Infinite Unknown

Dec. 12 (Bloomberg) — Bernard Madoff confessed to employees this week that his investment advisory business was “a giant Ponzi scheme” that cost clients $50 billion before two FBI agents showed up yesterday morning at his Manhattan apartment.

“We’re here to find out if there’s an innocent explanation,” Agent Theodore Cacioppi told Madoff (The FBI ’should’ be there to find out the truth, not an ‘innocent explanation’.), who founded Bernard L. Madoff Investment Securities LLC and was once chairman of the Nasdaq Stock Market.

“There is no innocent explanation,” Madoff, 70, told the agents, saying he traded and lost money for institutional clients. He said he “paid investors with money that wasn’t there” and expected to go to jail. With that, agents arrested Madoff, according to an FBI complaint.

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Tags: Banks, Crimes, Economy, FBI, Fraud, Hedge Funds, Nasdaq, SEC

Nov. 20 (Bloomberg) — U.S. stocks slid and the Standard & Poor’s 500 Index plunged to its lowest level in 11 years after economic reports depicted a deepening recession and lawmakers postponed a vote on a plan to salvage the auto industry.

The Standard & Poor’s 500 Index extended its 2008 tumble to 49 percent, poised for the worst annual decline in its 80-year history. Chesapeake Energy Corp. and National-Oilwell Varco Inc. slid more than 21 percent after oil sank to a three-year low as the slumping economy crushes demand. JPMorgan Chase & Co. lost 18 percent and Citigroup Inc. plunged 26 percent as concern the recession will trigger more bankruptcies pushed the cost of insurance against corporate defaults to an all-time high.

“We’re just trying to stay away from the window,” said James Paulsen, who helps oversee about $220 billion as chief investment strategist at Wells Capital Management Inc. in Minneapolis. “This isn’t about fundamentals, it’s not about bad balance sheets, it’s about fear and confidence.”

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Tags: Citigroup, Dow Jones, Economy, Financial Crisis, JPMorgan, Meltdown, Nasdaq, Recession, S&P 500, Stock Market, U.S., Wall Street

Dow rises 11% on big rally, but October is still shaping up to be one of the worst months in Wall Street history.

NEW YORK (CNNMoney.com) — The Dow rallied as much as 906 points during Tuesday’s session, as investors dove back into stocks near the end of one of the worst months in Wall Street history.

The Dow Jones industrial average (INDU) added 889 points after having risen as much as 906 points earlier in the session. It was the Dow’s second-biggest one-day point gain ever, following a 936-point rally two weeks ago. The advance of 10.9% was the sixth-biggest ever.

The Standard & Poor’s 500 (SPX) index gained 91.6 points or 10.8%, its second-biggest one-day point gain ever and its fifth-best one-day percentage gain.

The Nasdaq composite (COMP) rose 143.6 points or 9.5%. On a percentage basis, it was the fourth-best one-day gain ever for the tech-fueled Nasdaq. But on a point basis, it didn’t crack the top 10.

The broad advance occurred as the two-day Federal Reserve meeting got underway, with a decision on interest rates expected Wednesday afternoon. Policymakers are widely expected to cut a key short-term interest rate.

Stocks ended Monday’s session at the worst levels in more than five years, with the major gauges down more than 25% for October. Global markets had fallen too, as investors worldwide bailed out of stocks amid the credit crisis and weak economy.

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Tags: Banks, Credit Crisis, Credit Crunch, Dow Jones, Economy, Fed, Federal Reserve, Financial Crisis, GDP, Government, Nasdaq, Politics, Recession, Standard & Poor's, Stock Market, Treasury, U.S., Wall Street

Ben S. Bernanke, chairman of the U.S. Federal Reserve, speaks on a television above a trader in the S&P pit at the Chicago Board of Trade in Chicago, on Tuesday Oct. 7, 2008. Photographer: Joshua Lott/Bloomberg News

Oct. 7 (Bloomberg) — U.S. stocks fell, sending the Standard & Poor’s 500 Index below 1,000 for the first time since 2003, on speculation banks and real-estate companies are running short of money as the credit crisis worsens.

