Markets Down - Risks Up
Five days ago the Bank of Japan finally increased its interest rate from 0 to 0.25 percent. The famous carry trade, borrowing in Yen for near zero interest to invest in well paying U.S. dollar 'assets', started to unravel.
Worse than expected U.S. economic data, the Fed's unwillingness to lower interest rates and an escalating crisis in the Middle East, added to the insecurity.
All global markets are dropping or expected to drop. The most insincere 'assets' though are dropping the fastest:
bigger
Source: Coinmarketcap
Top token Bitcoin traded 11% lower at $52,680 as of 8:39 a.m. in London, adding to a 13.1% drop last week that was the worst since the period when the FTX exchange imploded. Ether shed over a fifth of its value before paring some of the slide to change hands at $2,342. Most major coins nursed losses.The declines come as a global stock selloff intensifies, reflecting concerns about the economic outlook and questions over whether heavy investment into artificial intelligence will live up to the hype surrounding the technology. Geopolitical tension is rising in the Middle East, adding to investor skittishness.
...
Digital assets are a victim in part of the unwinding yen carry trade, as speculators adjust to higher interest rates in Japan, according to Hayden Hughes, head of crypto investments at family office Evergreen Growth.“Those investors are also fighting a drastic increase in hedging costs based on the volatility in the US dollar-Japanese yen trading pair,” Hughes said.
Another hype that finally receives much deserved scrutiny are the glorified but unreliable machine learning algorithms currently marketed as 'Artificial Intelligence'. No profitable use-case has been made for billions of bad investments in these.
bigger
Source: Sherwood
Pre-market NVIDIA shares are down 10%.
Another banking crisis is coming up in the U.S. where the value of commercial real estate has drastically decreased:
Banks are the largest lenders to commercial real estate (CRE) and have grown the business in the past decade. These loans are coming due amid decade-high interest rates and a drop in demand for office space stemming from hybrid work—upending a traditionally lower-risk business for banks. Financial institutions have yet to fully come to terms with their losses; the reckoning is coming.
Geopolitical risk has increased too. The 'West' is losing its proxy war in Ukraine. There is no chance for it to unsettle a Russia which is steadily gaining strength.
The conflict in the Middle East is threatening to develop into an escalating spiral of retaliation strikes and counter-strikes designed in part to pull the U.S. in:
Israel has been bracing for potential retaliation on multiple fronts since two incidents last week: Israel was blamed by Hamas and Iran for the killing of Ismail Haniyeh, Hamas’s top political leader, while an Israeli airstrike killed a Hezbollah senior commander and five other people in Lebanon. Israel has declined to comment on Haniyeh’s death.
...
Israeli Prime Minister Benjamin Netanyahu held a meeting of his security cabinet on Sunday to discuss preparations for any counterstrike.
More retaliatory resistance strikes would follow those Israeli counter-strikes and on and on.
The market slump, as well as the geopolitical issues, have great potentials to explode.
Posted by b on August 5, 2024 at 10:35 UTC | Permalink
next page »The SP500 VIX (which is the average implied volatility of the index) has risen suddenly from around 20 to 50. For most of the year the VIX has been trading below 15, and in recent weeks around 12. It spiked on Friday to 20 and now seems to be going to 50, implying massive volatility (read= decline) ahead.
Also, @DarioCPX has been screening bank balance sheets for a long time and said something like this could inevitably happen. The commercial real estate woes would certainly be a major contributor to bank loans going bust. And there could have been some sort of credit event among Japanese banks, forcing liquidation, resulting a cascade effect in all markets.
https://x.com/DarioCpx/status/1820354399048544563
Re. Bitcoin, remember that BlackRock and other institutions have basically taken it over after ETFs were released. Some say that BlackRock and the US government are using BitCoin as a vessel to suck in retail (small investor) money, and they use BitCoin as a liquidity reservoir, which they will empty in case of a banking crisis or government debt crisis. So Bitcoin is a buffer and will be the first to go, as we saw in this occasion.
Even gold and silver and other commodities are down, but most likely they are down because margin calls hit the market and liquidity is drained, but gold is not necessarily the first asset from liquidity is drained. If March 2020 is any indicator, the gold slump was relatively shallow and it can continue to rise higher from external buying, and the declining confidence on the western FIAT system.
Posted by: unimperator | Aug 5 2024 10:53 utc | 2
/alights
Would now be a good time to buy a computer? :) Or was that yesterday?
/watches the bar placidly, occasionally tilting head and turning neck
Posted by: titmouse | Aug 5 2024 10:56 utc | 3
THE JAPANESE CARRY TRADE:
Over the years a very lucrative play for rich investors was to borrow yen at aero interest rates than buy American securities that paid say 4% dividends-one is making 3.75% for nothing.
What made it even move lucrative is that the yen has been falling for years (so one makes money on the difference in the currencies) and the American stock market is going up so one is making even more lucre on the stock appreciation.
Now its a 20 trillion market that's been borrowed fore this purpose-now that Japs put up their interest rate (.25% which i minimal but breaks the 15 year trend) the yen strengthens then players have to sell their American equities which plunge the stocks (so more selling) in order to pay back the yen loan (which increases the strength of the yen) leading to a downward spiral for the equities and appreciation for the yen.
