A Friday afternoon funny:
Just Another Day On Wall Street
July 27, 2007 3:30pm by Barry Ritholtz
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The American Flu
Reminds me of the 6 stages of project management. Something I am sure our government will pursue when they realize the extent of the bond market crash.
1. optimism
2. uncertainty
3. fear
4. search for the guilty
5. punishment of the innocent
6. praise for the uninvolved.
Lets hope the world drug council doesn’t test the NYC sewers this weekend…
…and remember all you folks who faithfully put your savings into a 401k every month…. the stock market going down IS GOOD FOR YOU!!!… and I know that! Because I am watching Larry Kudlow and his guests are telling me so right this minute!
WSJ has a list of casualties from our “contained” credit contraction.
as you’d expect, most aren’t subprime related.
there should be a box for the snorting of cocaine…..it’s a hell of a drug. ;)
and speaking of inflation….premium vodka going through the roof (obviously, grain)….but from what I hear, the more illict stuff is cheaper than ever. Way to go W.
No Friday Night Jazz?
I’ll pitch in:
http://www.drlonniesmith.com/home.htm
After Dow 14000, a couple of well known from the past masters of market machinations and mind games (old school 1987 boys) appeared on Bloomberg TV and declared that they were 100% short (they were 100% bulls before the appearance), heavily shorting the financial stocks. (I do not want to name them here but you know who I am talking about)
Thursday morning, the futures were up until 4 am, then without any major event, the S&P futures suddenly dropped 20 points. (It was well-orchestrated manipulation) Nobody could explain the sudden drop in the futures and the fear started to build up…
These market machination-masters are old timers. They know Wall Street traders’ psychology well, playing their minds like a piano…
The fear of the unknown started the deadly sell-off spiral on Thursday morning — everyone is selling therefore there is something bad out there, a fund is going belly up, forced fund liquidation, a credit crunch…
After 700 points Dow drop this week, there is still no clear reason for the sell-off, other than the fear of the unknown. The traders are scared to death of the monster – the unknown.
~~~
BR: That is so wrong I caqnnot begin to address it. No clear reason for the sell off? PUH-leeze!
How about the main source of financing for stock buybacks and LBOs just went away?
I listened to the bulls pound their chests since last summers Goldman Sachs manipulation of oil prices, and endured the snorts of derision every time I noted obvious market manipulations.
This is a good ole fashioned selloff . . .
Barry,
How much time are hedge funds generally given to meet margin requirements?
Will this impact the markets next week given margin debt in June reached another all time high of $378 billion?
thanks,
Curious in California
WSC, couldn’t agree with you more. I promise you these guys are the biggest crooks you can imagine. They start short selling like drunken sailors and it just freaks the heck out of so many others, they just follow the heard and sell along with them. This game has nothing to do with sub-prime, CDO’s, etc. It’s all about taking from Joe Sixpack and funding their kids Harvard education.
~~~
BR: JDog: You do not seem to be distinguishing between legitimate short selling, and the naked short selling by bad actors. This is an error on your part.
Further, I suspect you do not fully understand the magnitude of the credit crunch — otherwise, you might be more aware of what the CDO situation means to equities . . .
GDP Revised Down for Last Three Years
The changes lowered the average annual growth of real GDP to 3.2% from 2004 to 2006, 0.3 percentage point less than the earlier figures.
(Assuming one believes the GDP numbers of late are not fantasy anyway, otherwise this is merely twirling the dials on a old broken TV)
.
It was a rather interesting week. The sharp decline conjured up images of 1987. Will the subprime ‘worriers’ took the market down hard. Will they create an opportunity as splendid as 1987 for us come late fall of 2007?
I hope they leave some opportunities behind when they are done. Alas the setup for the 1987 was different in one may be important aspect:
The market in 1987 was rallying strongly during the the year’s first half while interest rates on long Treasuries spiked to over 10%. – http://musingsofaspeculator.blogspot.com/2007/07/about-interest-rates-second-look-at.html
The immediate question is the extent of forced selling from mark-to-market and margin calls by the end-of-the month.
New charts and the typical drivel up at my sight. I put up something readers liked yesterday, called “Sound Market”
For all you 1987 fans, remember the crash came from not near all time highs, but rather, after a 20% or so drop.
Barry or any other esteemed readers, do you see this as a perfectly normal, healthy correction or the start of something more sinister? Where do you see the S&P going to over the coming months?
If you have strong convictions of a larger correction, how would you best play it on the short side, buying puts/calls?
