After hours of debates, the moment appears to have come: the vote to pass the budget, aka the "save the European senior bondhodlers" vote, is on the table and voting should commence imminently.
As readers will recall, just after the abbreviated Thanksgiving session, there were some pretty dramatic afterhours fireworks, both in stocks, and in a variety of volatility indices, that of gold (^GVZ)most notably. As the charts below capture, the drop in the futures had offset basically the entire day's upside in the span of milliseconds, leaving many wondering just what had caused this. Luckily, courtesy of the Tabb Group's Paul Rowady we now know that this was yet another glitch borne out of the hyper-technological sophistication of the current marketplace, in which the smallest error can and will propagate through the system uncontrolled resulting in major losses for those who are aligned on the same side as the ponzi. In other words: it was yet another flash crash which luckily did not have a major impact as virtually no volume was being transacted in the market. All this merely means that Ben Bernanke, who is doing everything in his power to boost asset values, has increasingly more variables working against him as the system continues being pushed ever further away from its natural equilibrium, until one day it all just burns down.
One of the most long-suffering LBO names, Seagate Tech, has just decided to pull the plug on its going private aspirations. After on October 14 months of LBO rumors culminated with a press release from STX that the firm had received a "preliminary indication of interest regarding a going private transaction", today, just over a month later, the foreplay ended, and management is now forced to appease its angry shareholders by announcing a $2 billion share buyback having been snubbed by its PE suitor. Of course, this is too little, too late, and the stock is getting gutted in the after hours session. At last check the stock was just above $13, or a 6% slide from closing. Which begs the question: which hedge funds jumped late on the LBO bandwagon hoping to receive some of that 20% upside love? Well, quite a few it appears. The list below shows all the funds who bought for the first time by September 30, and possibly later. After all the LBO was not announced until October 14, and in this broken market it would be stupid to assume that this information was not leaked in advance. The question remains: who bought when, and who sold when. And how many of those who still have not sold, and played this name for the LBO are now stuck with far less valuable stock certificates?
Suddenly your world is out of control and you’re desperate for money. What do you do? Zero Hedge’s Cougar_w presents us with this fictional situation, only this time with an interesting twist. What would happen if two extraordinary creatures trying to coexist in a world of ordinary humans are overcome by money madness and walk into a bank to rob it? In this humorous, thought provoking and poignant excerpt of a larger story, we find out who has more humanity when put to the test.
In addition to the rout in the ES, VIX and GC which we pointed out earlier, there were some additional fireworks behind the scenes in today's after hours session. The CBOE Gold Volatility Index, the ^GVZ plunged by the most in over a year, as the index hit an all time low of 15.92 without the underlying making much of a notable move. The most curious aspect of the trade was that the entire dump occured in the AH session. Many were left scratching their heads over what caused this monstrous unwind in long vol positions: was this the unwind of a massive long ES/short GC arb? We don't know, although if rumors that a major fund is planning to stand for delivery of Dec gold turn out to be true, then obviously someone got confirmation today. Keep a close eye out on the GVZ. Should this price level persist on Monday, then the front futures contract will likely surge.
Earlier we pointed out that today was trending to be one of the lowest volume days in history. A volume surge accompanying a panic dump into the close managed to pull the daily volume just barely higher than last Xmas eve (though still about 60% of last Black Friday). What is more relevant is that just after the market closed, the bottom fell out. ES closed at the lows of the day (contrary to amusing flashing and epilepsy-inducing CNBC "breaking news" propaganda stating just how much better compared to the day's low the S&P was trading at EOD) as the entire world woke up just after 1 pm realizing that Monday has that very deja vu-ish September 15, 2008 aftertaste. Not surprisingly, VIX exploded to the week's highs, well past the Korean war threats, and a 14% move in one day. And, yes, that old backstop gold, pulled a VIX. What is most relevant, is that something big is happening just behind the scenes: ZB volume explodes to 608K, while the CME Ultra Treasury volume of 349K surpasses the prior record of 237k. Monday may just be a very interesting day as faith in the bailout machinery no longer works, and the Fed's two POMOs will mark the point where Brian Sack officially jumps the shark.