Japan is finished , at least for a generation.
Treasuries are being bought by the fistful -
10 year at 3.7% ( down from 4.6% in April )
Maybe my De-Dollarization thesis is pre-mature , TBD
Posted by: Exile | Aug 5 2024 11:01 utc | 5
@ unimperator
The SP500 VIX (which is the average implied volatility of the index) has risen suddenly from around 20 to 50. For most of the year the VIX has been trading below 15, and in recent weeks around 12. It spiked on Friday to 20 and now seems to be going to 50, implying massive volatility (read= decline) ahead.
or equally read massive opportunities. VIX does not predict direction.
btw Yen is through the roof. Even looking at S&P futures which are open and give a good guide to later opening prices, the market is down just over 2% today, down 10% in a week, but only back to levels from June and still up 10% on the year.
Posted by: Mickey Droy | Aug 5 2024 11:06 utc | 6
"Treasuries are being bought by the fistful -
10 year at 3.7% ( down from 4.6% in April )
Maybe my De-Dollarization thesis is pre-mature , TBD"
Posted by: Exile | Aug 5 2024 11:01 utc | 5
No de-dollarization is happening : think about this- Japanese 10 year at .3% interest rate; US 10 year at 3.7%; such that the 'reserve' currency rate is 10 X that of Japan's-that is de dollarization-US needs more interest rates to attract buyers of the debt.
And the Yen strengthened 3% against the greenback overnight-its happening
Treasuries are being bought by the fistful -
Posted by: Exile | Aug 5 2024 11:01 utc | 5
---
Not by choice. Banks and other Market participants are forced to follow de-risking rules.
Posted by: too scents | Aug 5 2024 11:09 utc | 8
Iran has informed Jordan via Foreign Minister meetings in Teheran that the low key build up of British forces in Jordan has been noted (Jordan and the UK are linked through the Royal Family and often train Officers in the UK don't forget).
What else was discussed is anyone's guess, but the Jordanian Foreign Minister looked like he was being marched to his execution at times, visibly shaken and speaking incoherently at times. Must have been a very serious meeting.
Posted by: Jordanian Observer | Aug 5 2024 11:10 utc | 9
You write, " Financial institutions have yet to fully come to terms with their losses; the reckoning is coming."
Their goto strategy is to privatize profits and socialize costs. This is what TARP did, this is what Student (Mutuum) Loans are.
Look for Mitch McConnell to mumble something and George W. Bush to stutter something else while they put the downside on us and reward themselves,again, with bonuses from our treasury.
Posted by: Timothy Murray | Aug 5 2024 11:11 utc | 10
The Western financial system has been bankrupt for many years now. We all know that it will be going down; but the problem is when? The timing is up in the air because if a bank holds a worthless asset on its books for $100 billion and the regulars don’t complain, then the system keeps going. They choose the time, which will be right for themselves.
But the system is even more unstable since it is actually designed to fail. You can temporally create wealth from nothing when the system is growing (printing money). But just like in physics, when the system contracts, then this wealth needs to be returned; but it is stolen instead.
So like good little sheep, let us make WW3, have our markets blow-up, and have all of our assets disappear while pretending some bad guy in the Middle East or in Russia is to blame. While we go ahead and worship the true bandits like Gods. What a racket.
So is this the big one? If not, it will be months and not years.
Posted by: meshpal | Aug 5 2024 11:17 utc | 11
About the guardrails ==> https://www.bis.org/basel_framework/
Posted by: too scents | Aug 5 2024 11:22 utc | 12
Treasuries are being bought by the fistful -10 year at 3.7% ( down from 4.6% in April )
Maybe my De-Dollarization thesis is pre-mature
Yup. The dollar isn't going anywhere in our lifetime (or even our grandchildren's lifetime) sorry. We (the West and it's allies) go through this sort of correction every decade or so. Remember 2008?
Posted by: bored | Aug 5 2024 11:25 utc | 13
"Treasuries are being bought by the fistful -"
Posted by: Exile | Aug 5 2024 11:01 utc | 5
That is not exactly a vote of confidence in American debt; much of that buying is directed by selling American equities, paying back Yen loan than parking the money in Treasuries which they can use for sureties for other lending activities.
Further, buying Treasuries at that rate is an illustration of GREAT FEAR!.
Meanwhile trillions of money is being destroyed
Posted by: meshpal | Aug 5 2024 11:17 utc | 11
According to Ed Dowd, the system needs continuously new and more injections of debt money to stay afloat, or even temper the decline. The latest excuse for massive debt injection through government bonds was the 2020 COVID. In 2008 GFC the banking system basically collapsed, but they reset the thing through massive injections of money to the banks.
What is the latest excuse for massive debt injection? Maybe it is the 'war economy'? Handing out free money to immigrants in the US pouring over the southern border and same game plan in EU? And the system actually needs more and larger amount of debt injection to stay afloat. The US jobs and economic data has been 'massaged' to patch up the deteriorating core, which is actually more like rotting away. The illusionary data game is now sinking away and revealing the massive gaps beyond the band-aid repairs.
