Archive for September, 2016

How the Vampire Squid Gambled – And Lost $1.2 Billion in Sovereign Wealth

18 | By Shah Gilani

On March 18, 2016, the Libyan Investment Authority (LIA), a sovereign wealth fund set up by dictator Colonel Muammar Gaddafi in 2006, filed suit in London at The High Court of Justice’s Chancery Division against Goldman Sachs International.

The suit claims the fund paid Goldman approximately $350 million to set up trades the LIA says it didn’t understand, which lost the fund $1.2 billion, everything it invested.

Instead of fraud, the LIA claims its “causes of action” are “undue influence” and “unconscionable bargain.”

Goldman decided not to settle and believes it can beat the charges because, you know, there was never any undue influence and Goldman Sachs is not unconscionable.

The suit will be decided this October. 

In short, the LIA claims the Great Vampire Squid’s blood-funnel bankers, traders, and especially one junior salesman, cozied up to the “nascent” sovereign wealth fund’s managers and traders, who all had “limited legal and financial expertise,” by entertaining them lavishly at expensive restaurants and hotels, plying them with gifts and prostitutes, training them enough to claim they should have known what they were buying, employing the deputy executive director of the fund’s younger brother, and finally inducing them into putting on leveraged derivatives trades that amounted to an unconscionable bargain.

Here’s the inside scoop on the case…

More on the Politics of the Fed

1 | By Wall Street Insights and Indictments Staff

During Monday night’s presidential debate, GOP nominee Donald Trump said that the Fed was being “more political” than his democratic counterpart Hillary Clinton, which sparked a national conversation about what the Fed actually does.

Shah stopped by a recent episode of Making Money with Charles Payne to talk about his position that the Federal Reserve is – and always has been – a political tool.

Click here for the full video.

The Most Dangerous Bank in the World Is About to Get a Bailout

1 | By Wall Street Insights and Indictments Staff

Now, as the stock has lost a whopping 60% of its value over the past 12 months, one big question has surfaced: Will DB get bailed out?

On a recent episode of Varney & Co., Shah argued that it would. With 60 trillion in derivatives on its books, if the bank were to collapse, counterparties to those derivatives – all the big banks around the world – would follow.

This would make the collapse of Lehman Brothers look like a day at the beach.

Speaking of Lehman… the other big question hanging over the markets: Are we back to 2007?

Click below for Shah’s answer…

Click here for the full video.

What They Didn’t Say About the Fed in Monday’s Debate

1 | By Shah Gilani

Republican Presidential Nominee Donald Trump blasted the Federal Reserve and Fed chair Janet Yellen for being more “political” than his Democratic counterpart Hillary Clinton in Monday night’s heated presidential debate.

Is he right? Is the Federal Reserve political in any way, shape or form?

Fed officials, the vast majority of political analysts, and “a wide range of independent observers,” according to the New York Times, “roundly rejected” Mr. Trump’s “accusation.”

But the truth is, the Federal Reserve is absolutely, positively political. It’s in their DNA.

I’ll prove it to you…

The Unintended Consequences of These New Rules Could Kill the Rally – Or Worse

4 | By Shah Gilani

Starting October 14, 2016, institutional prime money market funds won’t be able to price themselves at a constant $1.00 a share.

New SEC rules will require these giant funds to value shares based on actual market prices for underlying assets in their portfolios.

That means their per-share prices will fluctuate on a daily basis.

While that’s not exactly good news, it gets worse.

The rules allow funds to charge up to a 2% redemption fee when investors want out.

But the killer is, funds can put up “gates” that prevent investors from selling shares.

Besides problems investors will have with the new rules, unintended consequences affecting companies and municipalities that rely on selling their commercial paper and other short-term debt instruments to these big funds could end up killing the market.

Here’s what you need to know, and what to do…

Is This Embattled Pharma Stock Now a Buy?

2 | By Wall Street Insights and Indictments Staff

Ahead of congressional hearings to discuss the recent price boost for the company’s, EpiPen product, Shah speculated that pharmaceutical company Mylan NV (NASDAQ:MYL) could be a buy.

On the morning before the hearing, Shah said that the bad news was already out there, and as a result the stock was hovering just above its 52-week low. He further said that the stock was likely to bounce back – and he would even be looking to buy if it dipped lower during the hearings.

Sure enough, the stock has tacked on 4.74% since.

Shah also discussed, Microsoft Corp. (NASDAQ:MSFT), Tesla Motors Inc. (NASDAQ:TSLA), the Bayer-Monsanto deal, December’s likely rate hike, and the politicization of the Fed.

Click here for the full video.

Why Tomorrow Is the Most Important Day in the Markets

9 | By Shah Gilani

If you haven’t been paying attention, you could be forgiven for not understanding just how important tomorrow is for the markets.

Tomorrow is day two of two-day meetings being held by the Bank of Japan’s monetary committee and the Federal Reserve’s Federal Open Market Committee (FOMC).

Right now, it’s not what central bankers with god complexes say that matters – even though, yes, they move markets with what they say and even what they don’t say.

It’s what they’ve done and what’s going to happen – no matter what they say – that matters now.

Forget the gobbledygook, cryptic blathering spewing down from Mt. Olympus.

Here’s what going to happen tomorrow – and beyond…

The Situation at Wells Fargo Is Worse Than We Thought

15 | By Shah Gilani

We covered the still-breaking story last week, and I told you how it sold its customers up the river by selling them accounts and services they never signed up for, how the once-cleanest big bank in America sold its soul for a tiny fistful of dollars.

It’s already old news that the bankster culture club bred another scandal of almost biblical proportions on account of 5300 Wells’ “team members” getting the stiff arm out of the bank for doing what they were pressured to do.

It’s old news that the bank paid $185 million in fines to settle civil charges with the Consumer Financial Protection Bureau (CFPB), the Office of the Comptroller of the Currency, and the L.A. city attorney.

And it’s old news that none of that money will do one ounce of good anywhere – it’s only going to be absorbed into the black hole of the federal government.

But there’s still plenty to be said about cross-selling at Wells Fargo.

In fact, it’s worse than we thought…

Shah: Trump’s Economic Plan Heading in the Right Direction

3 | By Wall Street Insights and Indictments Staff

Republican Presidential Nominee Donald Trump revealed his economic plan this week, and while the finer details still need to be ironed out, Shah had good things to say about the fundamentals.

On a recent episode of Varney & Co., he said that cutting taxes and regulation is just what the markets need.

Shah also weighed in on the Bayer-Monsanto buyout, Apple’s disastrous iOS 10 launch, Samsung’s exploding phones, and more.

Click here for the full video.

A Huge “Bond Bomb” Is Set to Explode – Here’s What You Need to Know

9 | By Shah Gilani

I recently told you that volatility is about to come back to life.

In fact, it’s already happening.

From the close last Thursday through the close yesterday, markets have fallen 2.48%. That’s the power of volatility.

Sometimes it’s a seasonal phenomenon. Traders return from the summer doldrums and markets resume normal business – and volatility gets up of the floor and starts scaring traders again.

This year, though, the timing could not have been worse.

Right now, there’s a massive $400 billion cross-market bomb sitting there, waiting for something to set it off – and market volatility could be just the thing to blow it up.

Today I’m going to tell you where this bomb is planted and how a spike in volatility could light the fuse.

Here’s what you need to know…