October 3. Laugh or Cry

–Friday’s rumor that DB’s fine from the DOJ was to be cut to $5.4b sparked a sharp short cover rally in stocks and was a contributing factor in the steepening of the curve. (2/10 up 3.2 bps to 84.5).  Over the weekend, this rumor remains unsubstantiated, yet stocks are maintaining their bid.  I don’t know whether to laugh or cry in terms of the way the market trades.  Actually, that phrase comes to mind because German Economy Minister Sigmar Gabriel said of DB, “I did not know if I should laugh or cry that the bank that made speculation a business model is now saying it is a victim of speculators.”

Oct 2, 2016 October Tremors

Pitchforks, torches and sorcery

From a friend, “I’ll tell you what…anybody who is successfully calling the turns in this equity market over the past few months… is a witch, and should be burned at the stake.”

So, logically….

Sir Bedevere – “What ALSO floats in water? ….. A Duck!   Exactly!  So, logically….If she weighs the same as a duck…she’s made of wood!   And therefore, SHE’s a WITCH!   Burn her.”

https://www.youtube.com/watch?v=zrzMhU_4m-g  [Monty Python and the Holy Grail]

WHAT IS IT ABOUT OCTOBER?

From the latter part of September on, the money market was megaphoning warnings to the entire world.  But a belief in miracles kept people from selling what remained of their speculative holdings.

…They were solvent and the collateral was good enough.  But the trouble was that once these firms borrowed money on call there was no prospect of the lender getting that money back.  They simply said they couldn’t pay it back and the lender would willy-nilly have to renew the loan.

Things got worse and worse.  Finally there came the awful day of reckoning for the bulls and the optimists and the wishful thinkers and those vast hordes that, dreading the pain of a small loss in the beginning, were now about to suffer total amputation- without anesthetics.  A day I shall never forget, October 24, 1907.  –Reminiscences of a Stock Operator

The LA Times reports there’s a been a seismic swarm under the Salton Sea near the San Andreas fault, which vaults the odds of a major magnitude 7 or higher earthquake “over the next seven days as high as 1 in 100 and as low as 1 in 3000.”  Seismologists  have been expecting a big one, which “happens on average in this area once every 150 or 200 years, so experts think the region is long overdue for a major quake.”  Echoes of the October, 2014 treasury melt up, about which Jamie Dimon wrote, “Then on one day, October 15, 2014, treasury securities moved 40 bps, statistically 7 to 8 standard deviations –an unprecedented move– an event that is supposed to happen only once every 3 billion years or so….”

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If the start of this week’s missive seems a bit disjointed, maybe it’s because that’s how markets have been trading.  The focus of the week has been squarely on Deutsche Bank.  From Barrons: “The storm had been brewing since the U.S. Justice Department was reported in mid-September to be seeking a $14 billion penalty for Deutsche Bank’s alleged transgressions in the mortgage bubble and bust.”

Actually, from last November to February of this year the stock was cut in half, from 30 to 15. Co-CEOs Jain and Fitschen unexpectedly resigned in June of 2015.  Keen observers might actually point to those events as a signs of a brewing storm.  In fact, one might say a warning was being ‘megaphoned’.  In terms of the DoJ fine, DB said ‘we won’t pay it.’  And miraculously on Friday came rumors that the fine had been cut to $5.4B, sparking rabid short covering (still unconfirmed as of Sunday morning, though what is confirmed is that Italy is now charging DB with collusion in falsifying Paschi’s books).  In a completely UNRELATED turn of events, Apple’s fine to the EU was cut to $5.6 billion from $14.5 billion.  THAT’S A JOKE [insert legal disclaimer here].  But…it wouldn’t surprise me if the ‘back tax’ bill to AAPL does get sliced, because that, mes amis, is how things are <working> in this world.  That’s why the guy went into the Apple Store in France and smashed every i-phone with a boule.  A BOULE!  Because a hammer would have been gauchely American.

It all ties back to the broken window fallacy put forward by the famous French economist Frédéric Bastiat: One comes to the conclusion it is a good thing to break windows [or i-phones], it causes money to circulate, and the encouragement of industry in general.  But Bastiat continues, “Stop there! Your theory is confined to that which is seen; it takes no account of that which is not seen.”  It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented.