Bank of America Corp. tumbled 26 percent after cutting its dividend in half and saying it plans to sell $10 billion in common stock to brace for a recession. Morgan Stanley, KeyCorp and JPMorgan Chase & Co. slid more than 10 percent as investors shrugged off signs the Federal Reserve will reduce interest rates. General Growth Properties Inc., a mall owner, plunged 42 percent on concern it won’t be able to repay debt.

The S&P 500 slid 60.66 points, or 5.7 percent, to 996.23, extending its 2008 tumble to 32 percent in the market’s worst yearly slump since 1937. The Dow Jones Industrial Average dropped 508.39, or 5.1 percent, to 9,447.11, giving it a 29 percent retreat in 2008 that would also be the worst in 71 years. The Nasdaq Composite Index lost 5.8 percent to 1,754.88.

“We’ve approached the edge of the cliff,” Leon Cooperman, 65, who manages $6 billion at hedge fund Omega Advisors Inc., said at the Value Investing Congress in New York. “Do we go over the cliff or begin to recede? History says we recede, but there’s no guarantee. This is the most difficult financial environment I’ve lived through.”

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Tags: Bank of America, Ben Bernanke, Dow Jones, Economy, Fed, Federal Reserve, Ford, GM, Goldman Sachs, JPMorgan, Merrill Lynch, Morgan Stanley, Nasdaq, S&P 500, Stock Market, U.S., Wall Street

Related article: - Big Traders Dive Into Dark Pools

We can almost hear that ominous “Jaws” theme music in the background and can see that huge dorsal fin as it slices threateningly through the water - knowing full well that the real terror is hidden beneath the water’s surface.

But this time around, it’s not a “Great White” that’s sparking our fears; it’s a well-capitalized and broadly based series of secret stock exchanges known as “Dark Pools of Liquidity,” “Dark Liquidity,” or just “Dark Pools.”

Most investors have never even heard the term - and are truly shocked to discover these “off-the-books” trading networks actually exist.

But to Wall Street insiders looking to anonymously move billions of dollars in stocks, bonds, and other investment instruments, dark pools are de rigueur - especially when you’re an institutional trader who doesn’t want to reveal your intentions or your actions to the “rest” of the market, until after the fact when the orders are “printed.”

And that makes these dark pools of capital highly problematic when it comes transparency: There is literally none in most pools and only limited visibility in others.

Dark Pools: From Trading Haven to Heavyweight

Dark Pools are electronic “crossing networks” that offer institutional investors many of the same benefits associated with making trades on the stock exchanges’ public limit order books - without tipping their hands to others, meaning publicly quoted prices aren’t affected. This is the capital markets’ version of a godsend - especially for traders who desire to move large blocks of shares without the public investors ever knowing.

Some examples of so-called crossing networks include Liquidnet Inc., Pipeline, the Posit unit of Investment Technology Group (ITG), or the SIGMA X unit of Goldman Sachs Group Inc. (GS).

In an era in which “secret” transactions contributed to what’s shaping up to be the largest credit crisis in history, you’d think that any mechanism that allows insiders to trade in complete secrecy and with total anonymity would be scrutinized more closely than a Roger Clemens vitamin shot. But that’s not the case with Dark Pools.

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Tags: Bonds, Corporations, Credit Suisse, Dark Pools, Dollar, Economy, Goldman Sachs, JPMorgan, Morgan Stanley, Nasdaq, NYSE, Stock Market, U.S., UBS, Wall Street, Wall Street Journal

NEW YORK (Reuters) - Stocks tumbled on Wednesday, dragging the S&P 500 into a bear market, as worries about more credit losses hurt financial companies and Cisco Systems led technology shares lower after its CEO raised fears of an extended economic downturn.

The S&P closed 20 percent below its all-time high set in October, making it the last of the three major U.S. stock indexes to fall into a bear market. Stocks have been roiled for months by the credit crisis and a severe U.S. economic slowdown.

Related article: US: Total Crash of the Entire Financial System Expected, Say Experts

In the latest news to scare the market, Cisco’s (CSCO.O: Quote, Profile, Research, Stock Buzz) John Chambers told Reuters that customers of the company, which makes Internet infrastructure, see the economy picking up early in 2009 rather than later this year. At least two brokerages also cut their price targets on the stock.

Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz) dropped sharply as some investors worried that the two pillars of the U.S. housing market will need to raise billions of dollars in additional capital through stock sales, diluting the holdings of current investors.

