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Art Cashin On The "Rumormonger Convention" And Why Traders Have Put Santa's Picture On A Milk Carton
With fundamentals, technicals, and now even headlines out of Europe largely irrelevant, it only leaves one market-moving thing: rumors. And yesterday was a terrific example of precisely this. Art Cashin does a "rumor by rumor" expose of the key "events", however unfactual, that moved stocks yesterday. If history is any indication, and it is, today will likely see the rumor brigade unleashed all over again shortly.
From UBS:
Rumormongers Hold A Convention, Sending Market On A Roller Coaster Ride - Traders spent Tuesday’s session with one eye on Europe and one ear pressed to the rumor mill.
Early on, the commodity boys were pushing the idea that the 2:15 FOMC statement would come with a hint of a QE3 program. That rumor never quite gained full traction but its proponents kept pushing it.
The hope of the QE stimulus and some early strength out of Euro allowed U.S. stocks to open better.
Then around 10:00, two different rumors collided. One was that Merkel had given a thumbs down on European bonds to fund the rescue program. The second was that Iran was running military exercises around the Strait of Hormuz and, as part of the exercises, might shut down the Strait.
The Hormuz rumor sent oil up nearly $3 and scared off some bids in stocks. The Merkel rumored scared off even more stock market buyers. The trouble with the rumors was that they had both been around before. The Hormuz story was around Monday and the Merkel story was around on Friday. But, as we say on Wall Street, a rumor without a leg to stand on will find some other way to get around. So, for some inexplicable reason, the two semi-stale rumors caught hold on Tuesday morning.
The rumor related selling ended shortly after 11:00 and stocks churned sideways.
The rumormongers were not through, however. A story began to circulate that the CIA or maybe NATO was setting up military training camps in Jordan or Turkey or maybe both. The camps were said to be for training and arming Syrian dissidents to overthrow Assad. This rumor never seemed to get real traction.
The sideways churning continued into the FOMC statement at 2:15. The mongers kept pushing the QE3 hope all the way to the statement.
When the statement hit, there was virtually nothing new and certainly no hint of any QE in the visible future.
Stocks began to sell off. The selling accelerated as new rumors popped up. These rumors maintained that the S&P might downgrade one or more European sovereigns overnight. That put renewed pressure on the Euro and stocks.
The selling continued until about 3:40. Then, influenced by market on close orders that were heavily tilted to the buy side, the bulls circled the wagons and trimmed some of the losses.
Unfortunately, the action on the close swelled the volume enough to make Tuesday a “distribution day”. Traders wondered if they should consider putting Santa’s picture on a milk carton.
As always, stay tuned to Zero Hedge for a front row seat as any and all rumors develop and spread.
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Art Cashin writes the best market porn by far. I particularly liked his description in the last line of all that swelling.
<Sorry. My mind is in the gutter this morning.> :>)
my throbbing investments...
To bad its not Bernanke's face on that carton!
I love the notion that a mere 24 hours later these are all suddenly baseless rumors -- and the sell off was all just "profit taking" or a "distribution day". Where does your magical clarity come from, Art? Is there some new evidence that proves these "rumors" wrong? Don't bother providing any in your piece. How ironic that your defense against "baseless" rumors consists of baseless accusations. Thank god UBS is here to clear things up for us all with its razor-sharp blade of non-evidence. Of course, if it wasn't for these negative tidbits from the blogosphere markets would have naturally levitated on the raw power of UBS' hopium.
What's the matter, Art? Caught on the wrong side of the trade? Embarassed that you told all your customers that Santa was coming? Oh wait... wouldn't the notion of a Santa Claus rally *also* be a rumor? And who spread that one, Art?
I guess you can either blame Mr. Market for not behaving as planned, or you can apologize for being wrong. Amateurs tend to blame Mr. Market.
I don't understand the animosity towards Mr. Cashin around here...(scratches head)
After being modded down SEVEN TIMES (???!!) I'd say there are some lovers of UBS floating around ZH. Happy Bonus Season, boys.
Any explanation? I'm seriously curious. Uh... was everyone here... long???
