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Trader Commentary On Cause Of Sudden Financial Weakness
You read it here first:
"Hearing bank selloff fueled by a competitor 's bank analyst relaying details of his conversation w/ Volker- which had a very hawkish tone. Chatter of a block of citi to trade post close."
A reader points out the following:
Subject: Brad Hintz met with Volcker - quick comments...
FYI, these comments have been making their way around the street due to what Brad Hintz said on today's AM call... I can confirm that Brad met with Paul Volcker and that this is a fair summary of what was discussed.
* Conclusion: the proposal is real, not just political theatre. Treasury is drafting a bill right now.
* "We are committed to ending investments in hedge funds and private equity.
It's a conflict of interest." They want to control hedge funds by controlling the prime brokers and cannot have the brokers owning hedge funds.
* The definition of prop trading will be narrow. They are "wrestling"
with market making risk. Looking at limitations on risk, inventory - so cannot take large bets on market making. Proprietary trading - Volcker asked Brad about how much in equities, how much in commodities. "Trading governments is fine as they will not blow themselves up."
* In Volcker's words GS is going to have to choose if they want to continue with bank charter or not. Seems to Brad like more than 10% of GS revenues at risk - keep in mind if they restrict fixed income, GS will be high ROE firm, but lower growth - if they have to sell private equity investment - will be up front gains, but what will they do with the capital as they cannot invest in trading?
* Volcker seems to expect MS will stay as a bank.
* Volcker also wanted to talk about what new players could grow to take positions of those who will be restricted. Brad sees few at this time that are big enough to be able to make the jump from AAA to the Majors
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I guess this aint Kansas anymore!
This has the potential to be a more serious sea change than most seem to think...Volker said early last year that at that time he basically had no influence...more recently, late last year I think, he said, to paraphrase, that while complete fixes to our structural problems would require a long time to fix, that simply showing that the ship was turning in the right direction would go a very long way to impact reality by changing expectations about the general policy direction...sooo...putting the above together with the spending "freeze"...these are steps that can easily be belittled on a purely factual level, but this is someone whose influence is rising fast and who was responsible for IMO one of the two most important positive economic events in most of our lives: stamping out inflation, for a while at least (the other event being Reagan's firing of the Air traffic controllers). So...the doomsday trades that depend on hyperinflation expectations and a fair number of other trends have the potential to change course for any reasonable investable time horizon...
And there is a new sheriff in town straight shooting
Volcker amongst the gang who can't shoot straight in
DC.
So, what we’re seeing is old one-gun Volcker brought out of Fed gang retirement to shoot a few blanks at paper targets after the bank vaults are empty and his Fed pals have fled with the loot? If there’s a new sheriff in DC town, a new “straight shooter,” I’d like to know who’s gonna be arrested and put in jail, and if the answer is nobody, which we all know it is, isn’t it time we stopped all this shuckin’ and jivin’ and mistakin' promises for reality?
Frankly, this movie may sell on Wall Street but it’ll never make it on Main.
Exactly, JR. What good is more financial and securities laws, when the regulators and prosecutors are not enforcing the existing laws in a serious way?...when the ringleaders of the greatest financial crimes in U.S. history are Too Big To Jail.
The only thing that has any hope of stopping the continual rape and pillage of investors, pensioners, city and state funds, and taxpayers is to see the entire Wall Street RICO crime syndicate along with co-conspirators in the mortgage industry, the Fed, Treasury, SEC, and Congress arrested and perp walked in handcuffs to federal and state jails. Now. Not 2 years from now.
You stole my thunder before I could post. ;)
But you nailed it. Seems to me that this is merely closing the barn door after all the prize stallions have been let out.
Whoop - dee - doo....
So, the banks, particularly Greedman's Sack, get to walk away with billions and billions of loot, while we're left holding the empty money bags.
And we're supposed to thank Obama and CONgress for putting an end to this?
Do they think that we are THAT stupid (maybe we ARE that stupid if all we do is bitch about it on a blog site)?