Even Steve Wozniak, the Co-Founder of Apple, Made a Freudian Slip Extolling the Virtues and Inevitable Dominance of Android!Submitted by Reggie Middleton on 11/19/2010 06:41 -0500
Steve Wozniack, Apple's cofounder, was actually quite accurate in his rather stark admission that Android will overcome Apple in the mobile phone market just as Windows overcame Apple. Lest anyone forget, Bill Gates and crew nearly put Apple out of business due to margin compression and the commoditization of Apple's high end - and eventually overpriced products. Android is doing the same, simply on a very compressed time horizon.
Google’s 3rd Quarter Operating Results: The Foregone Conclusion That Was Amazingly Unanticipated by the Street!!!Submitted by Reggie Middleton on 11/08/2010 11:35 -0500
An independent analysis of the grand slam Q3 earnings performance that was anticipated in full detail by BoomBustBlog, yet (and amazingly enough, as I attempt to wipe the sarcastic smirk off of my face) took the Street by surprise. Let the destructive creation commence!!!
Just because a red close in the only index the Department of Wealth Effects tracks, the Dow, would seem oddly suspicious in a market that is now entirely controlled by Benny army's of Hewlett Packard inkjets, we get news from two trading desks that the SPY just went HTB in the last ten minute of trading, coupled with some forced buy-ins for good measure. The farcical result is presented below.
BoomBsutBlog and the independent analysts vs Wall Street: I(we) say insolvent, or damn close, they say buy. Hmmm!!! Judging by affiliation and track record, who do you think is right?
It is peculiar that the firms that don't underwrite securities or sell information services are the most bearish on the banks, isn't it? Even the constant "just shut up and buy 'em" banks missed the ball on Google!
Today, the most fascinating fuck up in the stock market was not the flash dash in Renaissance Learning after hours, after the company announced it was handing out a $2 special dividend which based on some Keynesian version of mathematics resulted in a $9 surge in the stock price, but what is almost certainly a world record set in the churn of one of the most actively traded ETFs: the SPDR Select Sector Fund - Financials, better known as the XLF. As the linked Nanex data demonstrates, between the times of 14:25:18 and 14:27:20, someone sent out a total of 2,793,000 quotes on the Nasdaq exchange, an average of 23,275 quotes per second, and 23.3 quotes per millisecond! While we have not followed individual churn rates before, we assign today's quote bombardment in the XLF the world record (for the time being) in churning empty quotes. All joking aside, the SEC should immediately figure out who the offending party in this flagrant example of quote stuffing was, and politely ask just how it is that the entity could possibly expect that someone, anyone, could possibly trade on these 2.8 million quotes in 2 minutes, and if the intention was not to actually trade based on the massive quote packet (which is the only legal option, but that's a story for a parallel universe in which the SEC actually cares about the rulez), just what the actual intention of this world record in churn was?
Wall Street responds to my missive on the potential of concentrated derivatives risk blowing up the banking system. Traders, salesman and financial engineers chimed in, and made some cogent points. Of course, I must rebut. It is the actual rebuttals that are probably more stinging than the original article - particularly the one concerning hedge funds. Please read on and feel free to chime in. Don't forget to bring the "Fiery Sword of Truth!"
All three companies beat, yet Amazon not liking the news (down 4% AH), and now AXP going red. Of course, this being one of the most roboticized stocks, looks for the HFT crew to throw in some extra volumechurn in exchange for capital losses offset by liquidity rebates to bring the price back.
The tech trifecta reporting after hours. E-Bay beats across the board, Seagate misses, Netflix misses EPS, FCF plunges and has Q4 guidance below consensus, but new subscriber adds seem to be all that matters as computers lift every offer inciting a short covering rush.
Forget What You've Heard Elsewhere, This Is What's Really Happening to Apple's Margins. The Stock Has Yet To Factor the Facts In...Submitted by Reggie Middleton on 10/19/2010 10:55 -0500
Increased Competition begets more pressure on margins. It's simple business 101. But "Apple's margin pressure came from growth so rapid that they couldn't source the components fast enough" you say. I say you should just take a closer look at that story before you go around repeating it... Maybe the Android will listen to it?