SocGen Redux - ETF Trader At Center Of UBS Rogue Trade

Yesterday when discussing the blow up of Goldman Global Alpha blow up we predicted, "If 2007 was any indication, and it was, every terminal event for Global Alpha is a harbinger of many, many bad things coming. What is just as ominous is that if Goldman's quant fund has now blown up, then there are tens if not hundreds of other quant funds, and otherwise, that are completely defunct and liquidating, but simply choose to keep quiet. Look for many more such stunner announcements in the days to come" Sure enough not even 6 hours later, we discover that SocGen part two has struck, this time via a UBS' ETF trader (the same as Jerome Kerviel), who has been identified by the FT as 31 year old Kweku Mawuli Adoboli. The trade in question that resulted in the $2 billion loss and forced the arrest of the trader is unknown but very much irrelevant: he was over his risk profile and nobody had stopped him: this reflects very badly on UBS. Look for the bank's Libor rate to surge yet again, as the interbank market struggles to price in the risk of further such trade blow ups in a time of uber volatility. And, as yesterday, we are certain that even more blow ups, at prop desks and otherwise, will now come out of the woodwork.

Netflix Plunges After Subscriber Guidance Cut

The myths of this market continue breaking one after another. After two substantial and long overdue trading blow ups in the past 24 hours, we next turn to that other momo miracle: Netflix, which at last check had plunged 12% to about $180 following an update from the company, in which it said it subscriber growth will come in below plan. Of course, the only ones surprised by this move, are those who are actually long NFLX (and those who bought into Goldman's topticking upgrade which brought the stock to over $300 however briefly). We expect "value investor" of very high conviction, Whitney Tilson, who lately has been known best for shorting low and covering higher, to soon resume his bearish position in the name. And yes, we still expect that the company will very soon come to market with a dilutive equity offering to raise cash and stench the relentless real cash burn.

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The Real World Is Becoming Expensive For Most Americans

Eric De Groot at Eric De Groot - 3 hours ago

The real world, hampered by the inability to eat iPads or other small electronic devices, is growing more expensive each day. CRBFoodstuffs And Year-over-Year (YOY) Change Headline: Consumers, restaurateurs feel pinch of rising food prices Sue Lednicky has been a wary observer of grocery prices' recent steep climb. "It's getting ridiculous to buy food," she said. "It's painful. I was just... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] 

At Least Greek CDS Is Tighter... Oh Wait, It Isn't

Some may find it odd that afer all the measures taken to resolve the threat of a Greek bankruptcy and Eurozone explusion, it is just Greek CDS that are actually wider on the day. We suggest those "some" forget about reality and enjoy the latest massive short covering squeeze which will end only when it does and not a moment sooner.

Here Is This Morning's Massive Econ Data Dump

Just the summary for now:

• CPI: 0.4%, Core 0.2%, consensus for both was 0.2%; Inflation higher than expected
• Initial Claims, +428, Exp. 411K, up from 417K (414K was revised upward of course); 22 out of 21 400K+ prints; Employment looking bad again
• Empire Index: -8.82; Exp. -4.0, , decline from -7.72 previously; 4th consecutive decline; Manufacturing continues to look ugly
• Q2 Current Account: -$118 billion, exp. -122.4 billion; Previous revised lower from -119.3 billion to -$119.6 billion. Irrelevant for current GDP data, and only relevant for the final Q2 GDP revision.

You'd Think The New York Fed Can At Least Afford Error Checkers

It may be time to scrap this morning's Empire Fed Data, because if the Average Employee Workweek data is wrong, which it glaringly is, then who knows what else is totally mistaken in the report.

Watch Bernanke's Remarks At The Systemic Risk Conference

Ben Bernanke will provide brief prepared remarks at the Fed's systemic risk conference starting any minute. Watch it live below. Nothing new is expected to be revealed even though the speech is less than a week away from the FOMC meeting, and will be watched by many.

Wall Street Kneejerk Responses To This Morning's Disappointing Economic Data Barrage

The economic data this morning was bad across the board, as it has been for the past month, and without even looking at the futures we are certain that it is green across the board: nothing reflects reality any more, least of all the stock market, which is now trading based purely on short squeezes (as we warned two days ago), and a spike in hopes for QE4 (QE3 is already priced in). Regardless, here is a compilation of kneejerk Wall Street responses courtesy of Reuters.