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Rosie On Who The Market Buyers Are
From this morning's Breakfast With Dave:
Is it the private client? Not really — stock funds actually had net outflows of $1.33 billion last week, while bond funds enjoyed an $8.2 billion net inflow.
Is it corporate insiders? Well, heck no — Robert Toll (CEO of Toll Brothers) just disclosed that he sold a total 1.6 million shares of his company’s stock yesterday.
Is it buybacks? Not at all — in fact, S&P 500 companies bought back a mere $24.4 billion on stock repurchases in 2Q, down 72% from a year ago and the lowest in recorded history, according to Howard Silverblatt of Standard & Poor’s.
So who’s doing the buying? Very likely it is still a combination of program trading, short coverings and portfolio managers desperately trying to make up for last year’s epic losses.
The permabid is the new riddle, wrapped in a mystery, inside an HFT market enema.
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The myth of "cash on the sidelines" is being advanced by idiots including Bob Pisani, Larry Fink, Bob Doll and other book-talkers with no better rationale for projecting future parabolic gains. What they are really saying is "Don't worry, there will be a greater fool later, so BUY BUY BUY now!"
Ponzi-esque, might you say?
Is it possible that there's cash on the sidelines outside the US?
I think you meant to say enigma ?
No, Tyler is making a joke. He's comparing HFT to a meth laced enema given to a race horse to increase performance, which kills the horse after repeated use.
Attaboy!
does Tyler really think that horses use bidets?
Horses have been proven to be fond of defacatoriums with bidetesque features.
giddy-up goldie, giddy-up
Tyler-
What are the ramifications of China allowing the yuan to appreciate against the USD? I seem to remember Hugh Hendry stating that this exact outcome could force him to turn bullish on risk assets.
Perhaps we should engage in our form of fiscal disciipline by 5-10K of us removing 5-10K of liquidity (simultaneously) from the checking accounts of those institutions running gambling prop desks disguised as customer friendly banks. 5K cash * 5K people withdrawing simultaneously would equal 25 mil, so 250 mil less in fractional reserve gambling money. If levered 40X, then 1 bil.
I'm in, queue forming at the teller line!
When you do this though they force you to fill out a stupid form that they turn into the fed....wouldn't you know it. It's none of their business but yet one more way they have their fingers in everything associated with our lives.
I thought you would withdraw a certain amount at a time without having to document (e.g. less than 10K)? Couldn't you go in a bunch of times & just whittle it down to nothing over a reasonably short period of time? ... might be fun to see how they react over time, too!
Of course, I don't know how much cash you're talking about. Most of mine is already in U.S. Treasuries... I have less than 50K cash in the bank now.
I withdrew my liquidity months ago. Anyone complaining about the TBTF banks should do the same, otherwise you are a hypocrite. If you are willing to fund these monsters with your interest-free deposit dollars, you have ZERO reason to complain.
That is exactly what I did: got disgusted by what is going on and moved most of the cash to a local mutual savings bank.
Sure, I'm getting only 1% until I figure out what to do with the cash, but at least the money should not be used for any funny business.
That is exactly what I did: got disgusted by what is going on and moved most of the cash to a local mutual savings bank.
Sure, I'm getting only 1% until I figure out what to do with the cash, but at least the money should not be used for any funny business.
I was thinking more along the lines of a "now you have it, now you don't" type of scenario where we could catch them with their hand in the cookie jar. 98% plus of my cash has been withdrawn but I keep a small amount in for convenience purposes. The cash that has been withdrawn has been accounted for already however by the banks. Money that is there and then instantly disappears at say, 10am on a given day, might cause problems for their levered prop desk since it is likely all the same pool of funds.
did it...last spring, did no good. The FED rushed in and made up the difference. I HATE this fucking Government interference...save the frat brothers, and let us die.
Whatever crazy, mentally unhinged activity is taking place on Wall Street one feels it will cost the Street dear in the longer run. People don't like putting their wealth in the hands of those who seem to be running a financial asylum.
/Whatever crazy, mentally unhinged activity is taking place on Wall Street one feels it will cost the Street dear in the longer run. People don't like putting their wealth in the hands of those who seem to be running a financial asylum./
Uhh...Sorry to burst your bubble (no pun intended), but if they even remotely gave a flying fuck about the long term, they wouldn't be in the situation they are in right now.
exactly, the sheep will run in one direction, then the other, at the direction of the wolves, and will have zero awareness of what they are doing.
I'm interested to see what everyone here uses as a proxy for 'cash on the sidelines'. What stats do you like to use?
What about the Fed? One of those dirty little secrets in their book of 'other secutities'.
But when does it all end in another crash or significant pullback of 20% or more?
Pick a date. Monday is fine.
Nobody knows. If you are worried, get out. It's a casino. You have no clue what will happen, nobody does.
Get out.
agreed. HFT is a slot machine.
i do, i have a clue - it is going to keep going up. Why would it stop? More dollars are printed - higher it goes. Giddy-up!!!
