Category Archives: stock market

>Obama’s First 2 Years Were Very Good

>Death of another Republican talking point:

While voters may have been unhappy, President Obama has quietly maintained his position as one of the equity market’s most well loved Presidents. As shown in the table below, the 47.6% gain in the DJIA since he took office ranks as the third best first two years for any President since the start of the 21st Century (FDR 90.5% and Coolidge 52.6%).

Note the story should read “start of the 20th Century,” as well. Anyway, so much for that “most anti-business President in U.S. history stuff.” The chart:

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>About That Privatizing Social Security Thing …

>[UPDATE]:

Ooops. Stay out of the bond market, too. Jars buried in the back yard are looking better already.

——————————

Yesterday’s New York Times had a front page story about “small investors” fleeing the stock market to the tune of $33.12 billion through July. The article quotes analysts as saying the average American investor has “lost their appetite for risk” and also suggests this:

And the flight from stocks may also be driven by households that are no longer able to tap into home equity for cash and may simply need the money to pay for ordinary expenses.

I’m sure that’s a big factor, as are the wild up and down swings we’ve seen in the past few years which have in fact soured people on the whole risk thing.

Apparently Joe and Jane Investor is rethinking how their IRA and 401(k) contributions are invested. Equities are too risky, too unstable, too prone to losing their value in a matter of seconds due to some stock traders’ “fat fingers” or a fart in Greece that reverberates around the global exchanges. These facts alone should give anyone advocating privatizing Social Security (AHEM, Republicans) pause. Similarly, insofar as the risk and instability of the market have been caused by things beyond anyone’s control let alone ability to predict, it should give anyone advocating repealing Wall Street reform (AHEM, Republicans) pause as well.

Democrats: don’t listen to the spin, listen to the facts. Small investors have pulled $33.12 billion out of the stock market this year alone (and in fact the “average investor” began fleeing the market way back in 2007). There is a reason.

Personally I’m more and more convinced that all of this automated electronic trading has turned the stock market into a rigged game with loaded dice and the casino always wins.

Remember the May 6 ”flash crash”, originally blamed on a trader’s “fat fingers”? Yeah, right:

Recently we posted a required reading analysis by Nanex in which the market trading analytics firm presented irrefutable evidence of quote stuffing by HFT algorithms in tens of stocks, in which thousands of cancelled quotes would reappear each second with a definitive periodicity and regularity, around the time of the May 6 flash crash. Aside from the fact that it is illegal to indicate a quote without a trade intent, this form of quote stuffing is in fact manipulative when conducted by HFT repeaters in specific “shapes” as it actually moves the NBBO actively higher or lower, in cases pushing the bid/offer range up to 10% higher without even one trade ever having occurred, simply by masking a big block order which other algos interpret as bid interest and pull all offers progressively or step function higher (or vice versa, although we have rarely if ever seen the walking down of a stock over the past 18 months).

[…]

Today, courtesy of Nanex we demonstrate that this type of illegal stock manipulation continues rampant to this very day, and the SEC still fails to acknowledge that it is precisely the HFT market participants that persist in destabilizing stock prices, which have given up responding to fundamentals and merely move up or down based on quote stuffing interventions by those who plead innocence and claim to only be providing liquidity. Well take a look at the millions in fake, and thus illegal, bids demonstrated below and tell us just how any of this manipulation is “providing liquidity” – the second the patterns break, the algos responsible for the churn pattern disappear, thus eliminating numerous levels of so called bid liquidity below the NBBO: break enough patterns and you have another flash crash as the market once again goes bidless.

Whew. And if that sounds like a bunch of gobbledy-gook to you, here’s the concept repated in plain English:

They say high-speed traders could have been trying to outwit one another’s computers with blizzards of buy and sell orders that were never meant to be filled. These superfast traders might even have been trying to clog exchanges to outflank other investors.

It’s the same casino mentality that allowed oil futures broker Steven Noel Perkins to single-handedly spike the global price of oil in a weekend binge of booze and bets on Brent crude futures. It’s the short sales and algo trading and all of the rest of the unregulated hedge fund BS over which Joe and Jane Investor has no understanding let alone control.

