Articles About The World Markets

Beware: Russian Worm Burrows Into Our Mobile Banking

7 | By Shah Gilani

This is a public service announcement. Really, you need to read this!

If you think your mobile banking app is safe, think again.

Right now, as in this very second, if you have a mobile banking app connected to USAA, Citigroup, American Express, Wells Fargo, Bank of America, TD Bank, JPMorgan Chase, BB&T or Regions Bank, you could be in deep Svpeng.

Svpeng is a breed of malware that targets your mobile device. It doesn’t come from your bank, but gets onto your device through a “social engineering” campaign that uses text messages as a medium of infection.

The worm originally cropped up in Russia last year, where it was used to steal credit and debit card data from mobile phones. The American version does something different – and even more insidious.

You don’t want to get caught in this trap. Now, so you’ll know how to avoid it, I’ll tell you exactly how this worm turns …

Warehouse “Rats” Could Ignite Chinese Credit Crisis

19 | By Shah Gilani

Everyone knows that China is the world’s largest consumer of several commodities, including copper, iron ore, and aluminum.

Everyone knows the Chinese have been stockpiling tons of these same commodities.

But not everyone knows that international banks have been making huge loans to borrowers that use these warehoused commodities as collateral.

Well, wouldn’t you know it? There may be a nest of rats in those stockpiles.

Chinese authorities and some of the banks that make these commodity collateral-based loans are investigating both borrowers and those warehouses. They want to determine if the borrowers fraudulently obtained multiple loans by hypothecating, or pledging as collateral, the same stockpiles of commodities over and over again.

While this is obviously bad news for the loaners, the amounts of commodities involved make this potentially a worldwide crisis. And now I’ll tell you exactly what these “rats” are doing not only to the involved banks, but also the Chinese and world economies …

Syria and the Markets and Our Own Bad Government

136 | By Shah Gilani

Let’s talk about Syria and how what’s happening there is affecting the markets.

I see oil rising to two-year highs. I see gold rising to three-month highs. Let’s see, what else is being affected? Oh, that would be nothing.

And today we find out that, with a touch of some levers somewhere, U.S. GDP growth wasn’t really 1.7% in the second quarter, it was really 2.5%.

Let’s talk about the GDP growth revision and how that’s affecting the markets.

I see oil coming off its Syria-inspired spike and gold giving up some recent gains. Let’s see, what else is being affected? Oh, that would be nothing. Well, maybe bonds just a bit.

Let’s talk about the U.S. government – the government of the most powerful nation on earth – and how its incompetence and interference and manipulation are affecting the markets.

Right this way…

Why I’ll Take the Free Market Over Government Programs Any Day

40 | By Shah Gilani

On Saturday I was researching a new article for Money Morning (it’s coming out tomorrow) about the effects of stimulus (or lack thereof) on the job market.

That’s when I Googled “list government jobs programs in the past five years.”

And there, on the very top of the page that had only 943,000,000 results, was the link to a page called “Government is Good – The Forgotten Achievements of Government.”

OMG (text-talk for “Oh My God!”), I thought to myself when I found the site, this is going to be funny!

It’s not.

Government is Good is “A web project of Douglas J. Amy, Professor of Politics at Mount Holyoke College.”

The professor cites 18 government “programs” that we are all better off because of. Some you can agree with; others can be opened and bled with an objective-edged scalpel, or a dull butter knife.

But it’s the first and most encompassing “program” he cites – that in fact isn’t a program at all but more of a pogrom – that deserves a swift slicing and dicing into reality.

The Professor should stick to politics, which is the art of doubletalk. When he’s talking about economics, markets, and business cycles, he’s in my house. And there ain’t no B.S. allowed in my house.

Let’s set him straight.

The Next Bank Meltdown Will Be No Accident

27 | By Shah Gilani

Big banks turned in a pretty stellar first quarter. All but one beat profits expectations. But as I told you earlier this week, I’m now out of these stocks completely.

Do you want the truth about what shape banks are in right now? Sure you can handle it?

I’m sorry; I can’t tell you the truth.

Regulators can’t tell you the truth.

And the Federal Reserve won’t tell you the truth.

No one can tell you the truth. That’s because banks don’t tell the truth. And neither does the Federal Reserve.

You won’t know the truth… until the next meltdown (which, by the way, is coming). Because in an acceptable kind of way, it’s hidden from regulators by banks themselves – with the aiding and abetting winks and nods of central banks.

Of course, to the untrained eye, it’s all a matter of unintended consequences that result from trying to regulate and safeguard the world’s agonizingly complex financial systems.

That’s what they want you to believe. It’s not the truth.

The truth is, the next meltdown will be no accident, either…

Thieves, Cheats, and Liars

40 | By Shah Gilani

Let’s talk about Cyprus, the International Monetary Fund, and the European Central Bank.

Let’s call what the IMF and ECB are doing what it really is. After all, it is the ultimate institutional goal. It’s thieving.