Also, what is the S&P’s avg. P/E ratio now that we have corrected 6%?? Is this high by historical standards? If P/E levels are no longer useful to investors, what are the “new” most important metrics to focus on?
TIA!
“How about the main source of financing for stock buybacks and LBOs just went away?”
Did these concerns suddenly appear on Thursday at 4 am? There is no evidence that LBOs and buybacks have suddenly died on Thursday morning.
In addition, there is no evidence that “stock buybacks and LBOs just went away” neither. Most likely, LBOs and buybacks will be more expensive to fund, but they are not dead.
It is not “a good old fashioned sell-off”. It is an artificial manipulative false signal that the bull market trend has reversed, but it has not. You will see how fast this “good old fashioned sell-off” turns into a bear trap – one moment it is “a good old fashioned sell-off” and a few second later you will see an army of bears trapped and forced to cover their positions at higher prices.
~~~
BR: Dude, you are YEARs late to the party. We have been discussing these issues for many many months, wonmdering aloud when they would hit equities.
Do some homework, and go back and read some prior posts. This is VERY OLD news . . .
Jdog33,
To assist the crooks, the corrupted SEC has eliminated shorting on up tick rule, so the bears can short on down ticks now and push the price even lower (a bear raid).
Once popular practice in the early 1900s is back, courtesy of the SEC and Wall Street crooks lobby.
~~~
BR: Put the crystal meth down, and back slowly away from the keyboard . . .
“BR: Put the crystal meth down, and back slowly away from the keyboard . . .”
For those who have not already heard, the SEC has voted to remove the “short sale tick test”, Rule 17 CFR 240.10a-1 for all equity securities. Effective Friday, July 6, traders able to short all securities on an up, down, or zero tick.
~~~
BR: Yes, it was in all the papers A MONTH AGO
“BR: Dude, you are YEARs late to the party. We have been discussing these issues for many many months, wonmdering aloud when they would hit equities.
Do some homework, and go back and read some prior posts. This is VERY OLD news . . .”
Could you be so kind to be more specific as to what “party” you are talking about?
BR: Put the crystal meth down, and back slowly away from the keyboard
one of the great lines of all time !!!!
WSC:
I appreciate all of your enthusiasm, but:
1) Multiple posting on a given post is frowned on — 2 or 3 is fine, beyond that is too much.
2) Try to familiarize yourself with at least some of the prior 4,365 posts. I don’t expect you to read all of the 43,435 comments from the nearly 13 million page views, but, at the very least try not to reinvent the wheel.
3) Please read the disclosures and rules of the site:
http://bigpicture.typepad.com/comments/the_big_picture_disclosur.html
Doing so will avoid having the benevolent dictator/overlord — thats me — permanently ban you from commenting.
Capiche?
“BR: Yes, it was in all the papers A MONTH AGO”
Then, why am I on “crystal meth”?
Bear raids were prevalent prior to the US 1929 crash. In 1934, the newly created SEC introduced a number of changes in the transaction process itself. One was the “uptick” rule, which prevented a broker from selling “short” if the last sale price of a listed stock was lower than the previous transaction price. This slowed the momentum of bear raids and they largely disappeared.
Untill 2007…
Wall Street was a plutocratic fiefdom in 1929.
Wall Street is a plutocratic fiefdom in 2007.
Are you suggesting the SEC would like to see stocks get killed by Bear Raids? That makes no sense at all.
Remember, the Uptick rules were never required on ETFs – which have done fabulously well without them over the past decades . . .
This rule change brings common stocks into alignment with SPY, QQQQ, SMH, DIA, BBH, etc.
WSC
There has been no uptick rule on futures or ETF’s , which would be the easiest way to “manipulate” a market , but alas the most liquid instruments in the world
There isn’t enough money to manipulate this market , not even by the PPT as many love to bandy about …. your arguments are spurious at best , cynical at worse ( and worthy only of Tin-Foil Hat jaded pronouncements )
The fundamentals have been deteriorating for a while , the market internals have softened for a while in spite of the spike to 14,000 , but it’s the inability of some fast money-types to liquidate their toxic securities which forces them to unload liquid instruments ….the rally in the Yen and SF , and ensuing sell-off in NZ and Aus $ is symptomatic of this …. this is a global margin call which will run its course
I have seen shoulder=tap margin calls all week at an internal prop desk…… it’s just the nature of the best
B.R.
“Are you suggesting the SEC would like to see stocks get killed by Bear Raids? That makes no sense at all.”
No, the SEC is controlled by Wall Street (by money) and the crooks love volatility. Shorting on downtick when a stock market is falling creates downward pressure on the market and increases market volatility (according to multiple academic studies).