What I want to see is:
1. Public beheadings of major fraudsters. Or at least decently arrested, decently tried, and decently shot.
2. Clawback of all funds stolen by the banksters.
3. For those not experiencing item (1), general population in a maximum-security prison. Additional punishment includes being forced to wear sexy pink panties into the prison shower. I'd bet that some hard-core lifer "buck" would comment on their "purdy mouths". Or at least Moma's home being foreclosed on.
4. Open transparency and an end to this "it's in the public's best interest to remain oblivious to what we do to them".
5. The arrest and prosecution of Hank Paulson.
6. Free beer and wings for the drinking public, courtesy of TARP.
Funny, CNBC is blaming it on their interview with Bob Prechter. Repeatedly...
Along with commodities being down.
LOL. The Prechter Point. Surprised they didn't have "technical difficulties" halfway through the interview.
The Father of World Chaos was overheard
muttering "They will all drown in lakes
of blood. Now they know why they are
afraid of the dark. Now they will learn
why they fear the night."
Subject: Brad Hintz met with Volcker - quick comments...
FYI, these comments have been making their way around the street due to what Brad Hintz said on today's AM call... I can confirm that Brad met with Paul Volcker and that this is a fair summary of what was discussed.
* Conclusion: the proposal is real, not just political theatre. Treasury is drafting a bill right now.
* "We are committed to ending investments in hedge funds and private equity. It's a conflict of interest." They want to control hedge funds by controlling the prime brokers and cannot have the brokers owning hedge funds.
* The definition of prop trading will be narrow. They are "wrestling"
with market making risk. Looking at limitations on risk, inventory - so cannot take large bets on market making. Proprietary trading - Volcker asked Brad about how much in equities, how much in commodities. "Trading governments is fine as they will not blow themselves up."
* In Volcker's words GS is going to have to choose if they want to continue with bank charter or not. Seems to Brad like more than 10% of GS revenues at risk - keep in mind if they restrict fixed income, GS will be high ROE firm, but lower growth - if they have to sell private equity investment - will be up front gains, but what will they do with the capital as they cannot invest in trading?
* Volcker seems to expect MS will stay as a bank.
* Volcker also wanted to talk about what new players could grow to take positions of those who will be restricted. Brad sees few at this time that are big enough to be able to make the jump from AAA to the Majors
And this is Negative? How about Overdue?
+1000
Amen!! 20% of the US people free-marketed out of their lively hood by outsourcing their jobs to less free countries with desperate populations & these pigs squeal at the slightest bit of pain. Hope Volker & Obama run em' all into the slaughterhouse where they belong so the rest of us can finally eat again.
I'm curious, in what universe is anybody entitled to their job? You gotta earn your wage just like the rest of the planet. Don't blame te market for the standard of living you enjoy at the expense of the developing countries. Blame the powers that be that see fit to subjugate their populace so their buddies can extract their pound of flesh and make you unable to compete against the laborforce of the rest of the planet.
http://www.youtube.com/watch?v=1wiRhVzsXFM
"Don't blame te market for the standard of living you enjoy at the expense of the developing countries"
Supermarkets stacked to the rafters with goods like caves from Ali Baba and the forty thieves.. 4 bedroom houses with SUV's in the garage owned by workers who in other parts of the real world would live in 2 bedroom apartments and catch public transport. Unfortunately it's time to get real, lose the hubris, forget exporting "democracy", tone down the nationalism and thank the lucky stars for owning the worlds reserve currency... or it will soon end in tears.
Getting real is going to involve plenty of tears.
weskus, where can I find the full video of your avatar girl?
Amen!! 20% of the US people free-marketed out of their lively hood by outsourcing their jobs to less free countries with desperate populations & these pigs squeal at the slightest bit of pain. Hope Volker & Obama run em' all into the slaughterhouse where they belong so the rest of us can finally eat again.
Fool me once, shame on you.
Fool me twice, shame on me.
appreciate color
Overheard from EVERY SINGLE intelligent investor: "stocks way too expensive."
@Edna
Post of the year. Maybe this story makes the rounds because an excuse is needed for the selling.
7,522,200 share block just crossed AH @ 3.15. I don't watch C, so I don't know if that is a significant block trade, or not.
Do the math. That's about 23 million dollars worth of stock. NOT SIGNIFICANT!
Love these efficient markets. Third-hard rumor of a vague conversation tanks stocks.