So when yesterday’s New York Times mildly posits this:

The notion that stocks tend to be safe and profitable investments over time seems to have been dented…

I’m thinking, Um, yeah. Understatement, much? Maybe what’s killed the notion of stocks as “safe and profitable investments” is the way the markets are now completely manipulated by computerized trading and other mumbo jumbo I can’t even wrap my head around.

A favorite bromide of the investment world is that “over time, the stock market outperforms other investments.” Maybe that was once true but this isn’t your father’s stock market. Back in the good ol’ days we didn’t have high-frequency traders and flash trades and computer algorithms running the show. Volatile is the new normal and it looks like a bunch of Wall Street assholes have turned the marketplace into a freewheeling ride on the roulette wheel.

So no wonder the average investor says no thanks to a rigged game. And when it comes to putting our safety net in that volatile casino? Not just no but HELL no. Those of you who want to put your economic future in the hands of a few untrustworthy, unregulated market manipulators whose best interest is not yours can still do so. But to gamble away the security we all share that way? Irresponsible.

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>Think Of The British Pensioners!

>Yeah, we don’t need no stinking regulations:

Britain’s financial regulator disclosed on Tuesday that Steven Noel Perkins, a former oil futures broker, single-handedly engineered a jump in the price of oil a year ago and cost his firm millions of dollars with a string of unauthorized trades after a weekend of heavy drinking.

Mr. Perkins had just returned from a liquor-soaked golf weekend with colleagues in June of last year when he sat down in front of his laptop at his home east of London and started to place bets on Brent crude futures, according to a report by the Financial Services Authority. He continued to drink and place bets through the night, and by the morning of June 30, Mr. Perkins had placed more than $520 million worth of trades, at one point pushing the price of oil to $73.05, an eight-month high. The trades by Mr. Perkins were the main reason the price gained about $1.65 a barrel in just over two hours in the middle of the night, according to the report.

“Mr. Perkins’s explanation for his trading on 29 and 30 June is that he was drunk,” the F.S.A. said. “He claims to have limited recollection of events on Monday and claims to have been in an alcohol-induced blackout at the time he traded.”

Hmm, yeah, ya know my party days are well behind me but I’m going to guess there were other substances involved besides alcohol. But regardless, why the hell are these young rock star traders allowed to play around on their laptops and drive up the price of oil in a booze-fueled binge? I mean, I don’t know how they do things in Britain–maybe it’s the same way they do things here–but this can really happen? One guy can do this? What if an oil company or foreign government paid someone to do this? Sounds like a plot for a summer blockbuster, I know. But truth is stranger than fiction.

If this story illustrates anything it’s the casino mentality of these traders. It’s just a game. The money isn’t real and a spike in oil prices has no consequences in the real world.

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>What Brown Can Do For Us

>While Scott Brown’s win in Massachusetts last night has prompted much soul-searching and teeth-gnashing among Democrats (and high-fiving among Republicans) at the very least it provided one more piece evidence that Republicans are still always wrong.

How so? I’m referring to this:

[…]CNBC’s “Mad Money” host Jim Cramer says that Scott Brown’s Massachusetts Senate win tonight will mean a “gigantic rally” is in store for stocks tomorrow.

Ooops. Not so much.


And then there’s this from ABC News at 1 pm yesterday:

The Dow Industrials are up almost 100 points at this hour and traders say the potential for a Republican to win Ted Kennedy’s senate seat is behind the rally.

Double oops.

And my utmost favorite:

Fox and Friends Suggests Brown Win Will Boost Your 401k (VIDEO)

Not yet!

The stock market has been tanking today. And I do mean tanking. Is it because of Scott Brown? Of course not. Reuters blamed bank results and earnings reports from IBM. The AP blames China. In other words, the usual smoke-and-mirrors voodoo magic bullshit that causes stock market fortunes to rise and fall on the tiniest sneeze from some far-flung corner of the financial world.

But Republicans peddling that whole “vote Republican and get rich” meme are looking a little silly today. One thing Brown did not do for us today is rally the stock market.

Cold comfort, yes, but there’s that.