OK, maybe you have a few clues. But do you think you know what BB is thinking? And the Chinese? Do you monitor events on the ground in Spain? What if TimmyG gets stopped on the steps of the Treasury building one day and someone he knows really, really well says, "Knock it off or you've seen your last successful treasury auction." Who makes that call, and why, and who will Timmy quickly text on his Blackberry?
The board is set and the pieces are in motion. This game is operating at a level of complexity and daring unseen in the history of finances.
Good luck with that.
cougar
Q4 earnings season starts Jan 2010...I'll go with that. 3.5 months of dallying and waiting for retail sales in the holiday period.
Santa rally, or lump of coal ?
Forgive me, but who are "Rosie" and "Dave?"
One and the same, David Rosenberg. TD refers to him as "Rosie" and he writes a regular piece called "Breakfast with Dave".
ck the tag lines
There are probably 3 large entities making this market, running perhaps half of the daily trades.
Most of that, probably just HFT.
So in other words, the market is dead. As if the exchanges closed up shop.
And if it's dead, with a few computers gaming one another on sub-millisecond response times, then do these prices mean anything at all?
No, they do not.
There is no stock market. These are no longer investments. The entire thing is fictive, like a game show. It's for show, for the evening news, so someone can point to a chart and make mouth-motions and vocalizations like they did when the market still existed. So they can pretend things did not actually fall off a cliff a year ago next month.
Without that fiction -- without that diversion -- the jig is up and we move across the event horizon into whatever needs to come next. Nobody anywhere wants that to happen, because they have not the faintest clue as to what comes next, and there is a small but measurable chance that nothing -- big ziltch -- full stop -- comes next.
cougar
The market is one big game of soggy biscuit at the moment.
OK, I had to look up that reference... and immediately regretted it! Still, it totally fits.
Thank you for sharing... I think.
c
sorry to have soiled your brain, but it was the most apt analogy I could find.
i first heard the definition of that phrase as a teenager, and those neurons won't die despite much drinking.
Good post
I have been hearing "cash on the sidelines" for the last 10 years.
Hmm, let's say the primary dealers bid up equities, swap them with the fed, use proceeds to buy treasuries, collect interest, then use these profits to complete the circle jerky by bidding up equities....
A virtuous circle...for banks.
All or most funded by TARP and other backstops, with the implicit guarantee and the full faith and trust of the UST.
We're paying these parasitic f*cks to bone us.
And what are we getting out of it? Green shoots, CfC, M2 implosion, debt implosion, commercial lending implosion and record unemployment.
There is no plan and no exit strategy. This could go on for years. Could go on until every last dime of real wealth has been completely stripped from the carcass of the once-mighty US economy.
Goddamn.
cougar
you left out the part where he says the catch-all "liquidity" really means "I have no idea".
I think there is just a lack of sellers right now. Rather than being overbought, we are "undersold".
Yeah...everyone who rode the pony all the way down is trying to ride it all the way back up. Nobody wants to sell and take the losses. I imagine that could all change in a really big hurry though.
If you look at the market action from June 07 - early 08 (crash starting) you will maybe get an idea of price action.
This goes on until an 'event'. A bank collapse, a horrific payroll number, a plunge in TICS... until then, we just keep playing the HFT game.
Follow the trend. Scalp away. There's always warning to get out. Remember, markets tried to climb back after Northern Rock/Lehman.
Somewhat agree that an event is needed to trigger a change in market trend, but just a warning - it's always the same plot and players but the script might change given the level of scrutiny on HFT that this and other sites have generated. The programs are dumb but not forever cast in stone; their puppeteers are not politically brain-dead either. When everyone expects one thing, it takes nothing for one puppeteer to change 3 lines of code and the others would follow. Good luck. Need proof? Just look at how many pros and speculataors got scorched in UNG this last week.
If there are no real buyers, there can not be any real sellers either. Some panic selling happened a year ago, but are’nt there pension funds and other players who have to sell to meet obligations now? Something does not add up here.
Might be that Haywood’s point (#73523) explains who ends up with the paper.
This rally can go to the moon for all I care. It would make me happy if I knew things were really getting better, rather than knowing that the Fed is monetizing the debt. What kind of country monetizes its debt? I'll take Zimbabwe for $500 Alex.
The Dow will find its real handle at the low/mid 7k range and remain in a 50%-60% off the all-time high lockdown for eight to ten years.
Let's see....wasn't that the same post dotcom prediction for Nasdaq in 2000 ?? I'll check my archives.
why do people care about what this guy has to say. his long term track record is terrible.
The "money on the sidelines" is in Uncle Ben's printing presses.
That there is the money /in the pipeline/, no?
You want money on the sidelines? Check out China's red hot IPO market. Example Everbright Securities on Wednesday raised Rmb11bn ($1.6bn) in the first IPO by a Chinese brokerage in almost seven years, as investors piled in at 59 times its 2008 earnings. The issue was 100 times oversubscibed. Or how about Sinopharm Group Co Ltd, priced its initial public offering on Wednesday at the top end of an indicated range, raising $1.13 billion in Asia's second largest IPO this year. 500 times oversubscibed. This is what the bears are up against. Funny money capitalism coming out of China
the guy has been wrong for about 3000 Dow Points so far, he will be right eventually but who won't ?