This is the parable of the broken window or …the 21^st century parable of the central bankers.   They believe these negative rates are good and that nothing bad can happen from their benevolent window smashing.  There is little sense of that which is not seen, the growing pension liabilities, money flowing to financial assets rather than capex.

By the way, S&P downgraded Illinois GO’s one notch to BBB on Friday, just two notches above junk, citing the lack of a budget, $111 billion unfunded pension liability and a growing number of unpaid bills (RTRS).  Illinois had earlier in the day announced it will stop doing business with Wells. As one client quipped, “You know it’s bad when a state rated junk won’t do business with you!” (thanks RU)  Note that in 2014, Illinois’ current-dollar GDP was $742.0 billion and ranked 5th in the United States.  For comparison that’s about the same size as Turkey (but of course with less dysfunctional leadership in the latter).  About half as large as all of Canada.  But the market ignores it.

In fact net changes on the week were rather small, with treasury and bund yields down a couple of bps, stocks and the euro nearly unchanged.  The Eurodollar curve remains linearly locked in cement, with the first ten one-year calendar spreads between 13 and 14.5. Monthly ranges have been only 5 bps.  It’s almost amazing that EURUSD  is so un-volatile, given the possibility of another intertwined banking crisis.  However, what DID move is crude oil; up 376 to close at the high of the week.  From Bloomberg: In U-Turn, Saudis choose higher prices over free oil.  Just months ago, Al-Falih’s predecessor, Ali Al-Naimi, proclaimed it didn’t matter whether oil prices went “down to $20, $40, $50, $60 a barrel — it is irrelevant.” Al-Falih now says prices, hovering under $50 a barrel, need to rise to encourage long-term investment.  

It was Q3 last year when oil made its death plunge to the mid-20’s into the beginning of this year.  If oil remains here to a bit higher, then the Fed’s predictions of 2% inflation will start ringing true by Q2.  Note that the price of oil is highly correlated to forward inflation expectations, which the Fed regularly cites.  YOY Core PCE printed 1.7 last week and appears to be on an uptrend.  A small, ironic example of price increases (without of course, any benefit of economic growth) is this: Minnesota is raising Affordable Care Act  premiums 50-67% to avoid a collapse in the program.

Crude oil (chart below) potentially is making a head and shoulders bottom.  A close above 53 would target 75 to 80.

Unemployment report on Friday.  ISM Monday expected 50.2.  German holiday Monday.  Golden week in China.

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https://en.wikipedia.org/wiki/Parable_of_the_broken_window

Sept 30. Black Moon

–The catalyst yesterday was news that several large accounts were pulling excess money from DB, which sent the stock (and stocks in general) hurtling to new lows.  It doesn’t really matter now if Dijsselbloem or other government officials solemnly declare their faith in DB.  Who are you going to believe, a gov’t spokesman or money walking out the door?  It’s another poignant reminder that confidence is the name of the game.  Once it starts to crumble, things can collapse in a hurry. “How did you go bankrupt?”  Bill asked. “Two ways,” Mike said. “Gradually and then suddenly.” * Compounding the issue is the fact that Central Banks are no longer considered omnipotent as was the case in previous crises.

–Crude oil was up another 60 cents yesterday, though this gain has evaporated as of this morning.  Higher oil should conceivably help risk assets, but when every Fed official volunteered that lower oil prices were a net positive early in the year, how does the flip side look?

–Bank of Mexico yesterday raised rates by 50 bps from 4.25 to 4.75 to stem weakness in the peso. The currency is lower this morning.  As Dr Peter Venkman said in the beginning of Ghostbusters, “The usual stuff isn’t working.”

–In terms of market action in rates, there was little of it besides a modest bid to the back end of the curve.  In Euro$’s, Dec/March made a new low settle of just 2.5.  TYZ this morning edged to its highest level since mid-August at 131-19.  Though the buyer of 20 delta TYZ calls has ceased his program, there are are still 95k of each strike open with the majority held by the one buyer; deltas are now 28 and 17.  Implied vol in treasuries remains mired at the lows.

–News today includes Personal Income and Spending expected +0.2 and +0.1 with Core PCE +1.7 yoy.  Chicago PMI expected 52.0

–Black moon tonight (two new moons in a calendar month).

