With the Nasdaq having finally eclisped its bubble-era record, the weight of the tech investing world now rests on the shoulders (or should we say "wrists") of just one company...
All problems, all crises, have at least one solution, if not many solutions. There is no such thing as an unwinnable scenario. Some may not be smart enough or courageous enough to see it, but the solution is always there, waiting to be discovered. The only fight that cannot be won is the fight in which the enemy makes all the rules and we foolishly abide by those rules. Life is not a game of chess, and a man can choose to be more than a pawn anytime he has the guts to do so. Collapse is already upon us; now we must decide who will determine what happens next.
Today, we find precisely how and why Sarao was singled out: he not only ratted out the parasitic trading strategies of the real culprits behind the broken market, the massive HFT firms (such as Virtu which just went public just a day before the Sarao charges were filed) which gave the "regulators" no choice: one of them had to be put away for good, but found a way to capitalize on the algos' stupidity, and actually make money by beating them at their own game. As such, regulators and exchanges such as the CFTC and CME had no choice but arrest him and prevent him from trading ever again!
Presented with no comment... ok well one! WTF!?
"What is different this time? Central banks are driving all investment decisions, and what this implies is that they are in this trade so deeply that there is no obvious or practical exit.... This is a dangerous situation. The focus must return to the REAL economy; we cannot trade our way out of past mistakes."
"The downside risk would be to have broad-based outflows if the macro story deteriorates further or the stock exchange collapses, which would create a confidence crisis,” one analyst tells Bloomberg, as capital continues to flow out of China. The country faces accelerating capital outflows, a looming economic downturn, and an epic stock market bubble, and ironically, efforts to combat the latter two problems are very likely to exacerbate the former.
Well, the Nasdaq finally did it. 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.
This is the story of an 11-year-old boy who bravely defended his mom’s used of cannabis oil during a anti-drug program at his school...
The evidence is mounting...
USA USA USA #15? Despite aerial bombardment, growing tensions with every neighbor, and the almost ubiquitous daily car-bombs, Israelis are "happier" than Americans according to Bloomberg's world happiness index. Happiness, it appears, is most abundant a long way from the equator with Switzerland, Iceland, Denmark, Norway, and Canada all topping the list; whereas the unhappiest nations are all in Saharan or sub-Saharan Africa (apart from war-torn Syria and Afghanistan).
Operating and reported earnings have turned sharply lower over recent quarters which has historically been associated with major market peaks. As shown below, it is also important to notice that revenue has tended to lag these downturns in earnings previously. This is because the measures used to substantially boost profitability from each dollar of revenue generated through accounting gimmickry, share repurchases, and cost cutting are finite in nature. When the effect of those manipulations fade, so does the inflated profitability generated from each dollar of revenue. This will be something worth watching closely over the next few quarters particular as the commentary of a "continued secular bull market" continues to hit the headlines.
Regular readers will be familiar with Christian Bittar, the former Deutsche Bank rates trader whose various exploits and adventures we began to chronicle more than two years ago. Now, thanks to the bank's settlement with the Justice Department, we know exactly what Bittar said on his way to manipulating the world's benchmark rates.