And if they were all just rumors, that have now been proven false -- how come the market's still going down. OK... Mod me down bulls, I guess... Where have the bears gone? (Weird day on ZH)
LOL? Because... apparently a few people here... love Art Cashin??? Go UBS, Rah Rah Rah??? Sorry but Art Cashin bet wrong and got creamed. Period.
..Kiss my ass longs.
"Sorry but Art Cashin bet wrong and got creamed. Period"
no need for the "Sorry but" part! +1
He's usually wrong about market direction.
Cashin is a 50/50 man now like most of the "professional" traders and investors. They were built into the largest bull market place in history, there is literally no way anyone could fuck up a trade, you could be pretty much guaranteed that you could buy something and double your money eventually if you sat on it.
Now the bunch of them are in the hard spot. A guy like Cashin runs his mouth on how super he trades, so far he's sitting on a lousy trading record since 2008. He's in the camp of the 9 investors that lose money to pay the 1 investor out on the other side of the trade.
Consider that he's paid to know his business and by the Hegelian logic of problem, reaction, solution. It just seems his solution falls short because he continuously fails to identify the real problem. The reaction part everyone knows, which is print more money, but understanding the problem is more important than the reaction and solution. From the cheap seats here on ZH, we don't suffer from that.
Practically everyone here is a proper dickhead (myself included) and has a piece to say. And like any mental scrum, it's the comments that start producing the shape of the problem. We identify the reaction, like go contrary to Cashin and a couple of other legacy traders MSNBC and CNBS drag out because they have identified themselves as buy and sell signals.
The solution part...I think we are all still working on that one. Oil, silver, gold, print money, deleverage, nuke a gay baby whale for jesus, whatever...
As you say, a crapload of the conventional wisdom was developed in slow moving markets that nearly always rose, except for the usual few-year boom bust cycles. The big boys, working with a game rigged in their favor, thought they knew how to trade. To quote something said about a politician recently - they were born on third, but thought they'd hit a triple.
Trading is fun again for those who can really do it it - with those guys as counterparties, it's taking money from self-assured idiots unable to adapt to the new conditions - or even realize that they obtain now.
I want to make a comment to all of those who talked shit to me three days ago about silver. Look who is laughing now. Down to $25.
Well, get ready to back up the truck if it falls under 15 again.
Then why don't you make comments to them instead of the board at large?
As for me, I'm selling a house in a few weeks, and will gladly trade the proceeds for more cheap metal.
If gold/silver keep falling I migh reach for the bottle too :)
they are off a cliff this morning... looks like gold will have a 15 handle today, silver with a 2 handle now.
Well I am loosing on stocks but if the price goes ridiculously low I buy physical, so either way I win :)
Sell the bottle. Reach for more silver.
Do you mean Doom Porn, or Market Porn?
-John
http://www.youtube.com/CarMarketer
so the rumor is that rumors will be moving the markets.
snafu
rumor bitchez ?!?
Good bye Santa.
We hardly knew ye.
read this article:
Collateral crunch, commodity financing editionhttp://ftalphaville.ft.com/blog/2011/12/14/796911/collateral-crunch-comm...
Rumor or fact:The time span for Technocratism is about 6 months.
From Reuters:
Domestic opposition to Monti's austerity programme is increasing and markets are refusing to reduce the pressure on Italy, whose fate is at the core of the euro zone crisis.
Italy had to pay 6.47 percent on five year bonds in an auction on Wednesday, up from a previous euro era record high of 6.29 percent in mid November.
Adding to the pressure, Italy's top union leader told Reuters that Monti's policies could cause a social explosion and it might be better for the country if he did not remain in power until the scheduled end of the legislature in 2013.
Fact.
Now, back to Gossip Girls doh! I meant market analysis.
And here's BUBA:
*WEIDMANN: TIME TO DROP IDEA ECB WILL SOLVE CRISIS PRINTING CASH
*WEIDMANN SAYS HIGHER BORROWING COSTS CREATE BUDGET DISCIPLINE
hence his nickname: 0ldsk00lweedMan
has weedMan been partying w/ the pirateParty?
enquiring pirates want to know...
Everything not nailed down getting blown away today.....
Catch the falling silver knife!
Wow look at silver.
I'm about to buy. Orders placed at 28.00, and down every 2.00, til ....... 0.00.
