The Contrarian

“In the investment markets, what everyone knows is usually not worth knowing.”

The Fed: Another “Accidental Info Leak”

(Bloomberg)

Fed Accidentally Released Confidential Staff Projections

by Christopher CondonCraig Torres

July 24, 2015 — 8:08 AM PDT Updated on July 24, 2015 — 4:55 PM PDT

The Fed said in a statement that projections prepared for the June 16-17 Federal Open Market Committee meeting were posted in error on a public website on June 29. Staff projections are normally released with a five-year lag when transcripts of FOMC meetings are published.

The staff projections show the federal funds rate at 0.35% in the fourth quarter of 2015, up from the current range of zero to 0.25 percent. After the June meeting, the Fed said the rate would be substantially higher than that at year end, at 0.625%. The Fed said the staff forecasts don’t represent the views of policy makers.

In the most recent hearings with Fed chair Janet Yellen, several members of Congress, including Jeb Hensarling, chairman of the House Financial Services committee, criticized her for not coming forth about previous leaks and circumventing the issue. One leak of internal policy deliberations took place in 2012 and the Fed has not yet disclosed how this happened.

In a further incident in April 2013, a member of the Fed’s congressional liaison staff accidentally e-mailed a copy of the minutes of an FOMC meeting to more than 100 people, including bank lobbyists and congressional staff, about 19 hours before the minutes were due to be published.

If you are trading the interest rate markets, and you get 19 hour advance notice of an important release, you have ‘gold.’

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14 years in prison for market manipulation: A former UBS Group AG and Citigroup Inc. trader was sentenced to 14 years in prison in London after being found guilty of conspiracy to rig the LIBOR benchmark interest rate.

Libor is used to price more than $350 TRILLION of financial contracts globally, including mortgages, loans, credit cards, etc. The trader was called the “ringmaster” of a global network of 25 traders and brokers from 10 different firms who participated.

They did this for many years. It confirms everything we have been saying on the topic for years. It’s hard to believe that 25 people can rig this huge, multi-trillion global market. Can you believe how easy it is to rig gold, silver, bonds, and stocks?