing the shutdown, now the longest in U.S. history. But privately, they also don’t want to give Trump a major platform to blame them for the shutdown when Trump’s demand for billions in wall funding has been the main driver, according to a Democratic lawmaker close to leadership.

Staff have been discussing the idea of postponing the State of the Union for months, with some expressing concern about scheduling travel plans for lawmakers and guests as well. –Politico

Pelosi’s announcement comes before a bipartisan group of lawmakers in the Problem Solvers Caucus is set to meet with Trump on Wednesday to discuss the shutdown and border security. Democrats are trying to cobble together a solid base as the White House attempts to pick off members known for cutting deals.

Shortly before Pelosi’s announcement, she and Minority Leader Chuck Schumer attended a closed-door caucus meeting with House Democrats, where Schumer told them to remain unified in their opposition to funding Trump’s long-promised border wall. 

You Have Been Hacked!

On Tuesday, United States authorities charged numerous mostly Ukrainian hackers for a scheme to trade on press releases that had not yet been released. The Ukrainians breached the SEC’s EDGAR database to receive access to the nonpublic information.

The scheme netted over $4.1 million for fraudsters from the U.S., Russia and Ukraine. Using 157 corporate earnings announcements, the group was able to execute trades on material nonpublic information. Most of those filings were “test filings,” which corporations upload to the SEC’s website before the official post.

The charges were announced Tuesday by Craig Carpenito, U.S. Attorney for the District of New Jersey, alongside the SEC, the Federal Bureau of Investigation and the U.S. Secret Service, which investigates financial crimes. In a Tuesday press conference, Carpenito said the thefts included thousands of valuable, private business documents. “After hacking into the EDGAR system they stole drafts of [these] reports before the information was disseminated to the general public,” he said.

he elaborate scheme involved seven individuals and operated from May to at least October 2016. Prosecutors said the traders were part of the same group that previously hacked into newswire services, according to CNBC.

Similar to the way John Podesta’s email account was hacked, the hackers used malicious software sent via email to SEC employees. Then, after planting the software on the SEC computers, they sent the information they were able to gather from the EDGAR system to servers in Lithuania, where they either used it or distributed the data to other criminals, Carpenito said. The EDGAR service operates in New Jersey, which is why the Justice Department office in Newark was involved in the case.

Those documents included quarterly earnings, mergers and acquisitions plans and other sensitive news, and the criminals were able to view it before it was released as a public filing, thus affecting the individual companies’ stock prices. The alleged hackers executed trades on the reports and also sold them to other illicit traders. One inside trader made $270,000 in a single day, according to Carpenito.

Stephanie Avakian, co-head of the SEC’s Division of Enforcement, said the same criminals also stole advance press releases sent to three newswire services, though she didn’t name the newswires. The hackers used multiple broker accounts to collect the illicit gains, she said.

The defendants then kicked back a portion of their trading profits to Oleksandr Ieremenko, a Ukrainian (oddly not Russian) hacker that is said to have infiltrated the database at some point between May 2016 in October 2016. There, he obtained thousands of “test filings” which included, among other things, earnings results.

Two Ukrainians were charged by the Justice Department with hacking the database — Oleksandr Ieremenko and Artem Radchenko. Seven further individuals and entities were also named in a civil suit by the SEC for trading on the illicit information: Sungjin Cho, David Kwon, Igor Sabodakha, Victoria Vorochek, Ivan Olefir, Andrey Sarafanov, Capyield Systems, Ltd. (owned by Olefir) and Spirit Trade Ltd.

Ieremenko had previously been charged in 2015 for a similar plot involving hacking into the databases of distribution companies who are responsible for putting out corporate press releases. Ieremenko and Artem Radchenko face a criminal indictment for conspiracy to commit securities fraud. Radchenko allegedly “recruited traders to join the conspiracy” and kept notes on what the SEC does and how to hack it, the Justice Department said.