– Why Nav Sarao Had To Be Destroyed: He Found A Way To Beat The HFTs At Their Own Game (ZeroHedge, April 24, 2015):
Now that the confusion and the initial smoke following the stunning CFTC/DOJ/FBI allegation that the entire Flash Crash was the result of just one high latency UK trader’s actions has cleared, several critical things have emerged.
First: Nav Sarao not a typical massively funded, connected and lobby-protected High Frequency Trader, such as Citadel or Virtu, using countless algos across numerous fragmented markets to frontrun size order blocks, but an old-school “point and click” prop trader. This is how he described his trading style in a response to the UK regulator:
I am an old school point and click prop trader. To this day I am still using the mouse to trade. That is how I trade, that is how I always have traded, admittedly very very fast because I have always been good with reflexes and doing things quick. My trading is for the most part very short term and for very small profits, a large proportion of my profits are 1 price movements, which in the eminiSP’s case would be a quarter of a tick. I have also take longer term positions In the past and my biggest day was actually made for the most part whilst I was sleeping! Continue reading »
Tags: Banking, Economy, Global News, Government, Politics, Stock Market, U.S., Wall Street
– 11 Signs That We Are Entering The Next Phase Of The Global Economic Crisis (Economic Collapse, April 23, 2015):
Well, the Nasdaq finally did it. It has climbed all the way back to where it was at the peak of the dotcom bubble. Back in March 2000, the Nasdaq set an all-time record high of 5,048.62. On Thursday, after all these years, that all-time record was finally eclipsed. The Nasdaq closed at 5056.06, and Wall Street greatly rejoiced. So if you invested in the Nasdaq at the peak of the dotcom bubble, you are just finally breaking even 15 years later. Unfortunately, the truth is that stocks have not been soaring because the U.S. economy is fundamentally strong. Just like the last two times, what we are witnessing is an irrational financial bubble. Sometimes these irrational bubbles can last for a surprisingly long time, but in the end they always burst. And even now there are signs of economic trouble bubbling to the surface all around us.
The following are 11 signs that we are entering the next phase of the global economic crisis: Continue reading »
Tags: China, Collapse, Economy, Global News, Stock Market, U.S., Wall Street
– “I’m Not Crazy, I’m Scared” – Why For One Trader, This Time It Is Different (ZeroHedge, April 24, 2015):
Bloomberg’s Richard Breslow, author of “Trader’s Notes” is painfully accurate with his latest take on the “markets.”
I’m Not Crazy, I’m Scared Continue reading »
Tags: Central Bank, ECB, Economy, Fed, Federal Reserve, Global News, Stock Market, U.S., Wall Street
– Why Sarao Is The Flash Crash Patsy: He Threatened To Expose The “Mass Manipulation Of High Frequency Nerds” (ZeroHedge, April 23, 2015):
There are several notable items in Bloomberg’s comprehensive overnight summary of the epic humiliation America’s market regulators are about to undergo, complete with yet another round of theatrical Congressional kangaroo courts, which will lead to a lot of red faces, a wrist slap or two and maybe even the termination of one or two lowly employees and… nothing else.
Because what difference does it make?
At this point only a bottom-up overhaul can “fix” the fragmented, broken market which by definition can only come after the next market crash, one which will promptly be blamed on HFTs (which leaving the central bankers unscathed).
Back to the Bloomberg piece in which we first discover that it wasn’t even the CFTC that, 5 years later, “figured out” the flash crash was one person’s fault: Continue reading »
Tags: Economy, Global News, High Frequency Trading, Stock Market, U.S., Wall Street
“Fed has created abnormal market conditions by printing money and keeping interest rates low. Investors are looking for growth anywhere they can find it and tech companies are good targets – at these values, however, all tech stocks are expensive – even looking at 5+ years of revenue growth down the road. This means that most value-driven investors have left the market and the remaining 5-10%+ increase in market value will be driven by momentum investors. At some point there won’t be any momentum investors left buying at higher prices, and the market begins to tumble. May be 10-20% correction or something more significant, especially in tech stocks.”
– How The Second Tech Bubble Will Burst, In The Words Of Silicon Valley’s “Poster Child” And World’s Youngest Billionaire (ZeroHedge, April 23, 2015):
Back in December, following the Sony email leak, the world was granted a second (again uninvited) glimpse into the private life and thoughts of the person who had previously suffered another email leak, this time exposing his fraternity days explots: Snapchat founder and CEO Evan Spiegel.