Next up, a panda farts in China, crashing Hong Kong futures.
Either that or Bin Laden is captured and markets soar. Always loved that golden oldie.
capture rumor as opposed to a deep capture rumor.
How about they capture Obama and the markets soar.
Titled the new normal golden oldie.
Panda Farts?
Now there is an idea for new innovative derivatives to help lift our economy out of the toilet. Hell. Why not use CO2 also?
Pure genius.
Panda farts?
Sorry, Al Gore has already monetized them. Maybe derivatives angles could work.
Panda Farts new Chinese air rights? Quick
how do I dump that into my new CDO?
So I can overcollaterialize my fund to get a AAA rating from Moody's. Worthless
what do you mean? It's Panda Farts the gold standard of the marketplace....
+1000 >>>> ROFLMAO
was just thinking:
Volker has a heart condition.
This is noise to make gold/silver sell off and the smart guys will be buying.
So what.
lol
They're going full steam on this because they know the liquidity issue isn't going away anytime soon. Once the rules are established, the floodgates will open and everyone better be on the right side of the trade then.
Only difference will be that prop traders and the banks that employ them won't make billions in trading profits. Someone else will, maybe us.
Having said that. What do you think
bank earnings are going to look like
going forward? The dulcet tones of a
toilet flushing.
7,522,200 share block just crossed AH @ 3.15. I don't watch C, so I don't know if that is a significant block trade for them, or not.
Not really. But the again it's all relative.
The C trading patterns are well.. quite ominous to say the least.
Why anyone wastes the time and energy to trade this shit in the range still is beyond me. Was thinking "takeover" of some sort at some point but even that theory is invalid.
Anybody? Any ideas why this circle jerk of C day after day after day? Is there still profit? If there is, then who's so dumb to keep buying it and losing money in the trade?
Musical chairs on the foredeck of the Titanic.
Was that a cruse director's announcement?
Directions to the foredeck, please.
While I agree with you, walkure, the last 10 months have been moral hazard writ large. Why does anyone waste the time and energy on a bankrupt company? Because a lot of momo traders have made serious money off of this corpse. It shouldn't work that way, but our FRB and government have made it so. Dow 1000 never sounded so good, if only to restore some sanity to this country.
The trading profit only generates if someone else loses money.
That's why I'm scratching my head and asking, who keeps buying and losing money on this POS stock?
Or is there a system in place that generates a profit simply because the stock changes hands in nano seconds?
There's gotta be something else.
QE, helicopter Ben.
But their means of distributing funny money throughout the economy stops at "gentlemen's clubs" and hillbilly heroin.
Stop the nonsense. Take your medicine. Patton and MacArthur would be disgusted.
perhaps an arrangement on a grand scale similar to Hillary's futures trading account where 2 HFT prop desks trade zagillions of shares a day between each other snagging sucker market orders at wide spreads and at the end of the day the left hand wins what the right hand loses + the gains off all the sucker scalps.
WTF - this is no different than shooting dice in the alley but we use terms like "trading profits" or whatever to dress it up. This isn't investing, this isn't productive...it's just legalized gambling w/ odds to the house that happens to get certain "info" before others. More and more the market is a fricking gambling casino where many of the largest traded stocks aren't bought or sold due to book value, future earnings potential...just riding waves through moral hazard. If anybody cared to fix this taxes (or some deterent) should be significant to encourage companies be bought, held, and sold based on their outlook. Guess this would kill about half of all trading and profits to traders but what is the purpose of the stock market, after all. Provide long term capital to companies or bet on up / down move in a five minute ownership of a stock?
Check shadowstats.
Liquidity disappearing and HFT Prop
endangered species.
M-3 annual negative...
http://www.jubileeprosperity.com/
it was held in @ $3.15 all day for this print. $3.15 was the price of the secondary that was fumbled by geithner and pandit in December.
well at least these levels give cramerican's the chance to average down (yet again).
The answer is simple: THE money Will go into bonds. Ans that will influence rates and give the banks supreme power over thegovernment.
Look at citi, it has 1.8 trillion in funds. The official deficit is 1.4 trillion. Do the math!