Merrill Lynch (MER.N: Quote, Profile, Research, Stock Buzz) shares fell more than 9 percent, after Fitch Ratings said it may cut the U.S. investment bank’s debt rating, given expected ongoing write-downs and diminished prospects for earnings.

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Tags: Bank of America, Economy, Fannie Mae, Freddie Mac, IBM, Merrill Lynch, Nasdaq, NYSE, Recession, S&P 500, Stock Market, Wall Street

Nasdaq is set to launch tomorrow what its executives are calling one of the most significant developments on Wall Street in decades — a private stock market for super-wealthy investors.Minimum requirement for traders: $100 million in assets.

Any private firm can list on Nasdaq’s new platform, which is called the Portal Market, and raise money by selling stock to an elite group of shareholders. These companies would remain private and not have to make public their financial statements or submit to federal regulation, such as the Sarbanes-Oxley corporate accountability law. Continue reading »

Tags: assets, Citigroup, Goldman Sachs, Lehman Brothers, Merrill Lynch, Nasdaq, Wall Street

Robert Reich warns a recession, or worse, could be coming.

Think the last few days have been bad for Wall Street and the rest of the world’s markets? Hang on, things are probably going to get worse, says Robert Reich, President Clinton’s former secretary of Labor and author of the recent book “Supercapitalism: The Transformation of Business, Democracy and Everyday Life.” According to Reich, who currently teaches public policy at the University of California, Berkeley, the United States might even be headed toward a depression.

Reich: 'Now we have a mess on our hands. Bernanke has the only
       pooper-scooper in town, but it is too small for the job.'

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Tags: Alan Greenspan, Ben Bernanke, Clinton, Depression, Dow, Economy, Fed, Federal Reserve, global, Henry Paulson, IRS, Nasdaq, Rate Cut, Recession, Robert Reich, S&P 500, Treasury Secretary, Wall Street

Cleaning up the mess that Mr Greenspan left behind was never going to be easy. Banks and brokers around the world face more than half-trillion dollars in write-offs as a consequence of the US sub-prime mortgage crisis, which is spreading from the US property market and roiling global stock markets. It’s toppled the US economy into a recession and the tremors are also rattling Asian stock markets.

Roughly $7 trillion has been wiped from world stock markets since the beginning of the year amid fears of a severe US economic recession and financial institutions reporting more mega losses. “The market crisis will preoccupy us well into 2008,” he said German Finance Minister Peer Steinbrueck on Feb 15th. “The financial risks securitized by banks contained packaged explosives,” and he accused rating agencies of having a conflict of interest in the role they played in the process.

So far, the Bernanke Federal Reserve has pumped more than half-a-trillion dollars into the markets with open market operations and special emergency lending schemes, to help cushion the blow to the US economy and stock markets. However, there’s evidence that the Fed’s prescription for dealing with the sub-prime debt crisis, is actually making matters much worse, and leading to “Stagflation.” Continue reading »

Tags: Alan Greenspan, Ben Bernanke, Bill Clinton, Bubble, Central Bank, China, Commodities, Dollar, Economy, Fed, Federal Reserve, Inflation, money supply, Nasdaq, Oil, Oil Prices, Recession, Stagflation, Stock Market

LONDON (AFP) - European equities dived on Monday after heavy falls earlier in Asia as markets were gripped by growing concern that the US economy was slipping into recession, dealers said.

Stock markets in Europe and the United States had sunk late last week following signs that the fallout from the US credit crisis was far from over.

In late morning European trade on Monday, Frankfurt, London and Paris stock markets chalked up fresh losses of about 1.5 percent.

Asian stocks plunged earlier Monday with Tokyo ending down almost 4.5 percent, Hong Kong tumbled 3.07 percent and Seoul gave up 2.3 percent. Singapore and Sydney both shed about 3.0 percent.

“Not a great start to the week with the UK following falls in the US Friday and Asia today,” said Mike Lenhoff, strategist at brokerage Brewin Dolphin.

“What matters most to investors is what is happening in the US. Investors view the US as in recession or going into recession which is not good news for corporate earnings and the market.”

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Tags: Dow Jones, fear, Hong Kong, HSBC, Nasdaq, Nikkei, Recession, Singapore, Stock Market, Sydney, world