China, meanwhile, while many western experts think it's 'about to collapse', have actually misunderstood what they are doing. China actually did not provide anymore Quantitative Easing for the financial markets, and hence did not inflate their market. The Chinese stock and real estate market might fall, but it isn't really in a bubble state like the western markets. The western experts are unable to understand the difference between financial economy with artificially inflated prices, vs. a real economy which is floating naturally, with losses not socialized.
Posted by: unimperator | Aug 5 2024 11:29 utc | 15
What happened to "slowly at first, then all of a sudden"?
Posted by: paddy | Aug 5 2024 11:31 utc | 16
canuck | Aug 5 2024 11:28 utc | 14
The US treasury and Federal Reserve are running a huge psyop! As are the other monetary manipulators.
Posted by: paddy | Aug 5 2024 11:34 utc | 17
Posted by: canuck | Aug 5 2024 11:28 utc | 14
Every FIAT currency is derived from the US dollar. That's simply why during a crisis time the flows will go into US bonds. They are, like Dmitri Orlov put it, 'mini-me's ' of the dollar.
Paradoxically that is precisely the reason why the whole system can sink, as US law makers can destroy the entire system through bad fiscal policies amid deteriorating current balance, and economy in the US itself. Because the debt is spiraling, and in order to not blow it up, other assets need to be drained to keep the spiraling debt afloat. Obviously they could also print the money but that might not be a good idea amid de-dollarizing economies.
The final plug we are waiting when most of the global south simply walks away from USD denominated debt.
Posted by: unimperator | Aug 5 2024 11:36 utc | 18
new and more injections of debt ...
Posted by: unimperator | Aug 5 2024 11:29 utc | 15
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Debt isn't injected. It is sold into the Market. Creditors demand a risk premium.
If the debtors are eating their own dogfood hyperinflation will result.
Posted by: too scents | Aug 5 2024 11:37 utc | 19
"No profitable use-case has been made for billions of bad investments in these."
No publicly known use-cases. Successful ML investment algorithms don't get advertised. And if everyone did it, any advantages would be competed away.
But there is a lagging indicator on that. It's called "iiLWL" aka 'increase in length at waterline" of the partner's new yacht.
As to "AI" being useful, it a big (10-20%) addition to productivity in some sectors. (But I wonder if that is one-time thing.) I think second order effect will be large. Other sectors, not so much at this point.
Posted by: Ed4 | Aug 5 2024 11:56 utc | 20
Anyone know what the practical effect of the forthcoming Chinese restriction on drone components will be?
Will it affect Russia more, or Ukraine, who have a thriving drone industry based on Chinese components?
BEIJING, July 31 (Reuters) – China on Monday announced export controls on some drones and drone-related equipment, saying it wanted to safeguard “national security and interests” amid escalating tension with the United States over access to technology. The restrictions on equipment, including some drone engines, lasers, communication equipment and anti-drone systems, will take effect on Sept. 1, the commerce ministry said. The controls also affect some consumer drones, and no civilian drones can be exported for military purposes, a ministry spokesperson said in a statement. The drone export curbs come after China announced export controls on some metals widely used in chipmaking last month, following moves by the United States to restrict China’s access to key technologies, such as chipmaking equipment.
Posted by: YetAnotherAnon | Aug 5 2024 11:57 utc | 21
"Every FIAT currency is derived from the US dollar. That's simply why during a crisis time the flows will go into US bonds. They are, like Dmitri Orlov put it, 'mini-me's ' of the dollar."
Posted by: unimperator | Aug 5 2024 11:36 utc | 18
No, I disagree.
If foreigners were buying US bonds the last week one would see dollar appreciation, we have not.
Last Monday the dollar traded 1 to 153 yen-today it is one dollar to 153 yen.
If foreigners were jumping to US bonds the currency would weaken to the dollar-obviously, the opposite occurred.
I would suggest that Luxembourg (everyone who understands the Fed realizes that Luxembourg is actually a secret fed account) or another Fed proxy is buying the bonds to give relief to the equity market and show, US, hmnnn, 'exceptionalism'.
I'll keep to my practice of the past two years of buying senior gold producer's equity, gold bullion and junior gold stocks in equal measure.
Aug 5 2024 11:37 utc | 19
Debt markets are manipulated by the central banks who can/will buy up debt (effectively print fiat).
The US fed has $7.2 trillion in 'assets" all debt it bought to keep interest rates low!
Last week overnight reverse repo was running less than $400 billion a day (a huge amount based on history, but not huge since the covid interventions), what will it be today?
US federal reserve tightening has been agonizingly slow!
Son quantitative easing, the central banks biggest holders of government debt.
Posted by: paddy | Aug 5 2024 11:58 utc | 23
Retaliatory strikes.....tilts head and yawns.....talk is cheap....so cheap....no one can even dent or shake the genociders....the people that can station and build a strike force in the area are the genocide enablers.....no one to date has done anything to shake the resole of the Apartheid State...some dead baby killers and a few blown up tanks isn't much of a winning hand.... with missiles hitting everything except Apartheid Infrastructure is playing by their rules....it's a war, they don't follow rules while everyone else gets stuck behind Red Lines......
Cheers M
Posted by: sean the leprechaun | Aug 5 2024 12:04 utc | 24
Last Monday the dollar traded 1 to 153 yen-today it is one dollar to 153 yen.