Seriously, Volckner is such an idiot. It IS just political theater. Do you really think that this will fly on Wednesday?
Spear, Leeds & Kellogg
its called breaking an ending diagonal in an overbought market - don't make it too complicated
the market doesn't care about GS losing 10% of revs - get over your homoerotic obsession
trade the charts
nice to rifin.x break 750 today...been a while...
for the life of me, wfc keeps catching a bid, non stop. i don't understand.
Pandit sold 21,098, today. Not much, but one wonders why? Taxes? Bloodletting? He got the ultimatum, last week, so maybe he's just lightening up.
Sold today or *reported* today? IIRC, they are required to report within a 90 day window...
Good question, so I looked it up. Listed as 1/22, and the price was $3.31.
My trading algos are telling me that the reversal of this morning's rally is an extremely bearish sign indeed.
Ahooga...
http://www.jubileeprosperity.com/
^^ OK, WTF is that?
Diving Alarm
.
If we can't trust Brad "Lehman market perform" Hintz, who can we trust?
hmmm, so what does all this do to the infamous JPM short positions in gold and silver? who takes the hit for those?
i'm sure if we all think long and hard we can figure out some way for that loss to be taken by the taxpayers.
Gold headed for $350 and silver headed for $4
is no hit for those short and on unlimited Fed
credit lines. Anyone who wants to profit long
gold and silver may have to dismantle the Fed
and Treasury first. Maybe tomorrow;...
http://www.jubileeprosperity.com/
That GS chart is one ugly bitch. Wait until the Fed speaks tomorrow in tandem with the AIG hearings. I wonder what the Bubblevisionistas will do if Bernanke's vote fails to get cloture. The fan will meet the shit then, for sure.
BRK.B added to the S&P 500?
Burlington Northern out - the irony.
WEB strategy?
BRK may be a great sell on the pop...
http://www.jubileeprosperity.com/
> In Volcker's words GS is going to have to choose if they want to continue with bank charter or not.
The day after Volckerday, Austan Goolsbee reappeared in public: he was on Bloomberg TV saying almost exactly this (without quite naming GS). Is Goolsbee on Team Volcker now?
Goolsbee is skull & bones.
guys, this mail went out earlier. the market went UP after it. wasnt til the last 30 mins of the day when suddenly stuff moved down (shockingly from resistence TO support).
GS moved onto my "conviction buy" list, target $999/share. They treat shareholders right!
Dont bother. They'll go private @ $666/sh.
Sorry. Dupe.
WASHINGTON (MarketWatch) - Former Fed Chairman Paul Volcker is
scheduled to testify before a key banking committee on Feb. 2 about an
Obama administration proposal to limit the size and trading activities
of the nation's biggest banks. Volcker, the chairman of the Obama
administration's Economic Recovery Advisory Board, backs the proposal,
which aims to deter commercial banks from becoming so large that they
put the broader economy at risk and distort normal competitive forces.
Volcker will testify before the Senate Banking Committee, which is
considering whether to draft legislation based on the proposal as part
of sweeping bank reform legislation.
SELL!!!
Yep...
Reckon GS fans may be worried about that commercial banking status ?? Cut off from Big Daddy's free money ??
Hmmm.....they be vewy,vewy quiet.
You mean that sweeping regulatory change of a switchover to IMF that has been slowly and surely plotted out since 19fucking50.
I'LL TAKE VOLKER TIL HE DIES! AMEN.
So are you guys contrarian?
Or do you agree with everyone?
Oh... how much money will ZH continue to cost everyone who reads?
zh is not a trading site and you would realize that if you read it for just a bit.
i'm bearish as can be but trading the market, i go long and short.
I'm surprised ZH chose to post your commment.
stop feeding the trolls. don't dignify them any more than you have to.
Volcker THINKS this is real because Obama says so. But Obama is using him to look like a tough cop for the election. Does anybody really think the banks are going to lose power in this democracy? Put another way, are they going to stop donating millions and lobbying?
+100
Exactly. No real change until the real SHTF, which means mass riots and food shortages. We're not quite there yet.
removed
Its only confusing 'till everyone learns how to game the new rules. It calms down....banking and regulating headlines slow down...and we go back to normal.