The crooks make their money on volatility: distribution to retail at higher prices => accumulation from retail at lower prices => distribution to retail at higher prices => accumulation from retail at lower prices…
Therefore, by removing the rule the SEC has introduced the additional volatility to the market, has pleased the Wall Street crooks, and has hurt individual investors (retail).
JJ,
“There isn’t enough money to manipulate this market”
You are obviously too young and naïve. I have been around the markets for more time that I do care to remember, and I have seen some really incredible games played by market makers, brokers, traders and many other individuals… In fact the Wall Street crooks have been charged and paid huge fines many times for stock market manipulation, so please don’t delude yourself into thinking that everything that goes on in the markets is what it really looks like. How many times Wall Street crooks have quietly agreed to pay multimillion fines to settle a class action suite that investors brought against them. And the charges were ugly: “collusion,” “gouging,” “extortion,” you name it. If it sounded like the charges were befitting a mobster, they were in there. Guilty! That’s what they were, by their own admission.
Anyhow, do you know how much money it takes to knock down S&P futures by 20 points at 4 am, when the trading is thing? (Hint: most likely even you can do it using leverage)
In addition, the margin calls did not initiate the sell-off, pushed the market further down but not initiated the sell-off (big difference between propagation vs. initiation)
I have been around the markets for more time that I do care to remember, have seen multiple bear traps, and this one looks a lot like a bear trap to me.
Good luck to both of you!
Hey Kid,
Here’s a dollar — go buy a clue !
Could not agree more with WSC! Cox should be impeached and fired.
The SEC is only protecting the interests of the big brokerage houses, and could care less about an individual investor.
These crooks have the system that no matter what they do, buy or short stocks, they can only win.
Naked Short Stock Sales – Part 1
http://www.youtube.com/watch?v=Bfi3Hxasm2s
Naked Short Stock Sales – Part 2
http://www.youtube.com/watch?v=RYUU2qZOcM0
Naked Short Stock Sales – Part 3
http://www.youtube.com/watch?v=taLhQoTvTLw
The best part about shorting phantom shares is the brokerage houses do not have to cover the shares if a trade goes against them. The shares just end up among those 6 billion of failed daily trades.
for those who think that markets cannot be manipulated.
in 1992, indian stock market was manipulated by one man with help of banks with around 3-4 billion dollar (total market cap must have been 250 billion back then)
http://en.wikipedia.org/wiki/Harshad_Mehta
sometimes i wonder what if our FED with printing press wants to keep the market always positive….is it impossible???
dont they have a near unlimited resource??
A formerly optimistic wildebeest.
http://www.youtube.com/watch?v=OxK6rqUZ7vw
Mankind has a history of creating gods and superstitions to explain things he cannot control or understand.
If I remember correctly, Barry is in charge of about $100M dollars – so tell us all the truth, Barry, do you get up each morning at 4:00 a.m. to see if the futures are down 20 points? Do you move that $100M in and out daily based on your guess of what the PPT is doing?
Manipulation is possible short term – especially in small float stocks -intermediate to long term for the whole market, though, it’s like trying to change the direction of an aircraft carrier by swimming alongside and yelling “stop”.
winston…as i have mentioned in my previous post.
indian stock market nearly tripled in 2-3 years due to the manipulations. and then it lost nearly 75% of its value when the scam was discovered.
so yes, markets can be manipulated with enough resources.
This is my prediction for Monday:
Nasdaq : Down 40 points (at least).
Dow : Down 150 points (at least).
S&P 500: Down 20 points (at least).
P.S. Don’t bother asking how I came up with my estimates, LOL.
Suge
techy:
While I agree that a goodly amount of subterfuge occurs, my point is that in the end it is the bond market that rules – and the bond market is simply too large for manipulation.
Manipulation cannot change the pricing of risk or corporate earnings.
Over the past few years, the “heroes” of this market have been the financial “innovators”. We have cheered when deals have been put together, creating collosal fees for the organizers, and then rewarded these “fee collectors” with higher stock prices. We rooted on and supported bubble creations. And then we convinced ourselves that nothing bad could happen this time because we had taken the economy worldwide with globalization and spread risk around the world.
There was only one snag in the gimmick – somewhere along the way we seemed to have forgotten that loans have to be repaid.
All we are seeing now is a partial unwinding of a Ponzi financial scheme, where debt finances additional debt. Like all inverted pyramids, the weight at the top eventualy collapses the underlying layers.
The only amazing thing to me is how anyone could be surprised.