Correction: -today it is one dollar to 142 yen
Banks in Japan are taking out loans using their own shares as collateral. Wonder how that will turn out. The central bank also owns bank stocks.
Reminder: SOFTBANK IS BORROWING AGAINST ITS SHARES LIKE #FTX WAS DOING USING $FTTLet’s see how long wall street geniuses will take to figure this out, I did it about 9 months ago
Furthermore Masa even pledged his own #SoftBank shares to access leverage to inject in the vision fund
Narrator: and the #BOJ is the second largest shareholder of SoftBank
Posted by: unimperator | Aug 5 2024 12:20 utc | 26
sean the leprechaun | Aug 5 2024 12:04 utc | 24
No wonder you oirish men are a bunch of losers. Sort of like some of those self flagellating cults.
I thought the doom and gloom of the Scots was bad... I guess doom and gloom is permanently attached to the Mac and O type prefixes.
Posted by: Peter AU1 | Aug 5 2024 12:21 utc | 27
I have to wonder if last weeks big stock dump by Berkshire (and others I am sure) was about covering the yen carry trade blowup this week.
Posted by: SwissArmyMan | Aug 5 2024 12:23 utc | 29
It looks to me like somebody(ies) had a hole in their balance sheet to fill.
Could the S&P's cutting of Ukraine's credit rating to 'selective default' on Friday have anything to do with this?
Posted by: dh-mtl | Aug 5 2024 12:25 utc | 30
For example one can ask google:
"What is the flight velocity of a swallow?"
Posted by: jared | Aug 5 2024 12:29 utc | 31
The mighty US fart bubble going down in a ball of methane flames.
http://cdn.history.com/sites/2/2015/04/hith-hindenburg-.jpg
Posted by: Peter AU1 | Aug 5 2024 12:30 utc | 32
The banquet of consequences.
https://asia.nikkei.com/Opinion/The-dollar-s-days-as-a-universal-reserve-currency-are-numbered
Posted by: jpc | Aug 5 2024 12:31 utc | 33
"It looks to me like somebody(ies) had a hole in their balance sheet to fill.
Could the S&P's cutting of Ukraine's credit rating to 'selective default' on Friday have anything to do with this?"
Posted by: dh-mtl | Aug 5 2024 12:25 utc | 30
I think that is a cause, but a minor one; the biggest cause is the implosion of the yen carry trade as the yen strengthens it forces invesators who borrowed yen to buy dollars to buy American equities.
Summer liquidity is also the second major cause as anyone on Wall Street or in London or European cities with any money is on Holiday.
"I have to wonder if last weeks big stock dump by Berkshire (and others I am sure) was about covering the yen carry trade blowup this week."
Posted by: SwissArmyMan | Aug 5 2024 12:23 utc | 29
Yes, Buffet selling 50% of his Apple shares certainly spooked the market:
"On Saturday, in a filing with the SEC, Buffett revealed that he had dumped almost half of his Apple stock, netting $76 billion. Earlier this year, the company sold a smaller number of shares, bringing the total sold this year to more than 500 million shares, representing 56 percent of Berkshire's total stake in Apple."
Posted by: dh-mtl | Aug 5 2024 12:25 utc | 30
No. Owners of Ukraine bonds will take the loss, or cds sellers will take the loss. Ukraine debt is not 'significant' from a worldwide asset perspective.
Posted by: Mario | Aug 5 2024 12:41 utc | 37
Posted by: unimperator | Aug 5 2024 10:53 utc | 2
=================================================
The USA is out of order, hence equity markets needs a meltdown to wake people up and get them finally to smell the coffee.
The USA is out of order, they've been supporting a provoked genocide in Palestine.
The USA is out of order, they've been supporting not one but two terrorist nations.
The USA is out of order, and they need a reminder of who is charge.
Ironically Muskie was calling for a civil war in Caracas and Southport UK but it looks is coming to the USA.
Some people are even questioning whether Muskie is part of Trump's swamp. Is he?
Later I will revisit yesterday's quizz. That's gonna be fun.!
Posted by: AI | Aug 5 2024 13:07 utc | 38
Posted by: canuck | Aug 5 2024 10:59 utc | 4
===================
Japan's been a zombie for years. First hand experience when in Tokyo and the collapse of the CDO trading desk.
Posted by: AI | Aug 5 2024 13:10 utc | 39
Posted by: canuck | Aug 5 2024 10:59 utc | 4
===================
Japan's been a zombie for years. First hand experience when in Tokyo and the collapse of the CDO trading desk.
Posted by: AI | Aug 5 2024 13:10 utc | 39
That's not what I am talking about-with all due respect you don't understand the incredible leverage and the arbitrage caused by the yen carry trade.
Anyone know what the practical effect of the forthcoming Chinese restriction on drone components will be?
Will it affect Russia more, or Ukraine, who have a thriving drone industry based on Chinese components?
Posted by: YetAnotherAnon | Aug 5 2024 11:57 utc | 21
I did a bit of research and according to the Chinese Ministry of Commerce restrictions will apply to drones:
With flight times of more than 30 minutes
With attachments that can throw objects
That weigh more than 15.5 pounds (7 kilograms)
which would cover nearly all of the civilian drones modified for military use. Depending on how vigorously enforced, it would mean Ukraine will have to jump through a lot more hoops to get the drones they are using. This is great news. It would no longer be as simple as ordering it in the US or Poland then reshipping it to Ukraine.