So let’s start with the thieves…

The IMF, on behalf of the big global banks it serves, and the ECB, on behalf of the big European banks it serves, is stealing, without any authority whatsoever (other than under cover of the European Commission, which they jointly own) depositors’ money in all the banks in Cyprus.

Because all the banks that lent to the Cypriot banks to keep them in business are now about to get shafted.


There’s a few missing seats in their musical chairs merry-go-round, so they are enforcing their right to get bailed out.

How will the banks do it?

Why Nothing Has Changed Since Black Monday

23 | By Shah Gilani

Friday was the 25th anniversary of Black Monday – October 19, 1987, when the stock market fell some 23% in one day.

And it was a hard anniversary to escape.

Not only was it written about in most mainstream newspapers and talked about on all financial news channels on Friday, benchmark stock indexes nodded their remembrance to that special day too, by promptly falling between 1.52% (S&P 500) and 2.19% (Nasdaq).

Maybe stocks fell as a wink and a nod to the past repeating itself, or maybe it was a nod to the future of Europe being muddled once again.

Either way, there are plenty of lessons to be had from what happened back in ’87 and what’s happening now. Let’s take a look.

Twenty-five years ago, computer-generated trading was taking root.

There were lots of newfangled computer-driven trading “models” being tried out. One of them, a scheme started by Kidder Peabody (don’t worry, they’re out of business now) had the cool and important-sounding name “Portfolio Insurance.”

If markets started to fall, and you were smart enough to have bought Portfolio Insurance from Kidder (and some other clowns, I mean clones), they would automatically sell S&P 500 futures short for you, to offset your losses on your big portfolio of stocks.

The thing is, the scheme was self-fulfilling.

As stocks dropped, more and more futures were being sold as “insurance” protection. But whoever was bold enough to buy the futures contracts that were being sold – eventually hand over fist – were hedging themselves by also shorting baskets of stocks to offset their long futures positions. And as more stocks were sold and markets went down further, more insurance was needed, so more futures were sold. Now do you see what happened?

Portfolio Insurance got a bad name, fancy that, and went bye-bye.

Good thing we learned from that.

But not really…

Why the ECB’s Plan Can’t Save Europe

53 | By Shah Gilani

So, Thursday was a big deal. Did you get that?

Markets rallied around the globe, especially European markets and U.S. markets.

But did you get what really happened?

I know you saw the rally, and I’m sure it lifted your spirits. It lifted mine for about a day – that is, until I lifted up the ECB’s skirt to see if their provocative language would leave Europe’s knickers in a twist or not.

If you’re not the kind of person to look at such intimate things too closely, don’t worry. I love all that stuff and am driven to know how all the bits and pieces come together or apart. So, I’ll tell you what I saw up there.

Europe’s knickers certainly are twisted. So much so that if an ill wind blows, everyone is going to see the naked truth.

Let me show you what I mean…

Where Would We Be Without the Fed?

25 | By Shah Gilani

We’ve arrived. We’re exactly in the middle between here and there.

The problem with being here is the “there” part.

I’m talking about where the markets are and where they’re going next. Is “there” backwards or forwards? Are we coming or going from here?

Before I give you my own forecast, and recommendation, let me say this about that…

Here are the two best forecasts I’ve ever heard:

  • “It will fluctuate,” which was what J.P. Morgan famously answered when asked what the market would do, and
  • “I cannot forecast to you the action… It is a riddle, wrapped in a mystery, inside an enigma,” which is what Winston Churchill famously said, not about the market, but about Russia. (The full first line is, “I cannot forecast to you the action of Russia.”) But you get the picture.

American markets are touching their highs. It’s as if everything is clear and sunny. It’s as if forecasting is as simple as looking out the window and calling out what you see.

It’s clear and sunny. Haven’t you looked outside? If only it was that easy…

But when you do look outside, let’s say, through a window, you only see in one direction. The question can then be asked, is the weather you’re looking at coming or going, or is it here to stay?

America, and indeed the global financial markets, came to the precipice of a cliff and barely caught their balance before plummeting into an abyss so deep and black that no one knows where it would have taken us. But my guess is to Hell.

The rope that held us from going over was stimulus, massive stimulus.

That stimulus was never mopped up. It’s been left out there like water on everything after the fire has been doused; and there’s more coming.

The Federal Reserve, which isn’t playing just 18 holes, but seems like it’s playing a marathon round of swinging hard and gently, but constantly swinging, is teeing up another ball with some little marking that reads QEsquared, or something like that.

Here’s my guess on what the Fed is going to do…

What I See Ahead for the Economy

31 | By Shah Gilani

Let’s try and be insightful today, shall we?

Equities have been rallying; we’ll call it the summer rally.

Major benchmarks are only a few percentage points off their highs. It’s all good, right?

I don’t think so.

We could use the old “can’t see the forest for the trees” adage, which means, sure, you can look at all the trees around you and see they’re still standing, because you’re in the middle of the woods. But you can’t see the whole forest, because you’re too flat on the ground and too deep under the canopy.

Let’s rise above the treetops and market highs and look down, to get the big picture.

Here’s what I see…