Last week, while wishing my newsletter subscribers at Capital Wave Forecast and Short-Side Fortunes a happy New Year, I warned them that 2015 isn’t going to be a happy-go-lucky year.
The one prediction I emphasized over and over was that volatility would be extreme.
We’re already seeing that today with the Dow Jones Industrial Average down more than 300 points and oil (based on West Texas Intermediate pricing) dipping below $50 for the first time since April 2009.
There are many reasons why volatility will be our constant companion in 2015. And there will be many opportunities to very profitably trade volatility – both on the way down and on the way up.
So today, I’m going to start showing you how to profit from volatility across all the asset classes that are going to make or break investors in 2015.
The madness of the manipulation machinery on Wall Street knows no bounds.
Remember credit default swaps (CDS)? They’re the risky financial derivatives traded among Federal Deposit Insurance Corp. (FDIC)-insured banks that, during the 2007-’08 financial crisis, took down Lehman Bros. and almost bankrupted giant insurer AIG Inc. (NYSE: AIG).
Well, they never went away. And now they’re making a comeback, and Wall Street is using them in ever more maniacal ways.
They’re back partly because the recently passed federal spending bill reversed a Dodd-Frank rule that said big gambling banks had to separate CDS into units not guaranteed by the FDIC (aka taxpayers).
While I may come back to that, I’m not writing about Congress‘ latest gift to Wall Street today.
It’s going to make your head spin and, worse, change the way you think about what’s real in America.
Christmas came early this year, for the market that is, by way of a gift from the U.S. Bureau of Economic Analysis.
However, this branch of the U.S. Department of Commerce, didn’t put its gift under anybody’s tree. They put it over all of us.
The gift was headline news that the “third revision” of third-quarter gross domestic product (GDP) showed the U.S. economy grew at a whopping 5% annualized rate, not the 3.9% rate posted in the “second revision.”
The government of the United States will remain open for business thanks to the usual suspects in Congress being open to being bought.
Sometimes it only takes a few phone calls from a deep-pocketed giant bank CEO to remind legislators who butters their bread.
According to Sunday’s Financial Times, bread-butterer par excellence Jamie Dimon, chairman and CEO of mega-fat JPMorgan Chase & Co. (NYSE: JPM), worked the phones hard last week. He called on his legion of congressional peeps and perps to pass the $1.1 trillion spending bill as written.
Why did this patriot risk getting calluses on his fingertips for some pipsqueak legislation?
WASHINGTON, D.C. – A tense battle between warring political parties erupted in Washington yesterday when Wall Street-backed Jihadist demands surfaced in the 1,600-page omnibus spending bill – threatening to first take the U.S. House of Representatives hostage, then all of America.
Intelligence services (obviously not Washington-based) initially identified the financial terrorists as Beltway lobbyists, but later revealed them to be a Big-Bank sleeper cell embedded in God-hating Dodd-Frank legislation, universally decried by the faithful as blasphemous.
In what was meant to be a stealth operation, the plastique-laden provision inserted into the bill aiming to roll-back certain Dodd-Frank rules, instead exploded prematurely.
Too-big-too-fail banks are paying record amounts to settle mortgage-related malfeasance dating back to the financial crisis, and everyone seems to think that’s good news.
It is… and it isn’t.
Not including legal costs and other lawsuits, Bank of America Corp. just settled for $16.65 billion, which beats the previous record $13 billion JPMorgan Chase & Co. paid.
The total and final tab for both banks’ forays into the mortgage securitization sinkhole will never be known. But based on what they’ve paid out so far, their combined costs will easily exceed $100 billion.
Think about that number: $100 billion.
Don’t get me wrong. I’m happy the banks are paying up. And I’ll be sad when they’re done paying, because the damage they caused will linger for decades.
Here’s something to tick you off today, something that you may not have figured out.
Lloyds Banking Group PLC (NYSE: LYG), the United Kingdom’s biggest mortgage lender, had to pay another fine yesterday.
(Yes, Lloyds is that too-big-to-fail bank I used to work for… but that was back in the 1980s, so don’t blame me.)
That Lloyds technically failed and had to be bailed out during the financial crisis and is still about 25% owned by UK taxpayers is beside the point.
Ask Lloyds traders how they feel about being saved to die another day. If they’re honest, and a bunch of them aren’t, they might tell you they’re glad to have the chance to continue screwing whomever they can in order to pad their bonuses.
Today, I’ll tell you all about how banking is an entitlement regime. In fact, it’s kind of like its own monarchy.