As for Russia, they have their own industrial capacity for drone making, unlike Ukraine which have to rely on ad-hoc solutions. If there are holes in Russian capability that need to be filled with off the shelf drones, I'm sure they can apply for some sort of exemption behind the scenes on a governmental level thanks to their good relations with China (if it doesn't exist already).
Posted by: Autumn | Aug 5 2024 13:25 utc | 41
Posted by: canuck | Aug 5 2024 13:18 utc | 40
======================
What makes you think I don't?
Posted by: AI | Aug 5 2024 13:28 utc | 42
"Yup. The dollar isn't going anywhere in our lifetime (or even our grandchildren's lifetime) sorry. We (the West and it's allies) go through this sort of correction every decade or so. Remember 2008?"
You are very wrong on this. So much has changed since 08, and they never fixed the problem that smacked everyone in the face in 08. I'd wager 2020 is how they're going to respond to financial collapse unless they gin up a war. I think 2020 was a financial response with a side of pandemic.
Posted by: Mr. House | Aug 5 2024 13:30 utc | 43
"Posted by: canuck | Aug 5 2024 13:18 utc | 40
======================
What makes you think I don't?"
Posted by: AI | Aug 5 2024 13:28 utc | 42
Well it goes hand in hand; Japan becomes a zombie nation because of low interest rates (to keep their exports up, and govt. interest payments down) which weakens yen such that Western sharpies exploit this trend-now that party has stopped.
If the West cuts interest rates while Japan is raising them, won't that be funny.
Posted by: too scents | Aug 5 2024 13:44 utc | 45
"Yup. The dollar isn't going anywhere in our lifetime (or even our grandchildren's lifetime) sorry. We (the West and it's allies) go through this sort of correction every decade or so. Remember 2008?"
"You are very wrong on this. So much has changed since 08, and they never fixed the problem that smacked everyone in the face in 08. I'd wager 2020 is how they're going to respond to financial collapse unless they gin up a war. I think 2020 was a financial response with a side of pandemic."
Posted by: Mr. House | Aug 5 2024 13:30 utc | 43
Mr. House you are right on; today, 2024, is Act 3 of the play "Lower Interest Rates to Kick the Can down the Road" which began, the initiating incident, in 2008.
And, you are correct in 2020, Act 2-now the only escape for the Western Elites is sanctions and seizures of foreign (read Russia, China, abd Iran) assets, huge propaganda (showing how Russia, China and Iran are 'evil' and going to kill us) served with a huge dollop of censorship, surveillance and social shaming, then WW3.
You should post more often...
AI and Apple are two vastly overhyped assets, Apple is reduced to a phone maker (why shouldn't Samsung be equally valued?). And AI is all hype. Epistemology has been trying to define "knowledge" for over 3000 years, and we're no closer than ever. Logical systems only return tautologies, there is no intelligence at root. There is no way for AI to know how to weigh the common and wrong info from the obscure, nuanced and correct info. AI doesn't know how to weigh various propositions, how to weigh their relative merits.
Remember, when the shit hits the fan, the US has been the first to recover; though all may have a bit of feces on them, the US dollar remains the belle of the ball. Germany used to be a safer haven (but too small). China will fill that role, but the propaganda is strong and many in the West believe China to be a house of cards (that's US).
Posted by: Scottindallas | Aug 5 2024 13:48 utc | 47
Perfect timing for a "distraction".
Who needs that "distraction" most?
Iran? ... Israhell? ... Uncle Sam?
All of the above?
Posted by: Arch Bungle | Aug 5 2024 13:58 utc | 48
Japan is finished , at least for a generation.
Posted by: canuck | Aug 5 2024 10:59 utc | 4
I hope they're holding a garage sale ...
Posted by: Arch Bungle | Aug 5 2024 14:01 utc | 49
Posted by: canuck | Aug 5 2024 13:35 utc | 44
===================
Great. Now you agree with me. Japan is a dying walking zombie.
Posted by: AI | Aug 5 2024 14:06 utc | 50
Perfect timing for a "distraction".
Who needs that "distraction" most?
Iran? ... Israhell? ... Uncle Sam?
All of the above?
Posted by: Arch Bungle | Aug 5 2024 13:58 utc | 48
I don't think it is a distraction.
The West has run up so much leveraged debt since 2008 that what is happening now was inevitable-as a matter of fact I am amazed they managed to keep the Western 'boat afloat' for 15 years-would have ended in 2019 when the repos hit in September 19 but the covid firehouse of cash kept the Wolf, or should I say, Bear, from the door.
Seeing WW#3 develop on three fronts doesn't help, I agree-but it is the straw that broke the Camel's, or should I say, the Bull's back.
The conflict in the Middle East is threatening to develop into an escalating spiral of retaliation strikes and counter-strikes designed in part to pull the U.S. in:
...
The market slump, as well as the geopolitical issues, have great potentials to explode.
Posted by b at 10:35 UTC | Comments (44)
Is b trying to suggest that the disruption in the Japanese banking system is being instigated by the Zionists?
If you want to get the US involved in a war make it about the money ...
