Triple Whammy Shocker: Goldman Shutting Down Sigma X?

Back on March 21, before the release of Michael Lewis' Flash Boys and before the infamous 60 Minutes interview, when Goldman COO Gary Cohn wrote his infamous WSJ Op-ed bashing HFT, it was clear that something was afoot. That something became promptly clear when it was revealed that Goldman is among the core backers of the pseudo dark-pool IEX exchange popularized as the protagonist in Flash Boys, and juxtaposed to the frontrunning, and faceless, HFT antagonist that Lewis maanged to demonize so well in the span of a few hundred pages, he promptly provoked a renewed investigation by the FBI, the SEC and DOJ into HFT.
A few days later, the shocker became a double whammy when Goldman announced that in addition to turning its back on HFT which had served it so well for years, the firm would also say goodbye to the NYSE and its designated market maker post, the last remaining legacy of its $6.5 billion Spear Ledds & Kellogg acquisition from 2000. That Goldman was asking mere pennies on the dollar for the residual assets also showed just how "highly" Goldman valued said legacy operation.
This is what we said at the time of the announcement:

... What is unexpected, is the complete transformation Goldman has undergone in in the past several weeks: first Goldman, the bank that everyone else on Wall Street always imitates, waving goodbye to HFT, and now departing the NYSE?

When the world's most intelligent FDIC-backed hedge fund, pardon, bank says the current market structure is no longer necessary to Goldman, people notice, and promptly imitate.

To be sure - if this is not indicative of a major storm coming for traditional "lit" market structure (as opposed to dark pools of which IEX, until recently, was one and where Goldman has nearly complete dominance with Sigma X), we don't know what is.

Moments ago we got the third and final "shocker" in this series of stunning disclosures by Goldman, this time involving Goldman's own "unlit" venue - one involving its own Dark Pool - the infamous, and market dominant Sigma X, which according to the WSJ, is about to be shut down!

Goldman Sachs Group Inc. is considering shutting down one of the world's largest private stock-trading venues, according to people familiar with the matter.

In conversations with market participants over the past several months, Goldman executives have broached the subject of closing its so-called dark pool trading operation, known as Sigma X, the people familiar with the matter said.

Goldman executives are weighing whether the revenue the firm generates from operating Sigma X is worth the risks that have been highlighted by a series of trading glitches and growing criticism of dark pools, the people said.

No decision is imminent, and Goldman could keep the business, according to people familiar with the discussions.

That this is a momentous development, if true, needs no explanation. Because while Sigma X may or may not be the top dark pool in the industry - a claim that Credit Suisse can possibly make alongside Goldman- Sigma X, which we have written about extensively over the past five years, certainly provides Goldman with not only extensive daily revenue but also gives the firm an inside look into what happens in the institutional marketplace, since the bulk of hedge funds and most mutual funds transact almost exclusively on dark pools now in an attempt to avoid precisely the parasitic HFT algos that have been the topic of so much discussion in recent days.
And if Goldman is willing to exit not only HFT, not only legacy lit markets entirely, but also its dark pool, then something truly big and transformational is coming to not only the existing market structure, but something that will be so disruptive, that for once we can't wait to find out just what Goldman has up its sleeves, sleeves which also happen to house the key lawmakers in the Beltway.
Why is Goldman doing this now? We don't know. It is worth noting however that on page 234 of Flash Boys, Michael Lewis cites Ron Morgan and Brian Levine, Goldman Partners and co-heads of Goldman's global stock markets, who said that "Unless there are some changes, there's going to be a massive crash, a flash crash times ten."


Goldman exiting virtually all venues except the upstart IEX is certainly a major change.
Another thing that is certain: take a long, hard look at the market as you know it today, because in less than a year it will be history.