*Hemingway, The Sun Also Rises

Sept 28. 5/30 chart US Japan Germany

–Tuesday’s session began with new lows in DB and associated risks to global equities, but ended with a slight rise in DB, which has further firmed this morning as the CEO says that capital injections aren’t needed.  Euro was marginally lower.  Large mover was crude oil, down 140 late as attention now shifts to the November OPEC meeting for possible production cuts.

–The trade mentioned yesterday  morning (+27k week 5 TY 131.5c expiring on Friday), was exited yesterday, contributing to a softening of vol.  I marked USZ bond vol at 9.9. (more below)

–The ED curve flattened with red/gold pack spread closing at 40.5 (-2.375) and approaching recent the recent low of 38.  The front end of the curve was interesting, with weakness in EDZ6 as thoughts of funding pressures emerged, due to weak bank stocks.  There was a buyer of 75k EDZ 9887.5p for 0.75, looked to be a cover but not much change in open interest.  EDZ6 has huge outstanding positions, with 1.58m in the EDZ6 contract itself (the most of any ED), and 900k 9900p, 815k 9887.5p.  There was a large buyer of EDH7 in the early part of the day, apparently a short cover with OI -18k.

–2/10 treasury spread also under pressure (in part due to new 2 yr) closing at 81.4.  5/30 spread fell as well, to 116, down slightly over 4 bps on the day.  However, it’s well off the low of 104 set earlier this month.  As the attached chart shows, 5/30 in Japan bottomed at the end of June and has rallied since.  In Germany, the low was a month later at the end of July around 86, now at 102, and the US was the last to bottom at the end of August.  Perhaps these curves didn’t actually “bottom” but are just bouncing…the low level of USZ vol under 10% would suggest that interpretation.  However, given the change in BoJ policy, it certainly seems worth the tactical risk to be long US bond vol.

–Both Yellen and Draghi speak today, the former in front of the House Fin Services Committee, on regulation.

Sept 26. The Clinton-Trump Moment

–DB down another 6 % to new low as Merkel reportedly won’t support it with state money.  Turkey downgraded to junk.  There are several stories this morning about problems in China, mostly a re-hash of last week’s news.  For example, in an interview with the BBC Ken Rogoff said, “If you want to look at a part of the world that has a debt problem look at China. They’ve seen credit fueled growth and these things don’t go on forever.”  The point is that financial players are more intertwined than ever.  The ‘Lehman moment’ has been quoted a million times; it was eight years ago (in September) that Lehman filed for bankruptcy.  But it was fully 15 months prior to that when Bear Stearns told investors that two of their mortgage funds were nearly worthless.  And earlier in 2007 there were a couple of high profile bankruptcies by subprime lenders.  Of course, the S&P’s kept shaking off the bad news, making new highs in Q3 2007 before the crash. Thank goodness we have a new cycle of i-Phone 7s to pull the globe out of this malaise.

–The other thing that could conceivably rattle some nerves today is the Clinton Trump debate this evening.  No matter who wins, we’re going to see the federal deficit grow, and it will again be up to the federal government – whether through infrastructure spending or other means – to spur the economy.  State and local governments are already seeing reduced tax revenues and are therefore likely to undergo belt tightening.  The Rockefeller Institute report out this month has the following title: Weak Stock Market and Declines in Oil Prices Depressed State Tax Revenues; Declines in Q2 Raise a Yellow Flag for State Budgets.

Sept 25. Vol in an uncertain world

• Fed stands pat and doesn’t provide clarity for December
• Japan targets ten year rates; steeper curve beyond
• Japan probably of less importance than China (bad debts)
• Draghi in front of Bundestag/ DB
• US and vol levels

The Fed didn’t hike, much to the consternation of some, but additionally, Chair Yellen’s testimony leaned a bit to the dovish side.  As a result, yields fell and the curve flattened.  It’s somewhat interesting to note that while Japan is apparently trying to steepen its curve in order to help financial institutions, the effect of the Fed’s meeting was a flatter curve; a bid to longer duration assets, both bonds and stocks.  As Tad Rivelle pointed out so eloquently in his paper ‘Twilight of the Central Bankers’ , “Growth is not a simple function of higher asset prices.”  We also had an evaporation of vol in the interest rate arena, to levels which seem untenable.  More on vol levels below.