Posted by: Arch Bungle | Aug 5 2024 14:07 utc | 52
"@31
A European Swallow or an African Swallow?"
Posted by: Fred777 | Aug 5 2024 14:12 utc | 53
Neoliberal Paper Tiger Magic Money Economy
An economic system that completely disregards the mass production of low-cost standard goods, relentlessly attacks domestic trade union cohesion and is too specialised in manipulating human desire through advertising and the use of 'pieces of paper' such as share certificates and banknote.
Mao Zedong once called US imperialism a paper tiger, but even then it still had more substance than it does now.
The West, where we live, is becoming bloated with bluff and Advertisment, and its substantive value is disappearing year by year.
Posted by: Nokaz | Aug 5 2024 14:22 utc | 55
Obvious occurrences accelerate
Schwab, Fidelity Traders Report Outages During Stock MeltdownAugust 5, 2024 at 4:21 PM GMT+2
Charles Schwab Corp. and other retail brokerage users reported outages as a global stocks selloff surged when trading in the US market opened on Monday.
More than 14,000 users reported an outage at Schwab at 9:50 a.m. in New York, according to the website Downdetector. The firm didn’t immediately respond to a request for comment, but a company account posted on the social media platform X said that some clients “may have difficulty logging in to Schwab platforms.”
“Please accept our apologies as our teams work to resolve the issue as quickly as possible,” the firm said, without confirming the size or scope of the outage. Schwab had 35.6 million active brokerage accounts as of as of June, according to its second-quarter report.
The global market was roiled over the weekend following Friday’s lackluster US jobs report and the most significant crash of Japanese equities in more than a decade.
The website Downdetector also reported issues at Fidelity Investments, which the firm separately acknowledged in an X post. Fidelity didn’t immediately respond to a request for comment.
Posted by: too scents | Aug 5 2024 14:36 utc | 56
A.I. Author is an idiot . Editor, the Emperor’s Soft’worn’ made to measure. Apple , fall from gravity , tree. Microsoft a Y2K Con job selling reliability and mythology in patches . So , sell everything and buy the war . Surely there is stimulus in destruction . Bird flew or flu , who knew . Best bit , byte … the herd is having problems logging on to their accounts . Sure , blame the digital dark cloud storage . Coin- incident! Sure . Log on if you can to sell into the abattoirs . Ever seen an INDIAN ROPE TRICK . Rope a dope . Sell and buy a war . A plague won’t do it this time .
Posted by: Paleologos | Aug 5 2024 14:50 utc | 57
Hmm….have a good friend that is a data analyst at a hospital system in the Midwest USA; they said they were sent home do to massive corporate wide system breach/hack that started early this AM.
This is what 5g asymmetrical warfare looks like, a coordinated attack on systems for important sectors of the economy (healthcare and finance). Could be just one lever of more attacks soon to come in the Mid East proper. We can’t be so naive to think they would limit there attacks to just physical assets in Israel proper….
Posted by: drsmith | Aug 5 2024 14:58 utc | 58
Putting the Zionist story aside, first of all, Japan's fiscal structure has been doomed for quite some time.
The fiscal structure has been doomed for decades.
It has the worst debt problem in the developed world, which the Japanese themselves knew about and yet continued to put off the problem.
And Japan's demographic and industrial structure is highly vulnerable to shocks now.
We have 120 million people, an unusually large population in my opinion, crammed into an island, but we don't have the food production capacity on our land to support this population.
Japan's economic growth after the defeat in the WW2 was based on the export of manufactured goods to the USA.
Those manufactured goods could be produced in large quantities because the post-war baby boom generation was young and able to withstand high workloads.
You may have heard somewhere about Japan's overwork problem, but whatever it was, explosive economic growth was achieved for a while by overworking the young population, which was in excess.
However, people get old.
The population that expanded in a short period of time has now entered old age.
The Japanese people (mostly old) can no longer endure long working hours.
Many people are too old; if they work any longer, they will die.
In fact, they are dying fast and furiously.
As such, the elderly in Japan today want to live on pensions with the assets they have accumulated in their youth.
A country that cannot sustain its own population on the food it produces on its own land is trying to live off the scraps of paper it has saved in exchange for various other things.
You can see how dangerous this is, can't you?
A country where many people live on 'paper value' such as pensions and stock price can easily destabilise society if the value of those pieces of paper is distorted.
Posted by: Nokaz | Aug 5 2024 15:07 utc | 59
Hmm….have a good friend that is a data analyst at a hospital system in the Midwest USA; they said they were sent home do to massive corporate wide system breach/hack that started early this AM.
Posted by: drsmith | Aug 5 2024 14:58 utc | 58
---
QoS loadsharing only works if there is sufficient installed capacity in the "cloud".
Investing in boring infrastructure isn't done when the kool kids want AI. There is a two tier system anyway and non-retail orders get executed.
Not by accident, the two tier system is win-win.
Posted by: too scents | Aug 5 2024 15:07 utc | 60
/cheep
It does seem like a lot of instability in service of maintaining a decoy. I wonder what it is they don't want us looking at? :) That money is rotten inside?
I thought humans all knew that, so often wanting it and claiming it the root of evil. :) Maybe it's the idea that money is pretend, and what matters is who controls its issuance? That would mean wars are pretend, a way to steal nesting sites (assets).