Meet the secretive electronic trading pool Goldman Sachs is considering dumping

No, Sigma X is not a Goldman Sachs fraternity. It’s the electronic trading platform the bank may be about to shutter (paywall), the Wall Street Journal reported yesterday. (People familiar with Goldman’s thinking tell Quartz that the firm hasn’t made any decision on the platform.) Goldman uses Sigma X to help companies and hedge-fund clients sell big blocks of shares. Closing it wouldn’t be all that surprising, given recent events in the marketplace: Regulators including the Department of Justice have intensified their scrutiny of electronic trading and high-frequency traders in particular. After penning his latest novel Flash Boys, Michael Lewis created a relative storm of controversy on the Street by proclaiming the the markets “rigged.” Goldman president and COO Gary Cohn wrote an article in the Wall Street Journal backing curbs on HFTs, and the firm issued a memo supporting a Sigma X rival, IEX Group, featured in the aforementioned Flash Boys. Reports emerged that Goldman is in talks to sell its equity market-making unit, formerly known as Spear, Leeds & Kellogg, to a Dutch firm. So here’s the short history of Goldman’s dalliance with Sigma X more @ http://qz.com/197261/meet-the-secretive-electronic-trading-pool-goldman-sachs-is-considering-dumping/

Close the Billionaire Tax Loophole

illionaires are exploiting a tax break to pass their fortunes along to their heirs and laying the groundwork for dynasties.

Chuck Collins 
RINF Alternative News
If our leaders want to balance the budget, here’s a suggestion: Congress can scrap a new “Paris Hilton” giveaway that’s draining billions of federal tax dollars.
This giveaway takes the form of a complex tax loophole designed to circumvent the federal estate tax, one of the few ways a democratic society can reduce extreme wealth inequality.
The estate tax is a levy on inheritances that multi-millionaires and billionaires leave behind when they pass away. It affects only the wealthiest two out of every thousand U.S. taxpayers — individuals with at least $5.34 million to their name, or $10.68 million for a couple.
Estate-tax levels have bounced around for decades. In 2013, the government officially pegged it at 40 percent, one of the lowest levels since 1930. The effective (real-life) rate paid by these deep-pocketed estates amounted to less than half of that.

Estate taxes have historically raised substantial revenue from Americans with the greatest capacity to pay. A century ago, President Theodore Roosevelt— who inherited and squandered a fortune of his own — joined with steel magnate and philanthropist Andrew Carnegie— one of the richest men in the world at the time — to support establishing the modern version of the estate tax.
TR and Carnegie shared a goal of slowing the build-up of wealth dynasties, which they believed would corrode our democracy.
Although they succeeded, their goal remains elusive. We’re living in a new period of increasingly extreme wealth inequality.
The wealthiest 1 percent of households now own over 38 percent of all private wealth andalmost half of all financial wealth, such as stocks and bonds. And our political system is being corrupted by billionaire political contributions facilitated by a string of Supreme Court rulings that toppled key campaign finance limits.
Perhaps you can recall that howling a decade back that it was time to “end the death tax”? An organized group of the super-wealthy spent millions lobbying to save themselves billions. The heirs of Wal-Mart founder Sam Walton, whose combined wealth exceeds $100 billion, were among those clamoring against this supposedly unjust tax. The heirs of the fortunes left behind by the founders of Gallo wine and Mars candy joined the fray.
These scions of extremely wealthy families lobbied to kill the law. When they failed, they got to work on a plan B: gutting it. And America’s plutocrats prevailed.
The wealthiest 1/10^thof 1 percent are no longer complaining about the estate tax because of a loophole Congress gave them. This loophole is big enough that even the richest Americans can dodge estate taxes before they pass away.
Take casino mogul Sheldon Adelson, who is worth $30 billion and recently made headlines by meeting personally with all the leading GOP presidential hopefuls in what the media deemed to be his own private primary. Using this loophole, he’s already given his heirs $8 billion. This tax-free down payment on their inheritance will cost U.S. taxpayers $2.8 billion in estate taxes down the line.
How did he do that? Adelson used a scheme called the Granter Retained Annuity Trust (GRAT) to shuffle assets in and out of 30 trusts in order to game his taxes down. Other early adapters to the GRAT loophole include Facebook’s Mark Zuckerberg, Goldman Sachs CEO Lloyd Blankfein, Dish Networks’ Charles Ergen, fashion designer Ralph Lauren, and multiple Walton family members.
Richard Covey, the lawyer who pioneered the loophole, believes the GRAT resulted in $100 billion in lost revenue since 2001, according to a Bloomberg News interview.
Not all wealthy Americans advocate dodging estate taxes. Bill Gates Sr. argues that those with substantial wealth in our nation have disproportionately benefited from the public investments and property protections our society makes.
This Tax Day, let’s demand that Congress close the billionaire tax loophole. By gutting the estate tax, it’s building massive dynasties that will make inequality in America even worse.
Chuck Collins is a senior scholar at the Institute for Policy Studies where he directs the Program on Inequality and the Common Good (www.inequality.org), and the author of the new book, 99 to 1: How Wealth Inequality Is Wrecking the World and What We Can Do about It. Chuck is also a co-founder of Wealth for the Common Good, a network of business leaders, high-income households and partners working together to promote shared prosperity and fair taxation.He is co-author of The Moral Measure of the Economy and with Bill Gates Sr. of Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes

