Archive - Apr 2014

We get a modest sell-off... and the market breaks. As the popular saying goes: "the market may be rigged, but at least it's broken."

Earlier today, four "buzzing" US-based IPOs priced, raising hundreds of millions in cash, namely GrubHub ($193 million), OPower ($116 million), Five9 ($70 million), and Corium ($52 million), for a grand total of nearly half a billion in proceeds. So how much actual net income do these supposedly post-VC stage companies generate? Instead of boring readers with more numbers, here is a simple chart.

Presented with no comment:

TWTR -43% (from highs); Pandora -30%
NFLX -25%; AMZN -22%
FB -20%; Biotech -17%

The global Central Banks are relying increasing on verbal intervention. The reasoning here is very simple: actual monetary policy is proving to have marginal effects. In the US, every new wave of QE has had less and less impact on the stocks.

UPDATE: Nasdaq negative year-to-date; Biotechs 3-month lows. AMZN, FB, TWTR, NFLX, P all in Bear market territory

Shortly after 946amET, the stock of The Nasdaq OMX Group suddenly dropped in a mini-flash-crash from from 35.98 to 35.00 in just over 2 seconds on approximately 100,000 shares. As Nanex notes, this is what high-frequency-trading liquidity looks like. But now, an hour or so later, the Nasdaq index and most especialy its Biotech and high-growth names are being crushed. Biotechs are near 3-month lows, Momos are down 16 to 18% since FOMC, and Nasdaq is about to go negative for the year.

Is there any hope that we might actually elect a president with the mandate and courage to take down Wall Street instead of kissing its rear end in humiliating obeisance? The 2016 presidential election may be far away to those obsessed with the news cycle, but it's not too early to express one single hope: that we finally elect a president who doesn't kiss Wall Street's rear end every single day for four/eight years running. Either the next president issues an executive order (or whatever it takes) to enact these four administrative rules, or he/she is kissing Wall Street's rear end every single day of his/her administration.

Update: in direct flashback from the summer of 2011 when the ECB leaked news only to retract it within minutes, this just happened: CONSTANCIO: DOESN'T KNOW ABOUT 1 TLN-EURO QE MODEL REPORT

When in desperate need to crush your currency (being bought hand over fist by the Chinese), so urgently need to boost German exports, since you are unable to actually do QE as per your charter, what do you do if you are Mario Draghi? Well, you leak, leak, leak that you are contemplating QE, and then you leak some more. Such as today.

• ECB HAS MODELED BOND PURCHASES UP TO 1 TLN EUROS, FAZ SAYS
• ECB TESTS SHOW INFLATION COULD BE BOOSTED 0.2% TO 0.8%: FAZ

Like US inflation soared on the $1 trillion QEternity? Can't wait. In other news, expect zero reaction from gold on this latest news that another $1.4 trillion in fiat is about to flood the market. If only inbetween Mario Draghi's jaw bones.

The current rally off the 2009 lows is echoing rather strongly the surge off the 1982 lows and lining up uncomfortably close to the Black Monday Crash that took the S&P 500 down over 20% in 1987. Of course, it's always different this time; but the market's confidence that the Fed has your back and that computers are there to help not hinder leaves us with an uncomfortable feeling of deja vu all over again.

Another day, another pre-market pump and post-open dump... it seems a missed jobs number and a determined Fed is not a recipe to maintaining all-time record highs and hyper-growth expectations...

And all it took for the FBI, the SEC and now the DOJ to figure out the casino was rigged all along, was for a Michael Lewis book to do their job for them.

• DOJ PROBING HIGH SPEED TRADING FOR INSIDER TRADING: REUTERS

U.S. Attorney General Eric Holder confirms Justice Department investigation into high-frequency trading. http://t.co/ERuwcHcGLt

— WSJ Breaking News (@WSJbreakingnews) April 4, 2014

It is now quite clear why BATS CEO Bill O'Brien was so agitated during the Tuesday's screamfest on CNBC. As The Wall Street Journal's Scott Patterson reports, under pressure from the NYAG, BATS has hurriedly issued a statement correcting the CEO's false comments during the exchange with IEX's Brad Katsuyama. After Katsuyama said "you wanna do this, let's do this" clearly giving him an out, O'Brien stated that BATS priced its trades off 'high-speed' data feeds when in fact they price their trades off a much slower feed (and therefore 'enable' the exact HFT-front-running that is in question).

Presented with little comment aside to ask, WTF?

Curious why March hourly wages fell, and why the weekly number continues to trend at a near-recession level, and certainly one that does not support a 2% inflation growth case? Here's why: in March the best paying industry groups - information, financial activities and manufacturing (which actually saw a drop of 1,000 jobs in the past month) - added a cumulative total of... 2,000 jobs among them. Where was the bulk of the job gains? At the worst paying sectors of course.

Bad news is the best news this morning. A higher unemployment rate and worse than expected job creation is the new mother's milk for stocks which kneejerked instantly to new record highs. Bond yields are tumbling and gold is surging (back over $1300) as 'investors' believe this will signal an un-taper (because QE did so much good for so long) or lower-for-longer chatter (so more buybacks?). The USD is fading fast also.