:) Oh well. Maybe it'll all make sense later. I still have sunshine and love for free.
/watches with occasional rapid head turns
Posted by: titmouse | Aug 5 2024 15:11 utc | 61
Japan has apparently been a dying zombie economy for three decades now, yet life expectancy keeps going up, they have more Michelin-starred restaurants than ever, and their "producer goods" manufacturers are going gangbusters.
https://www.fingleton.net/the-japanese-electronics-industry-a-rebuttal/
"Industries go through life cycles. When an industry is young, it typically requires leading-edge manufacturing techniques and thus production is dominated by just a few advanced nations. As it matures, other nations catch up. And this is what has happened in memory chips and other so-called “commodity” semiconductors. Whereas Japan was the world’s biggest producer in the 1980s, it long ago passed the torch (and much manufacturing technology) to Taiwan, a nation that trails well behind with a per-capita income at market exchange rates less than half of Japan’s. This might be tragic if the Japanese had nothing else to do. In fact electronics manufacturing is a fast expanding universe and, while some Japanese corporations such as Sony are in trouble (by the way, how is Zenith doing?), the overall Japanese electronics industry has found ever more challenging new worlds to conquer. It is busy making a host of leading-edge producers’ goods that though invisible to the consumer are driving the electronics revolution. Examples include tantalum capacitors, charge coupled devices, laser diodes, ceramic packaging, and LCD drivers. Such components are essential in countless applications from cellphones and car navigation devices to optical fiber communications networks and avionic systems."
"In the end the way to decide this is to look at overall economic aggregates. This is something Katz seems not to have considered. I have never seen him mention, for instance, Japan’s remarkable trade performance of the last two decades — the so-called lost decades of the popular imagination. It ranks as the most impressive of any advanced nation. Japan’s current account surplus – the widest and most meaningful measure of its trade – zoomed more than three-fold between 1989 (the last year of the 1980s boom) and 2010 (the year before the earthquake). In the same period, America’s current account deficit ballooned more than five-fold. Japan’s performance also contrasts markedly with that of such formerly strong trading nations as the United Kingdom, France, and Italy, which are now going ever more deeply into debt."
Posted by: YetAnotherAnon | Aug 5 2024 15:13 utc | 62
ZH has a posting up as a follow on to too scents | Aug 5 2024 14:36 utc | 56
about the market techie problems
Retail Traders Furious As Outages Hit Major US Brokerages Amid Black Monday Chaos
The quote in an X tweet from Big Fish
They solved the problem. You cannot dump your stocks if you cannot log in.
I don't see the genie going back in the bottle folks. That genie is faith and it is gone for now.
The simple solution is to nationalize finance in the West but that opens a pandora's box of social organization changes that are coming for the West but folks aren't ready yet.
I want to be able to stop writing...the shit show continues until it doesn't.
Posted by: psychohistorian | Aug 5 2024 15:14 utc | 63
What a coincidence ... Just one day before the Hiroshima Atom Bomb commemoration ...
Posted by: Arch Bungle | Aug 5 2024 15:16 utc | 64
The rule during a crash is that "all correlations go to 1" as those that are leveraged have to sell whatever assets they can to raise cash fast, which tends to be those assets not so much affected by the bubble - even risk off assets such as gold. In the 2008 crash, gold fell 30% to US$700 before bottoming and then rallying to US$2000 in the next few years.
Risk off assets usually bottom in the first crash, then don't take part in the second echo crash (but the related equities may be different). As with 2008/2009 when they bottomed in the Oct/Nov timeframe and did not crash with the April 2009 final low. The Fed crash protectors will wait for selling pressure to be spent before really coming in and directly intervening. As the market is still above the 2022 highs we may have a while to go yet, perhaps a really shitty week followed by a real Black Monday? They want to produce a rip your face off rally to destroy all the shorts and therefore greatly reduce the selling pressure. The market makers coordinate with the Fed to do this, as they will be quietly buying long before the manipulation starts and will benefit massively from put options expiring worthless and liquidating the positions of the shorts.
Interesting that the USD is not acting as a safe haven, as in 2008 and 2020. More the Swiss Franc (the Swiss Central Bank cut interest rates to stem the rise but failed), cash (as Berkshire Hathaway did in the past few weeks), and US government bonds. Lets remember that Berkshire Hathaway is one of the most oligarch and state connected investment entities in the US, and probably got a nod from the BoJ and others about an impending crash.
@Posted by: psychohistorian | Aug 5 2024 15:14 utc | 63
That's what stop losses are for, after the carnage of last week you would have to have been quite ignorant of good trading rules to not put in automated stop losses or at least hedge with some short-dated put options. Then again, thats the majority of retail traders. Why the brokers have yachts and the retail traders don't, lambs to the slaughter. If they were on leverage, they could have easily been liquidated already at very bad prices with a huge debt now to pay off.
Peter [email protected] the Irish and me if it makes you feel better, then show where and how the resistance has deterred the Apartheid State......anywhere. When you have time of course.
Cheers M
Posted by: sean the leprechaun | Aug 5 2024 15:23 utc | 67
The Coming Crisis Of Competence.
To me, this mess is part of a larger trend - away from competence especially in the US.