And while many have been quick to mock Spiegel for some of his boyish ways, the reality is that the not only is the 24-year-old the world’s youngest billionaire, but he has quickly won the admiration of Silicon Valley’s brand names like Twitter CEO Dick Costolo who has said “I really think he is one of the best product thinkers out there right now.” Continue reading »
Tags: Economy, Evan Spiegel, Fed, Federal Reserve, Global News, Stock Market, U.S., Wall Street
– The Global Liquidity Squeeze Has Begun (Economic Collapse, April 17, 2015):
Get ready for another major worldwide credit crunch. Today, the entire global financial system resembles a colossal spiral of debt. Just about all economic activity involves the flow of credit in some way, and so the only way to have “economic growth” is to introduce even more debt into the system. When the system started to fail back in 2008, global authorities responded by pumping this debt spiral back up and getting it to spin even faster than ever. If you can believe it, the total amount of global debt has risen by $35 trillion since the last crisis. Unfortunately, any system based on debt is going to break down eventually, and there are signs that it is starting to happen once again. For example, just a few days ago the IMF warned regulators to prepare for a global “liquidity shock“. And on Friday, Chinese authorities announced a ban on certain types of financing for margin trades on over-the-counter stocks, and we learned that preparations are being made behind the scenes in Europe for a Greek debt default and a Greek exit from the eurozone. On top of everything else, we just witnessed the biggest spike in credit application rejections ever recorded in the United States. All of these are signs that credit conditions are tightening, and once a “liquidity squeeze” begins, it can create a lot of fear.
Over the past six months, the Chinese stock market has exploded upward even as the overall Chinese economy has started to slow down. Investors have been using something called “umbrella trusts” to finance a lot of these stock purchases, and these umbrella trusts have given them the ability to have much more leverage than normal brokerage financing would allow. This works great as long as stocks go up. Once they start going down, the losses can be absolutely staggering.
Tags: China, Collapse, Economy, Global News, Stock Market, Wall Street
For your entertainment.
When will the “market” crash?
Directly after Lord Rothschild has given orders to press the sell button.
– This Technical Signaled The Last Two Market Crashes And It Just Happened (ZeroHedge, April 17, 2015):
So the fundamental case for a 20 year bull run as BMO is calling for and certainly many other banks seem to be onboard with that is not looking great YTD. In fact, most perma bulls have shy’d away from even mentioning fundamentals other than to say that generally they aren’t looking great but don’t worry the Fed is still engaged. And so I feel its a worthwhile exercise to have a look at the technicals. Thing about the technicals is that you can cherry pick any baseline point to really make any case, good or bad. But if we take a look at a time period that encompasses several cycles we negate our ability to cherry pick the baseline and we can be much more confident in our overall analysis. Continue reading »
Tags: Economy, Global News, S&P 500, Stock Market, U.S., Wall Street
– LEMMINGS LOOK LIKE A PACK OF INDIVIDUALISTS COMPARED TO WALL STREET (The Burning Platform, April 12, 2015):
Since most of you are too lazy to read Hussman’s brilliant analysis every week, I’ve picked out the key paragraphs from this week’s letter. For the really lazy, I’ve bolded the key sentences. The lemmings on Wall Street are still confident as they march in lockstep towards the cliff.
“A group of lemmings looks like a pack of individualists compared with Wall Street when it gets a concept in its teeth.”– Warren Buffett
I had very vocal concerns about valuation during the tech bubble and the housing bubble, well before they burst. But it was a specific combination: extreme valuation coupled with fresh deterioration in market internals – the same combination we observe presently – that provided us with timely evidence that market conditions had shifted to urgent risk at what in hindsight turned out to be the very beginning of the 2000-2002 and 2007-2009 collapses. Those collapses wiped out the entire total return of the S&P 500 – in excess of Treasury bills – all the way back to May 1996, and June 1995, respectively, despite aggressive Fed easing in both instances. Don’t imagine that the current bubble will avoid a similar completion. Continue reading »
Tags: Bonds, Debt, Economy, Global News, Stock Market, U.S., Wall Street
– Stan Druckenmiller’s “Horrific Sense” Of Deja Vu: “I Know It’s Tempting To Invest, But This Will End Very Badly” (ZeroHedge, April 11, 2015):
“I just have the same horrific sense I had” before, Druckenmiller said to an audience at the Lost Tree Club in North Palm Beach, Florida (according to a transcript obtained by Bloomberg). “Our monetary policy is so much more reckless and so much more aggressively pushing the people in this room and everybody else out the risk curve that we’re doubling down on the same policy that really put us there.”
Tags: Economy, Global News, Stan Druckenmiller, Stock Market, U.S., Wall Street
– Quotes from the Great Depression:
“There is no cause to worry. The high tide of prosperity will continue.” — Andrew W. Mellon, Secretary of the Treasury.
– 2015 Or 1987? Computerized Trading & “A Crash Is Coming” Or Rates Mean “Bull’s Not Over” (ZeroHedge, March 31, 2015):
1987 Or 2015?
“They are not real buyers and sellers… these are computers that drive the markets down extremely fast…”
“A crash is coming…”
“A correction will prompt rate cuts which will ensure The Bull Market is not over…”
* * *
It’s never different this time… The Friday night before Black Monday 1987…
Tags: Economy, Global News, Stock Market, U.S., Wall Street
– This Is Your Broken Market On Central Planning (ZeroHedge, March 30, 2015):
At 1036ET, All S&P Sector ETFs, VIX ETFs Halted due to break on NYSE Arca
Update: 10 minutes later (TRADING RESUMED) kinda…
Pisani: “Sometimes, this just happens folks!”
