May, 2010
SEC/CFTC: ‘Yes, yes, we’re on the case…’
Joint statement out of US regulators on Friday regarding Thursday’s Flash Crash. Operative pars:
…We are devoting significant resources and expertise to this effort.
As we determine the cause and contributing factors,
Everyone should have expected the French inquisition
Arrêtez-vous, spéculateurs!
Taking a page from the playbook of their counterparts in Spain and Germany, France’s financial regulators say they intend to use any means necessary to crack down on evil,
‘The tension between masses and elites is every bit as intense…’
This might well make you shudder – a penetrating think piece by George Friedman of Stratfor, the global intelligence firm. He argues that what we’re in is a global crisis of political legitimacy.
Extract:
Dave’s worry list
From Gluskin Sheff’s ever-cheery David Rosenberg on Friday:
A quick recap then – two, three and five, check. One, four, six, seven, eight and nine, more of a wait-and-see. As for home price deflation,
Some tightening for the weekend
It seems CDS players are happy not to hold positions open through to Monday.
Prices from Markit:
As Markit analyst Otis Casey explained the tightening, “This is largely technical driven with profit taking and people liquidating positions before the weekend. Goldman Sachs COO Gary Cohn declined to comment regarding the status of any settlement talks with the SEC.”
CDS wrap: Carnage
Carnage. We’ve become inured to days of extreme volatility in the credit markets but today was extraordinary even by recent standards. The Markit iTraxx Europe index was trading at 146bp, an astonishing 26bp daily move.
‘We aren’t dinosaurs. Dinosaurs made oil. WE EAT OIL FOR BREAKFAST.’
The wits at the Awl have published a guest op-ed by ‘The Machines’, on the small matter of that Wall Street flash crash.
An extract:
From time to time, The Awl offers space to ordinary, everyday people to deliver commentary on the issues of the day.
Smell a re-write?
From Prudential Financial on Friday…
John Praveen’s Global Economic Outlook sees global economic growth on track to broaden and strengthen in Q2 with improving growth outlook in Eurozone and U.K.,
Rumours of ECB bailout calm markets
One of the grimmest weeks on European bourses since the dark days of late 2008 ended with a slight melt-up on Friday, compared to earlier losses — thanks to rumours of a European Central Bank rescue.
Flashes at the European close,
Insta-outrage, politicians and the flash crash edition
As the Dow Jones Industrial Average fell off a cliff on Thursday, FT Alphaville wondered: how would US politicians react?
The answer was not long in coming. Within 20 minutes of the close on Wall Street,
The dead, dead cat bounce
Oh dear. Equities got ugly again on Friday.
First, the FTSE 100, which dropped 200 points before climbing back to -175 at pixel time, as this chart shows:
Elsewhere, via Reuters:
RTRS- NASDAQ FALLS 3 PCT
RTRS-S&P 500,
US April non-farm payrolls rise 290k, beat forecasts
US non-farm payrolls rose by 290,000 jobs in April, the Bureau of Labor Statistics said on Friday. Economists surveyed by Bloomberg had forecast a gain of 190,000 jobs and Reuters had forecast a gain of 200,000 after March’s rise of 230,000 jobs.
‘A 12th ‘sigma’ event if there is such a thing’
Dennis Gartman, author of the daily investment letter of the same name and contributor to CNBC, has been in the markets a while.
But never in his entire trading career does he seem to have encountered anything like Thursday’s Wall Street plunge.
How to roll debt, Spanish style
Take $3bn worth of five-year bonds to market.
Offer an average yield of 3.53 per cent — 72 basis points more than offered the month before.
Politely force ask your domestic financial institutions to participate.
Nasdaq – “It wasn’t us”
From a press release issued by the US exchange on Friday:
The NASDAQ Stock Market Had No Technology or System Issues Associated With Yesterday’s Trading Between 2:00 and 3:00 p.m. Eastern Time.
Got that?
The NASDAQ OMX Group,
Rage against the machine, the soundtrack
Well, this brings a whole new meaning to open outcry. With a tip of the hat to Zero Hedge, these were the sounds from the S&P 500 pit, as the machines rose up and the Dow plunged (click through to listen):
Citic to Credit Agricole, CLSA: How’s your Chinese?
China’s growing interest in western financial institutions has taken an intriguing twist with Crédit Agricole’s joint venture deal with Citic Securities, China’s largest brokerage, agreed in a memorandum of understanding signed this week.
Markets Live transcript 7 May 2010
Markets Live chat transcript for the chat ending at 11:22 on 7 May 2010. Participants in this chat were: Neil Hume, FT Bryce Elder NHzzzzzzzzzzzzzzzzz NHzzzzzzzzzzzzzzzzz
Gilts react to hung parliament
So, Britain is set for a hung parliament.
Connect the dots on these flashes, via Reuters:
RTRS-615 UK ELECTION SEATS DECLARED; CONSERVATIVES ON 290 CANNOT WIN 326 NEEDED FOR PARLIAMENT MAJORITY
RTRS-UK JUNE GILT FUTURES EXTEND LOSSES,
Silver linings beyond the euro crisis and yen gyrations
The extreme currency gyrations of the last 24 hours have thrown the yen, euro and dollar in the spotlight, following Thursday’s collapse of the euro to an eight-year low against the yen and below $1.25 against the dollar.
Citigroup: Don’t buy this dip
As the market tries to figure out what the hell happened after 14.00 EST on Thursday — was it the trading robots or a fat finger — Tobias Levkovich of Citigroup has issued a warning to clients:
In the S&P 500 over time,
Overnight election reaction action
Nothing’s certain in the British general elections yet . . .
While we wait for a more decisive outcome, here’s a sample of the market reaction so far.
First the FTSE 100:
And up close:
The long gilt future saw an immediate reaction to the exit poll:
‘It’s the beginning of the endgame for…’ Belgium?
File this on under Sovereign crisis –> eurozone –> the search for the next Greece.
Sharp-eyed readers may have noticed a little dig in Independent Strategy’s note on sovereign contagion. Belgium,
‘A financial earthquake’
Here’s a eurozone-focused — but very eloquent — description of the sovereign contagion problem.
From Independent Strategy:
In engineering there is a stress point when a structure will start to vibrate at what is called its “natural frequency” (think of a bicycle frame at speed).
Lehman-Greece parallels du jour (III)
What’s going on with the yen? And what does it have to do with Greece?
The Japanese currency managed a surge on Thursday, then promptly fell over:
Friday’s FT has some detail:
The Bank of Japan moved to offer Y2,000bn ($21.6bn) in overnight liquidity on Friday to “increase markets’ sense of security” because of turmoil resulting from the debt crisis in Greece.
Blame the trading bots – again
Does anyone remember the high-frequency-trading outrage that erupted last summer?
Prepare yourself for a redux.
The blame for Thursday’s Dow Jones rout has swiftly shifted from a fat-fingered Citigroup trader to the rise of the machine-trading bots.That’s right,
Further reading
Elsewhere on Friday, and conveniently divided by geographical meltdown,
In the US,
- What caused the crash?
- How a market crashes.
- It was the yen wot did it.
- Did shutdowns make it worse?
- There had to be a second trader…
Pink picks
Comment, analysis and other offerings from Friday’s FT,
The Short View: Greed, fear, and confusion
The first Friday of the month with the release of the US jobs report is usually a banner trading day,