“Most American investors unaware rehypothecation is widely practiced inside US, but more limited. Rehypothecation will be the problem!
US law permits moving US client accounts from parent company to subsidiaries in other nations,which enables their use as collateral for loans usable to invest in other securities. Now, clients can specify their assets may not be transferable to a foreign jurisdiction.
Jon Corzine used MF Global to transfer US client accounts to a subsidiary entity in London, where UK rules permitted much higher levels of rehypothecation (i.e .leverage up to 4X, US rule less than 1.5X). A iming to build giant enterprise w/other people’s money, it blew up.”
Dr. Harald Malmgren
Stocks were listless to weak today ahead of the FOMC rate decision tomorrow.
Gold and silver were higher on a slightly weaker dollar.
Housing prices seem to be cooling.
Nike came in better than expected on earnings, and in-line with revenue. The stock was slightly lower after the bell.
Non-Farm Payrolls next week.
Have a pleasant evening.