Tags: Economy, Global News, Stock Market, U.S., Wall Street
– Kyle Bass Warns “The Fed Is Backed Into A Corner… Equities Are My Biggest Liquidity Worry” (ZeroHedge, March 28, 2015):
While Kyle Bass is usually the smartest man in the room, among this crowd he is Einstein as he carefuly explains – while sitting politely during status quo interruptions – the real state of the world “the unintended consequence of QE has been to widen the income gap,” what is behind the Potemkin Village of the stock markets, how The Fed is “backed into a corner” of raising rates against their will, and why bond yields (at the long-end) will drop further. Currency wars are net positive, as Greg Ip suggests, and will not end well, as he concludes in one section, “why haven’t all the Yen left Japan already?”
“How many rich people do you know today that are poorer than they were at the peak in 06/07 (apart from Dick Fuld), I don’t think I know any.. QE has been distributive to the rich… but now that the world has started this policy it is unable to end it…
the next recession will be a hard one because the tools in the toolbox are not there to avert a severe downturn…” Continue reading »
Tags: Economy, Fed, Federal Reserve, Global News, Kyle Bass, Quantitative Easing, Society, Stock Market, U.S., Wall Street
– The Bottom’s Not In——Why This Market Is Dumber Than A Mule (David Stockman’s Contra Corner, March 26, 2015):
They were trying to put in a bottom—–again! The sell-off earlier this week amounted to the sixth sizeable “dip” since November 20—-so the market’s ingrained reflex was back at work all afternoon, trying to scoop up the “bargains”.
But the roundtrip to the flat-line shown below is not a classic “wall of worry” and its not a “bottom” that’s being put in. This market is dumber than a mule, and the nation’s central bank and its counterparts around the world have made it so.
Tags: China, Economy, Global News, Stock Market, U.S., Wall Street
– Who Left the Crash Window Open? (OfTwoMinds, March 22, 2015):
Can stocks keep hitting new highs even as sales and profits fall?
Given that we live in a world where a modest 3% decline in the stock market triggers panicky demands for more quantitative easing (QE 4), few observers expect much a correction, regardless of the souring fundamentals such as sales and profits.
A correspondent notified me of a Puetz “crash” window (based on the analysis of Stephen J. Puetz) opening in late March-early April. (Since I am not a subscriber to Puetz’s work, I can’t confirm this.) As I understand it, while these windows do not predict a crash/sharp correction, such moves tend to occur in these windows, which are based on cycles and events such as eclipses.
So I decided to look for any evidence that a sharp correction might be in the offing. Continue reading »
Tags: Collapse, Economy, Fed, Federal Reserve, Global News, Stock Market, U.S., Wall Street
– “Market Is Hyper Overpriced” Warns Retiring Fed President; “Significiant Correction” Coming (ZeroHedge, March 20, 2015):
Fresh from a well-publicized dollar dispute with Goldman’s Gary Cohn, recently retired Dallas Fed chief Richard Fisher made an appearance on CNBC Friday and spoke with Rick Santelli. There were quite a number of notable exchanges including the following zingers..
Santelli: “If you had to rate the US economy 0-10 where would you peg it?”
Fisher: “We’re #1., we’re a 10. We’re the epicenter of growth and in the sweet spot.”
Santelli: “Do you think any part of the stock market being high has anything to do with the committee you just left and if you didn’t grade the economy on a curve would you still give it a 10?”
Fisher: “Well, what worries me is how totally lazy investors have gotten, totally dependent on the Federal Reserve and I find this to be a precarious situation.”
Fisher: “Are we vulnerable in my personal opinion to a significant equity market correction? I believe we are.”
Then Santelli pulls out a Pavlov reference suggesting that the Fed has in fact conditioned retail investors to be lazy prompting Fisher to point out the irony in the fact that global financial markets are depending on a “diminutive woman” (Yellen) to play Atlas. “What worries me is that the people that watch this show are completely dependent on the Fed — look at the volatility. I could see a correction taking place of substantial magnitude.” Continue reading »
Tags: Economy, Global News, Stock Market, U.S., Wall Street
– Surprise: Tech Company Valuations Are Completely Made Up (ZeroHedge, March 18, 2015):
Talk of a massive bubble in the red hot world of private tech companies is getting louder of late. As we noted last week, Prem Watsa recently highlighted what he called excessive “speculation” in tech stocks and predicted that at the end of the day, habitually slapping billion-dollar valuations on unproven companies that often have little more than an app and a dream will end “very badly.” This comes on the heels of Mark Cuban’s warning that stretched valuations in private tech companies are far more dangerous than any perceived Nasdaq bubble 2.0, as at least with overvalued publicly traded firms there’s liquidity.
Well, now that everyone is jumping on the “there’s no way that app is worth $50 billion” bandwagon, Bloomberg is out with a startling revelation: “Snapchat, the photo-messaging app raising cash at a $15 billion valuation, probably isn’t actually worth more than Clorox.”
No, probably not, but it sure is more fun than doing laundry, which is why it absolutely makes sense that the number VCs are putting on the app makes absolutely no sense.
Here’s Bloomberg: Continue reading »
Tags: Bubble, Economy, Global News, Stock Market, Wall Street