First, the Bank of Japan is sort of like the movie Planes, Trains and Automobiles; they can’t quite find a vehicle to reach their inflation target.  “You’re going the wrong way!” “Oh he’s drunk.  How do they know where we’re going?”  This week the BoJ left  the funding rate at -10 bps but shifted to yield targeting on the ten year, which should tend to steepen the curve beyond that point and provide relief in the form of carry to insurance companies and other financial institutions.  Bernanke said in his blog, “Pegging a long-term yield as the BoJ now plans to do, amounts to setting a target price rather than a target quantity.  …In that regard, it was puzzling that the BoJ retained its 80 trillion yen quantity target for JGB purchases; one of these two targets is redundant.”

There were several charitable research notes mentioning that yield targeting had a successful precedent in the US in the 1940’s, but that episode was specifically related to wartime financing, and ultimately the US treasury absorbed much of the losses, as also occurred in the 2008/09 crisis.  In other words, it’s hard to imagine a graceful exit to yield targeting.  There’s a paper on the Fed’s website that summarizes this period.

In a compromise struck on March 20, 1942, Federal Reserve and Treasury officials agreed to cap the long-term Treasury yield at 2.5%, the seven to nine year yield at 2%, and the one year rate at 7/8 %.  The Federal Reserve strenuously opposed the Treasury’s initial proposal to increase reserves, but eventually acquiesced to an alternative plan of posting a 3/8 % rate on short-term Treasury bills.  At the time, this 3/8 % peg was seen as relatively innocuous, partly because the rate was slightly higher than the then-prevailing rate of 1/4 % on Treasury bills, and also because it was not then perceived as an indefinite commitment.  Interestingly, the caps on long-term interest rates were never formally announced, perhaps to avoid embarrassment in case the policy proved unsuccessful.

The maintenance of the low bill rate peg during much of the postwar boom is remarkable in and of itself.  The Federal Reserve Bank of NY had advocated an increase in the bill rate as early as 1944, but Chairman Eccles was reluctant to make such a move until the end of the war.  One reason for this reluctance had to do with the stability of the banking system.  Banks had absorbed a large amount of government securities relative to their available capital during WWII, which left them particularly vulnerable to increasing interest rates… If the price declines were sharp they could have highly unfavorable repercussions on the functioning of financial institutions and if carried far enough might even weaken public confidence in such institutions.

In March of 1951…the Fed and Treasury negotiated the Accord that ended the direct setting of long term interest rates, thus recognizing “the dilemma presented by the conflicting problems of debt mgmt. and credit restraint in the inflationary situation which developed.”  … One difficult issue was how to deal with losses inflicted on bondholders by the rise in long term rates. The solution was to allow bondholders to convert old 2.5% bonds into non-marketable 29 yr bonds convertible into 5 yr notes…  Thus the treasury absorbed much of the losses associated with its renunciation of the interest rate caps.

Perhaps a bit too much on Japan above, but its central bank has been a key player in fighting deflation.  Also, as shown above, economic problems tend to rhyme.  Given the fact that in terms of global GDP China has completely overshadowed Japan (in 1980 Japan was nearly 8% of global GDP and China was 5%, while in 2008 Japan was less than 6% and China nearly 18%), maybe it’s better to spend some time there, and indeed there was dissection of both BIS and Fitch reports suggesting China’s debt growth is unsustainable.   From the Telegraph, “Bad debts in the Chinese banking system are ten times higher than officially admitted, and rescue costs could reach a third of GDP if authorities let the crisis fester, Fitch Ratings has warned.”  Really the move in the renminbi says it all, having been at 6.1 at the end of 2014 and trending ever lower (in terms of the dollar) to nearly 6.7 now, (the high set in Q2).

Moving to the ECB, Draghi is scheduled to speak to a German parliamentary committee on Wednesday and take questions.  RTRS: “Schaeuble, a fierce critic of Draghi, urged members of the German finance committee to ask tough questions about Draghi’s monetary policy when he testifies before the committee on Wednesday, the newspaper said, citing meeting participants. …Draghi is due to address the finance and budget committees of the German parliament on Wednesday.”  Also, according to a report in Focus magazine picked up by BBG, Merkel said she won’t use state money to bail out DB (which closed near its low).  A global case of schadenfreude as a depositor bail-in looms?