Years ago it took big regulation threats to bring stock options into existence, now we take it for granted. So what new and improved, tax beneficial idea will pop up where people can clean up with loads of cash and get back to rigging the game for a precious few??
I left work early and came home to this? Turn those machines back on!
An odd note -- C and AIG both closed today at almost the same price they closed at exactly one year ago. Despite wandering all over the damn board, C was at 3.33 on January 26, 2009, and closed at 3.17 on January 26, 2010. Likewise, AIG (adjusted for reverse splits) closed at 25.20 on January 26 2009, and at 24.40 on January 26, 2010.
Seems to me that something is up with JP Morgan too... that one has come off quite drastically since the Obama press conference and it looks like it has a ways to go.
you guys continue to view some rational volcker policies as "bad" for the market
they are not
GS should go private or de-bank
if they force breakups, a jpm and bac could be worth DOUBLE the current prices
i mean, am I only one of the 1% of traders ou there who gets it???????
BAC could get 15/share for MERRIL
wake up!!!!
BAC swallowed Merrill and Countrywide, two companies that were headed for oblivion due to bad assets and leverage. What happened to those assets that were driving the companies out of business? The are still sitting right there on the balance sheet. If they sell or divest the companies, those assets will have to be marked by the fool er, buyer that purchases them.
Are their cash flow generating potential worth more than the potential negative equity on the balance sheet? You have to think this through.
All this cloke and dagger stuff is really over the top. There is smart money, and there is everybody else. If you trade with the smart money you win. If you trade against the smart money, you lose. My read is the smart money is short and they want to take this market down, way down. It really doesn't matter who said what to who. Today's action was negative, as has price movements for the last week.
The era of Positivism is slowly approaching. Cycles you know.... http://en.wikipedia.org/wiki/Positivism
Take a look @ my new Red Alert. We are on the verge of a major breakdown in the markets. Feel free to check my charts http://midasfinancialmarkets.blogspot.com/2010/01/red-red-alert.html and support my blog by following.
Good blog; good Blogroll. Thanks.
1/27/10
Early Bird:
ESH10:
This pattern is our KEY intermediate pattern (60 to 120 days)
Due to the fact that clearly taking out 1050.50 confirms the correction and in addition it opens the door for a trend reversal.
RCT (from 10/20/09)
Time expectation: 86 days from 10/20/09, today is the 67th day.
Neutral
Equalizer: 1050.50
Up Price Target: 1180.25
Down Price Target: 920.75
Immediate to short term:
We’re heading immediately down to 1072.00
Before the decline we should reach 1092.75 to 1093.50
Not reaching 1093.25 to 1093.50 is immediately bearish.
I’m not expecting a profound bounce at 1072.00,
In fact the opposite
It should continue down to 1067.25
At 1067.25 we have a possibility for a profound bounce
The compression percentages say we have a 30% chance to profoundly bounce at 1067.25
Failure to profoundly bounce at 1067.25
means we’re continuing down to 1062.00
the percentages are 90% we profoundly bounce at 1062.00
but there is a catch.
clearly below 1061.00 the bottom falls out.
We have a very serious compression hole
The hole begins at 1061.00 and ends at 1038.00
Therefore on this potential decline 1061.00 to 1062.00 is bounce or break time.
Regarding the decline:
Below 1084.25 moves the door handle
Below 1082.00 opens the door
Below 1080.50 we’ve entered the decline room
This decline potentially is different than the previous decline from 1148.00
Potentially it doesn’t stop until MAYBE 1018.00
Below 1018.00 within 3 minutes we’re at 976.50
masterchetrading@gmail.com
Interesting. Agree with your outlook. I have been looking at 10 and 25% of the .SPX move up from March to guage strength or weakness. Faltering around the 10% area of 1104 can lead to rotation down to the 25% mark of 1031. Its exciting to call a top now, and it might happen, but the downside of such a protracted move higher is a large, uncomfortable pull-back parameter. We might seriously delay a move higher with a move down here and subsequent range trade between 1031 adn 1104....but I have a hard time calling for a total reversal yet.
Personally, I am not confident in the mkt and can see a re-test of the March low. However, all I can do now is work around 1104 and see what unfolds.