U.S. food prices up 19 percent in 2014; increasing inflation feared

Monday, April 14, 2014 by: J. D. Heyes (NaturalNews) Despite proclamations that the "economy is improving" and that "unemployment is down," one thing is evident and that is - for a number of reasons - food costs are soaring, and as they do, those most vulnerable, like the poor, the elderly and those earning the lowest wages, are being hurt the most. "We are sure the weather is to blame but what happens when pent-up demand (from a frosty east coast emerging from its hibernation) bumps up against a drought-stricken west coast unable to plant to meet that demand? The spot price (not futures speculation-driven) of US Foodstuffs is the best performing asset in 2014 - up a staggering 19 percent," notes Tyler Durden over at Zero Hedge. In February, the site gave voice to a sort of prelude to the aforementioned scenario, in publishing a post by Michael Snyder of The Economic Collapse blog: Did you know that the U.S. state that produces the most vegetables is going through the worst drought it has ever experienced and that the size of the total U.S. cattle herd is now the smallest that it has been since 1951? Just the other day, a CBS News article boldly declared that "food prices soar as incomes stand still," but the truth is that this is only just the beginning. If the drought that has been devastating farmers and ranchers out west continues, we are going to see prices for meat, fruits and vegetables soar into the stratosphere. A number of factors are leading to price increases Sure, prices are up because California's drought is limiting supply. Some have even said that commodities prices are being pushed upward by speculators on Wall Street; that may be happening to an extent. But there are a number of other factors that the government doesn't report as having much of an effect at all on food prices (and remember, the government doesn't include "volatile" food and energy prices in its monthly inflation reports). Speaking of energy, the price of a gallon of fuel, especially diesel fuel, has a lot to do with the prices you pay at the grocery store. Historically, food supplies were more much more local; transportation costs, therefore, were much reduced (and that was during the era of much cheaper fuel). Not anymore; the impact on prices that California's drought is having demonstrates how vast the U.S. food supply chain has become. With it has come higher transport costs. Kimberly Amadeo, a U.S. Economy Guide at About.com notes: Food prices rise in response to high gas prices. That's because transportation is a large cost of food you buy at the store. When you notice prices at the pump rising, expect to see the same thing happen in about six weeks at the grocery store. High gas prices are, themselves, usually caused by high oil prices. Here again, it usually takes about six weeks for increases in oil futures to translate to the pump. Government policies don't help keep prices down Regulations and laws are also behind the increase. As NaturalNews has reported, with Americans hungry and hundreds of millions around the world starving, U.S. lawmakers have adopted an insane policy of burning up our food supply in the form of a corn-based ethanol fuel mandate (and by the way, ethanol-laced fuel gets much worse mileage, meaning you have to buy more of it to get where you're going). It's a policy that has never made much sense, but adopted more as a sop to Big Agriculture creating a market that otherwise would not have existed. Also, growing corn for ethanol reduces the available farm land to grow food crops. What's more, a recent Congressional Budget Office report concluded that the increased use of ethanol accounts for 10-15 percent of the increase in food prices. Speaking of inane government policy, ever-changing subsidies for certain crops (which creates shortages) and paying farmers in some regions not to grow crops are two more factors that enhance shortages. Sources for this article include: http://www.zerohedge.com http://theeconomiccollapseblog.com

