The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Monday, May 7, 2012

Aussie retail trade data was selectively sent to 6 clients 20mins before official release

I've discussed dodgy trading before major Aussie economic events in the past. People in the market talk about it. For example, there was a pretty unusual slide in the Aussie-US dollar cross from ~1.0422 to about 1.0388 that started at exactly 12.30pm--at the time the RBA finished its Board meeting last week--and continued up until a little before the official RBA announcement of the 'surprise' double rate cut at 230pm that day. Traders also remarked on an odd spike in the 3yr government bond prices during the same period (Kouk even tweeted about it), although they pulled back on low volumes just before the announcement. Somebody covering their tracks?

If you knew what the RBA was going to do you would be trading unregulated FX rather than SFE securities. And before too-smart-by-halves scoff, Bruce Kovner, the founder of one of the world's biggest hedge funds, Caxton, has said that the best traders of FX used to be the Russians because of the KGB's ability to pick up key economic intelligence.

You've got two hours between the 230pm release date and the time when seven of the nine RBA Board members leave the Bank's Martin Place building to monitor their communications and collect one solid indication of what happened. It is hardly inconceivable. The technology certainly exists. The self-interest is manifest.

Would this be beyond, say, Chinese princelings wanting to quickly make tens of millions? In this context, John Garnaut has an outstanding article out on the extreme financial corruption inside the PLA.

As an aside, I thought it was frankly very stupid of Swannie to tweet Tony Abbott after 1230 but before the 230pm release time gloating about how many times the RBA raised rates under Howard. He'd presumably been informed about the Board's decision by his Treasury Secretary.

The reason I raise this is because Enda Curran from Dow Jones and Kouk have pointed me to this media release by the ABS revealing that today's surprisingly strong retail trade data were leaked to six clients 20mins before the rest of the market. Hopefully it was just a technical glitch.

And then, of course, we have the question of how the Sydney Morning Herald came to know and publish the RBA staff's supposedly confidential Board recommendation on the day of the meeting. But more on that another time.