Now to the US, where Monday’s debate between Clinton and Trump holds center stage.  There hasn’t been much of an election trade, though many markets have priced implied volatility higher after the election than immediately preceding.  For example, a friend noted that in the e-minis, there’s a 2% vol spread between week-3 Oct and week-3 Nov, and nearly a 2% spread between GCX and GCZ.  In treasuries, vol simply seems too low against a backdrop of 1) a critical employment report on Oct 7, 2) the upcoming US election, 3) general erosion in the faith of central banks and more specifically 4) the idea that Japan could spark a shift to steeper curves globally.  Clearly vol suppression is related to yield suppression in a world of the central bank put, but there was an interesting (bigger picture) note related to the last G20 meeting:  ‘Heads of state and government representing the world’s largest economies used words like “fear,” “uncertainty,” “risk,” and “terror” 87 percent more often on average than during last year’s gathering.’  Consider the chart below of ten year vol.  Does it make sense to be at 2014 lows?

A quick thought on the election.  In the last two years the Mexican Peso has lost nearly 50% of its value, partially due to the decline in oil and more recently over fears of Trump.  Some markets are clearly more concerned about the election outcome than others.  It’s worth considering that a large infrastructure re-building program under Trump could occur, which would stimulate the economy (and blow out the deficit).   Note that state tax revenues are reflecting a weakening environment: “According to preliminary estimates from Rockefeller Institute of Government, tax collections will be down 2.1% in the second quarter relative to last year, reflecting a decline of 3.3% in personal income taxes and a 9.2% plunge in corporate tax collections.”  Also, the three month moving average of the Chicago Fed Nat’l Activity Index has had nineteen consecutive negative months.

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https://www.tcw.com/Insights/Economics/09-19-16_Trading_Secrets.aspx

http://www.reuters.com/article/us-ecb-draghi-germany-idUSKCN11T2ME

https://www.federalreserve.gov/monetarypolicy/files/FOMC20030618memo01.pdf

http://www.bloomberg.com/news/articles/2016-09-23/anxiety-spikes-among-g-20-an-analysis-of-un-speeches-shows

https://www.washingtonpost.com/world/asia_pacific/new-godzilla-film-imagines-a-strong-japan-pushing-back-against-the-us/2016/09/23/ddd7d5c4-7f70-11e6-ad0e-ab0d12c779b1_story.html

Sept 23. Risk premium? What’s that?

–Implied vol continues to be crushed as the curve flattened yesterday.  2/10 fell 2.3 bps to 85.5.  Red/gold euro$ pack spread eased 2 to just over 44.  Yesterday I marked TY vol (Dec) at just 4.4, with the 131 straddle 1’58/59. Settled 1’59 but was trading 1’58.  On Monday the one-week atm straddle was nearly half that level, trading just above 50 in front of the FOMC.  There are 64 days to go in for December, and 29 for November; TYX straddle settled 1’13 or 4.1.

–Today is October option expiration, with tens targeting the 131 strike and bonds at 168.

–Odds for a hike in December remain around 50% depending on measurement.  Nov/Jan FF spread settled at 12.5 yesterday.  However, it’s not until July’17 that a FF contract fully reflects one hike; FFN17 settled 9935, the first contract with a spread greater than 25 to the October contract.

–Not only did Nasdaq scream to a new high yesterday, hi-yield etfs HYG and JNK are nearing yearly highs as well.  However, credit issues are still apparent in some parts of the globe with DB again lower this morning.  Also, there is continuing coverage of the explosion of China’s debt.  Yesterday the Telegraph’s AEP ran (another) story on the expansion of non-performing loans.  http://www.telegraph.co.uk/business/2016/09/22/fitch-warns-bad-debts-in-china-are-ten-times-official-claims-sta/

And this morning, the Bank of England is also raising warning flags.  http://www.businessinsider.com/bank-of-england-on-china-debt-2016-9

Of course, the emerging mkt etf EEM posted a new high for the year.  Soft Fed equals weak dollar equals stronger commodities therefore buy emerging markets.  Simple right? …although not not particularly good news for Japan and Europe.

Sept 22. It’s just unclear in a different way

–There’s a must-read piece out by Tad Rivelle titled ‘Twilight of the Central Bankers’.  Here’s the link:

https://www.tcw.com/Insights/Economics/09-19-16_Trading_Secrets.aspx

The author thinks the Central Bank playbook of attempting to juice up asset prices to spur growth is running out of rope.  “The explanation is simple: growth is not a simple function of higher asset prices.”