Wish me luck!
why not physical? wouldn't you feel better about your purchase?
Of course it's physical! Nothing but. (my dealer lets me place GTC orders for bars, coins, etc)
you've got it good!
the three places I keep buying from (online stores based in Germany) haven't even really lowered their prices today. (just a little over 10 cents now).
Make sure they have the silver on hand. None of that three month waiting list shit, awful way to lock your capital if you are waiting for your silver to be mined.
AGQ on the way up!!!
Rumors, yes. But he missed one that didn't necessarily move the market yesterday, but it will in time.
Apparently Monday's rumor that there were US troops in Jordan turned out to be Tuesday's fact.
Interesting.
And war is bullish...for Keynesians. (And gold typically goes up, relative to all other assets, during a war, too.)
and silver is now looking like the teenage nerd trying out roller skates for the first time. the fall is gonna be brutal to watch.
bad enough the school bullies loosened the rollers and greased the floor.
so what's really changed after all these years?
OT: Well, it turns out Meredith Whitney and ZH were 100% wrong (and I was correct) about the municipal bond market this year. I was getting junked left and right and told that I didn't know what I was talking about. The municipal bond market is up on average 10% through Dec. 12.
Boooyahh! touchdown dance! touchdown dance!
Everyone was being played by the media (and Jamie Dimon) while i was making monnneeeyyy!
http://www.bloomberg.com/news/2011-12-14/default-defying-muni-rally-show...
With regard to muni's, like everything else, it's not a question of "if", it's a question of "when"?
well, timing is everything in the investment world, and the timing in question was specifically this year.
"timing is everything in the investment world"
(sarcasm on) But the retirement savings dude who comes to my office to peddle his product keeps saying you can't time the markets" (sarcasm off)
Yea keep holding those safe paper promises.
There is risk with everything, including those gold coins buried in your back yard. And I am a gold fan by the way. I just don't have tunnel vision like many folks on this board, no offense to anyone, enjoy everyone's opinion and dig ZH.
Why is anyone surprised by this? We've got a headline driven algo market. Computers jumping on all headlines within nano-seconds to beat the other computers to take advantage of the news. For every fraudulent headline that drives the market there is someone sitting and waiting with a bucket to catch all the cash about to fall their way.
Computers can't out-smart a human investor but they sure can out-trade him
on the one hand, i think there should be a rule about news organizations and the dissemination of rumors without specific sources
on the other hand, there seems to be such an apetite for this garbage - so who do you blame the addict or the dealer?
it's actually been quite easy to trade for the past few months because you just wait for the rumors to come out and fade them.
Won't be long before ZH get shut down spreading rumours like QE3 and oil wars yesterday.
Everytime a ZH "rumour" comes out, the market moves for the way they are positioned.
Watch in horror as asset prices correct to pre-1980 levels.
There is no helicopter.
seems to be a nice bid keeping financial from imploding. Staples are up. Just the metals getting hammered. Yup seems normal.
seems to be a nice bid keeping financial from imploding. Staples are up. Just the metals getting hammered. Yup seems normal.
But wheres the Santa rally everyone had priced in? Just a lump of coal in the stocking this year I guess....gonna need it for heat.
No rumors to drive equity markets yet? Weird.
There should be one coming right before Europe closes, but if not then, watch for 3:30!!!
We are living in times of Financial Totalitarianims
http://thechinonomist.blogspot.com/2011/11/financial-totalitarianism.html
What's a “distribution day”?
For non-US readers who may be wondering what milk cartons have got to do with anything, "Traders wondered if they should consider putting Santa’s picture on a milk carton." = Traders wondered if Santa has gone missing. (They put missing kids' pictures on milk cartons in the US.)
Distribution Day--When so-called smart money puts over-valued and over-hyped assets on sale to be lapped up by so-called dumb money.
Milk Cartons--Have You Seen Me?--Pictures of missing children placed on milk cartons in the hopes they might be seen, noticed, reported to authorities and found/rescued.
SP500 daily chart resumes choppy downtrend. Opposite for USDX.
My long term indicators have continued to warn of USD strength and EURO weakness and these signals have increased since 2009. The overdue dollar rally should be substantial.
http://stockmarket618.wordpress.com