And here’s something else I’m sick of hearing. I’m tired of hearing how the Democrats have now lost their filibuster-proof majority, which seems to be all the mainstream news media can talk about. Ohmygosh that glorious super majority that did us all so much good for the past year, what will we do without it?

Puh-leeze. When did we ever have a super majority? Here’s “Party Of Joe” Joe Lieberman threatening to join a GOP filibuster. And here’s Democrat Ben Nelson threatening to filibuster the post-conference healthcare bill if it’s not to his liking. Here’s Ben Nelson again threatening to filibuster healthcare reform if it doesn’t have the Stupak Amendment. Oh lookie, here’s Democrat Blanche Lincoln threatening to filibuster the public option.

And here are eight Democratic Senators joining the GOP in support of the filibuster on cap and trade.

So give me a break. When members of the supermajority decide they aren’t getting enough attention and threaten to filibuster their own party’s key legislation just because, you know, they can, then we’ve got a bigger problem than how many D’s and R’s are in the Senate.

Democrats need to grow a pair. I’m sure the predictable result from the Scott Brown win will be that Democrats conclude they need to be even more “Republican light.” Already Jim Webb has called for a halt to all healthcare votes until Brown is seated. And this makes me very sad, because it tells me Democrats have no fucking clue as to what’s happening in the country.

I don’t think Scott Brown’s win was a “referendum on healthcare reform” so much as it was a “referndum on the status quo.” For one thing, Massachusetts already has universal healthcare which is in many regards far superior to that which the rest of the country would get if healthcare reform were to pass. So near as I can tell the federal healthcare legislation wouldn’t affect people in Massachusetts one bit.

I think more than anything people are tired of the status quo. Brown was an unknown state senator, from a party that had not held that Senate seat for an entire generation. People want change, and in Massachusetts that was Scott Brown. In another state it could be someone else, from a different party.

People are frustrated. They want Washington to work again. We were promised change with President Obama and we didn’t get it. We were promised an end to lobbyists running our government and we didn’t get it–the healthcare bill proved that.

So to the Democratic Party I send you a cautionary piece of advice: either lead, follow, or get the hell out of the way. Your epic fail in Massachusetts signals a problem far bigger than just being too liberal or too conservative. You were handed the reins government and you promptly twiddled your thumbs. We’ve got the same corporate control of government and our discourse that we had under Bush. That is what people are tired of. We’re tired of banks and insurance companies and Wall Street brokerages getting all sorts of wonderful legislative boons that ordinary citizens never get.

So people are frustrated and they want someone, anyone, different. Remember the root of populism isn’t left or right, it’s people. So, dear Democrats, focus on things that help actual people and you might be okay. Continue to bend and scrape before the mulitnationals and, well, see ya.

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>I Guess It Seemed Like A Good Idea At The Time

>Remember President Bush’s grand plan to “fix” Social Security with “private accounts”?

Remember when John McCain supported the idea?

Here’s a sobering thought:

Investors begin 2009 licking their wounds from the worst year on Wall Street since the Great Depression, one that left many portfolios devastated and their owners scrambling for safety.

• The Russell 3000, which covers 98 percent of investable equities, shed $6.7 trillion or 39.7 percent of its value during 2008.

• The S&P 500 was down 38.5 percent, its worst performance since 1937.

• The Dow Jones industrial average was off 33.8 percent — the worst return since 1931.

• The five worst-performing stocks in Silicon Valley all lost more than 90 percent of their value.

• Every single technology index fell this year. Biotech did the “best,” with a 17.7 percent drop; Internet, computer, networking and semiconductor stocks all were down more than 40 percent, and disk-drive stocks were off nearly 61 percent.

Pension funds took a massive hit this year:

With the stock market shedding more than a third of its value this year, pension funds at big companies have been battered beyond recognition. What looked like safe stowaway spots where corporations securely tucked away assets for their employees’ retirements now look like roller-coaster funds. In addition to sending shivers up the spines of employees who count on that income, the problem also threatens to haunt the bottom line at many major firms.

Can you imagine the effect on American society if not only pension funds but also the Social Security safety net were invested in the stock market right now?

Thank God we dodged that bullet.

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