Oligarchy, not democracy: Americans have ‘near-zero’ input on policy – report

Reuters / Amr Abdallah Dalsh

The first-ever scientific study that analyzes whether the US is a democracy, rather than an oligarchy, found the majority of the American public has a “minuscule, near-zero, statistically non-significant impact upon public policy” compared to the wealthy.
The study, due out in the Fall 2014 issue of the academic journal Perspectives on Politics, sets out to answer elusive questions about who really rules in the United States. The researchers measured key variables for 1,779 policy issues within a single statistical model in an unprecedented attempt “to test these contrasting theoretical predictions” – i.e. whether the US sets policy democratically or the process is dominated by economic elites, or some combination of both.
"Despite the seemingly strong empirical support in previous studies for theories of majoritarian democracy, our analyses suggest that majorities of the American public actually have little influence over the policies our government adopts,” the researchers from Princeton University and Northwestern University wrote.
While “Americans do enjoy many features central to democratic governance, such as regular elections, freedom of speech and association,” the authors say the data implicate “the nearly total failure of 'median voter' and other Majoritarian Electoral Democracy theories [of America]. When the preferences of economic elites and the stands of organized interest groups are controlled for, the preferences of the average American appear to have only a minuscule, near-zero, statistically non-significant impact upon public policy."
The authors of “Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens” say that even as their model tilts heavily toward indications that the US is, in fact, run by the most wealthy and powerful, it actually doesn’t go far enough in describing the stranglehold connected elites have on the policymaking process.
“Our measure of the preferences of wealthy or elite Americans – though useful, and the best we could generate for a large set of policy cases – is probably less consistent with the relevant preferences than are our measures of the views of ordinary citizens or the alignments of engaged interest groups,” the researcher said.
“Yet we found substantial estimated effects even when using this imperfect measure. The real-world impact of elites upon public policy may be still greater.”
They add that the “failure of theories of Majoritarian Electoral Democracy is all the more striking because it goes against the likely effects of the limitations of our data. The preferences of ordinary citizens were measured more directly than our other independent variables, yet they are estimated to have the least effect.”
Despite the inexact nature of the data, the authors say with confidence that “the majority does not rule -- at least not in the causal sense of actually determining policy outcomes.”
“We believe that if policymaking is dominated by powerful business organizations and a small number of affluent Americans, then America’s claims to being a democratic society are seriously threatened,” they concluded.

3 Months Later, Here's What Denver Looks Like Since Legalizing Marijuana

Three months following Colorado's decision to legalize the production, sale, possession and use of recreational marijuana — a vote that Denver city officials including Mayor Michael Hancock, among others, fought kicking and screaming — guess what's happened to Denver crime rates in 2014? According to new data, they've fallen across the board. Property crime is down 14.6% compared to the same period in 2013. Violent crimes are down 2.4%. (Arson is up 109% from the same period, but represents just 23 of 3,757 crimes — so if you want to blame every count on smouldering doobies, whatever.) As the Huffington Post notes, this is a far cry from wild-eyed claims of Amendment 64 opponents that legal weed was the devil's work and Colorado would see a surge in crime and drug use. "Expect more crime, more kids using marijuana and pot for sale everywhere," said Douglas County Sheriff David Weaver in 2012. "I think our entire state will pay the price." Gov. John Hickenlooper said " MORE @ http://www.policymic.com/articles/87383/3-months-later-here-s-what-denver-looks-like-since-legalizing-marijuana

Germany shuts scheme for young unemployed because of overwhelming demand

Germany said on Monday it would no longer accept applications for a programme to attract young Europeans to its job market due to overwhelming demand from crisis-ravaged countries.
The labour ministry said it had been flooded with interest from job-seekers particularly from struggling Spain and Hungary for the scheme offering subsidized job training, apprenticeships and work in fields lacking manpower.
"Currently we cannot meet the demand" for the programme, called "The Job of My Life", a labour ministry spokeswoman told reporters.
Germany, Europe's top economy, faced criticism from its EU partners for an approach to the eurozone debt crisis that placed a strong emphasis on fiscal discipline, which has been blamed for exacerbating the economic impact among ts weakest members.
Source and full story: The Local (Germany), 14 April 2014