–What did we get yesterday?  An expected pass by the Fed, followed by a dovish press conference with Yellen noting that some signs of inflation expectations may be slipping.  (What could possibly be the upside of making that statement?)  On the projections, Core PCE inflation was actually shaved down by 0.1 to 1.8 for 2017.  Thus, asset prices rose.  And the dollar declined.  Japan and Europe desperately want weaker currencies to pull up their own inflation readings, but Yellen was of no help to them.  Need a life line?  Let me toss you this anchor.

–Do you recall those mad scientist movies- in black and white – where an electric shock is administered to dead tissue and it jerks to ‘life’?  That’s the knee jerk reaction of both stocks and bonds rallying, with the curve flattening, in a dead market, courtesy of Yellen, who is paralyzed by her own analysis.  Can’t blame the dissenters, of which there were three.  Could the contrast between Yellen and Volcker be any starker?  He single-handedly raised rates against near universal objections to break an inflationary mindset.  Yellen just wants to make sure we have safe spaces.  And I don’t know what Japan is doing.  If you set the ten year rate, how and when do you exit from that policy?   At some point, if we are in the twilight of central banking, both stocks and bonds will fall together.

–In any case, October Fed funds instantly went from a trade of 9956 during the morning to a close of 9960.5.  The Nov/Jan Fed Funds spread settled at 13, indicating slightly better than 50/50 odds of a hike in December.  The euro$ curve flattened slightly.  5/30 treasury spread dropped 5.2 bps to 119.7.  Implied vol was simply crushed.

–Stanley Fischer tells a story about his time at the head of the Bank of Israel: (from Reuters)

He decided to keep the rate unchanged until the following month, he recalled telling his advisers, when the situation would be clearer. “It is never clear next time; it is just unclear in a different way,” came the response from his second-in-command.

And so, Fischer said, he learned his lesson: “don’t overestimate the benefits of waiting for the situation to clarify.”  Maybe he should pass that anecdote along to Yellen.

Sept 21. BoJ’s out, Fed up to bat next

–BoJ meeting not causing much of a market reaction with the yen (future) nearly unchanged but the curve steeper,   As the FT says, the BoJ intends to cap ten year yields and overshoot its 2% inflation target through yield curve control.  Something like that.

–This afternoon we await the Fed’s decision and press conference.  Though some shops continue to think a hike could occur, the overwhelming expectation is for no move.  However, there were some large trades done as a hedge.  For example, a buyer of 80k EDV 9887p up to 0.5 (trade was an exit).  I would note that Nov/Jan Fed funds spread closed at its high of 10.5 bps signaling approx 40% odds of a hike in Dec.  Oct/Nov ED spread settled 0.75, should be closer to 2.5 given the FF spread in my opinion.  There are several articles about the ‘dot plot’ and likely changes.  I’m not bothering with that particular exercise other than to note that the Fed’s forecasts have consistently been off the mark.  Many Fed officials have said they now believe the neutral rate is lower, and of course the ‘longer run’ dot average has declined to reflect this belated epiphany (which the market has been indicating forever).  My guess is that we’re coming very near to the point that the dots will invert with market pricing.  Which, as a friend often says, ‘will set the cat amongst the pigeons.’  By very near, I mean perhaps by Dec 2017, and specifically mean that the yield on gold eurodollars will exceed the average ‘longer run’ dot.

–DB made a new low yesterday and is not seeing a bounce this morning.  My belief is that a continued sell off will spill over into EUR weakness, a gratifying outcome for the ECB, but for all the wrong reasons.

Sept 20. And then, depression set in.

–Not much occurred in the markets yesterday.  Interest rate futures were largely unchanged.  However, the Nasdaq future made a new contract high, but then reversed and had an outside day with a lower close: Key Reversal.  However, other stock index futures didn’t fare badly and ranges weren’t particularly large, so it might be a bit of stretch to call a top.  (Though that’s what I’m doing).  Take a look at a stock like GE.  It used to be the largest cap stock in the US, and it’s still fairly large at $266b, but it’s off more than 10% from the high set in July and closed on the low of the day yesterday.  Also, take a look at Deutsche Bank.  It closed down 3% at 12.97 and is nearing it’s all time low.  According to BigCharts the market cap is $16.54b.  According to BBG it’s $17.9b.  The US Justice Dept wants $14b.  

• ABOUT:
  Former member of the CME specializing in interest rate options and yield curve strategies.

  The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results.