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Back To Square Minus 1: Regulators Fail To Agree On Short-Selling Ban
The latest iteration of the "rip your face off rally" was fun while it lasted. And now, it is, once again, about to be replaced with the "face your rip off" version, after the FT reported that European regulators have failed to agree on a coordinated short-selling ban, "leaving France and other advocates of the curbs considering unilateral action to stem the recent sharp falls in share prices." This means that the last ditch effort to prevent the daily wipeout in the FTSE MIB has now been pulled off the table, and all those who otherwise would have been forced to cover their halted futures positions as cash soared, will now sit pretty and wait for the market to come to them. It also means that while Europe could have potentially stood united, if even for a few more days, divided it will fall. But not all is lost: there is a potential loophole, and if the Borsa opens limit down, it may well be the final recourse: "The new European Union market regulator, Esma, is trying to co-ordinate action by national regulators and more conversations could take place today. A Thursday evening conference call was unable to reach unanimity." That, however, now appears like a long shot.
Global equity markets moved higher on news of the talks with shares in London, Paris and Frankfurt all closing up about 3 per cent. The S&P 500 was up 3.5 per cent in midday trading in New York after the lowest level of new US jobless claims since April provided some reassurance the economy was not heading for a double-dip recession.
The move to ban short selling would be reminiscent of action taken in the highly volatile period following the collapse of Lehman Brothers in 2008. But academics who have studied those bans said a similar move now could backfire.
“It is the worst thing to do right now. This would signal to the market there may be something fundamentally bad that is happening,” said Abraham Lioui, a professor at the Edhec business school in France.
But a senior French official argued a ban had proved to be an effective tool during the financial crisis. “It is a weapon we have when markets are dysfunctional. And the market has shown it is behaving dysfunctionally [on Wednesday and Thursday],” he said.
Yes, it is the market's fault it is behaving "dysfunctionally", and letting politicians intervene will surely fix it.
Perhaps this news explains why gold has retraced nearly half its losses from this morning. Absent another margin hike from the CME today, we are fairly confident the intraday gap will slam shut very shortly.
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Hoping the dumb money floats in tomorrow speculate on some puts
You're definitely going to get your wish.
By tomorrow, 75% of all lemmings will flood the market because they believe the markets will go up 30% before the end of this month.
I'm pretty sure, because that's what I did 3 years ago.
Tic Tac Tic Tac
Societe Generale Derivative Book Losses over 192.000 Mn.E
6 Asian Bank cutting lending facilities to French Banks.
Belgium CDS Long 2yrs.
Long German CDS 2yrs
Banca Intesa San Paolo 84.000 Mn.Euros in Peripherical Bonds(PIIGS EXPOSURE)
Sarkozy is kaput and u will c next week.
And Insurance Companies too.
Remember when Greece is invited to leave Euro zone. Credit Event will be activated so all CDS Premiums has to be paid by the Insurance Co. and Reinsurance will suffer big losses in the short term.
Its the reason to save the ICE market .To be or not to be , to Save JP Morgan or Crash JP morgan....The option has been created a new lehman crisis but now in the Eurozone.
- GOLD will be the new standard for world economy yes or yes. as new collateral.- Bullion Banks-Key
Not questioning your number but do you have a link for that?
They should be banning HFTs instead.
But what about CNBCs "high level source"??
some kids doing prank calls...