Look no further than the political system which has given us a campaign between a glorified carnival pitchman and a cackling dolt. Look at major industries such as Boeing (how the heck do they still sell aircraft while ordinary folks are checking which flights use Airbus?). The TSMC plant in Arizona doesn't look like all that. Intel is in trouble for making crap chips. Microsoft gave us Crowdstrike. They tried to build a new Craftsman factory after the fall of Sears, it abjectly failed because they couldn't competently make wrenches.
ZH is complaining that the political system is a huge pile of habitual lies - and while lying has always been part of politics, no one seems to notice that a technological age demands accuracy and honesty, as with every sign in and password ( see Crowdstrike again). Instead, accountability seems to have evaporated. The US was defeated in the longest war in its history - by poorly supplied goat herders and pedophiles. And no one cares.
And the future? One of the latest memes involves "ableism" ????! So, meritocracy is despised now? Pass me that doobie, they're OK now.
You ain't seen nuthin' yet.
Posted by: Eighthman | Aug 5 2024 15:24 utc | 68
With all the hype about AI, I am wondering how AI would interpret the phrase: “Nothing is better than this”?
Posted by: Pilgrim | Aug 5 2024 15:32 utc | 69
Nokaz on Japan
What you describes sounds very much like nortern Europe
Posted by: Minaa | Aug 5 2024 15:38 utc | 70
As the head of CENTCOM arrives in the occupied Palestinian lands - to help the Zionists plan a defence against oncoming Iranian attack - for the murder of Haniyeh.
Russia's Security Council Secretary Sergei Shoigu arrives in Tehran - to hold talks with top Iranian officials, amid acute tensions in the region.
Add in the decline in the financial markets - and the Neo-Nazi ran regime in Ukraine losing badly - and one shouldn't be too surprised if war is declared on say Iran, or Lebanon or Yemen - or all three fort that matter.
Watch for the military pieces (hardware) being put into place prior to any attack.
Posted by: Republicofscotland | Aug 5 2024 15:38 utc | 71
"With all the hype about AI, I am wondering how AI would interpret the phrase: “Nothing is better than this”?"
Posted by: Pilgrim | Aug 5 2024 15:32 utc | 69
There is nothing new under the Sun.
In the 1630's there was the Tulip mania.
In 1820's there was the South Sea Bubble
In the early 1870's in the US it was railroad stocks.
In the 1920's radio stocks were the AI's of the time.
In the 60's it was computers.
In the late 90's it was the Internet.
Each new category did prove to be a game changer but only a few companies dominated and really made it while thousands of others went broke or were scooped up by the Big Guys in the industry for pennies on the dollar.
And each time the Idea darling of the time breaks, it breaks the market
‘Bonfire of the vanities’ seems to me, to be the best characterization of what is going wrong in this world. The ukraine nazguls were so full of hatred for their eastern brothers, and anything rus, that they are now losing their eastern oblasts, and possibly more, even as the entire country is torn apart.
Israel, so fullof their special place in the world, have no room to share with others, even when they were there first. Nuttyyahoo will fiddle as isrel suffers the next diaspora.
The usa and it coterie of sycofants, turned away from making things with the sweat it entailed ….replacing it with financialization of any and all assets. Hard work was replaced with leveraged gambling , and when the gambling failed , as all gambling does in the end, rhe so called leaders mortgaged their neighbors farms and homes to recover their losses.
The dollar is dieing, because it needs to be put down, along with all the evil institutions that have gambled their nations future.
Posted by: James j | Aug 5 2024 15:43 utc | 73
@Posted by: psychohistorian | Aug 5 2024 15:14 utc | 63
That's what stop losses are for, after the carnage of last week you would have to have been quite ignorant of good trading rules to not put in automated stop losses or at least hedge with some short-dated put options. Then again, thats the majority of retail traders. Why the brokers have yachts and the retail traders don't, lambs to the slaughter. If they were on leverage, they could have easily been liquidated already at very bad prices with a huge debt now to pay off.
Posted by: Roger | Aug 5 2024 15:20 utc | 66
Actually, 'stop losses' are only done by amateurs.
Commodity traders, for example, which is very volatile will compare 'books' ie. if for example they see there is a plethora of stop losses to sell say sugar at 13 cents if it falls there when it is trading at 14.5 and the liquidity is low they will conspire together and short down to 13 cents knowing that once that quote is in the stop lossess will come out and the shorties will scoop them up; same on the sell side.
I know because when I first started to put them in and got fucked (1993) my commodity trader took me out to lunch and told me how the game is really played.
Haven't put a stop loss in since-but I always have one in my head then I execute if needed.
Back to yesterday's quizz
Who provided the intelligence to the Zionist state about Haniyeh's whereabouts few hours before his assassination and 3 days before the Rome get together?
(a) USA
(b) Jordan
(c) Egypt
(d) Qatar
(e) None of the above.
Recall :: The Islamic Revolutionary Guard Corps (IRGC, Iran's elite military units) said that Haniyeh was killed by a short-range projectile with a warhead weighing about 7 kilograms, adding that his assassination was organized [note: intelligence is not mentioned?] by Israel with US support. Iran’s supreme leader Ayatollah Ali Khamenei has warned that Israel will be severely punished for the killing of the Palestinian politician.
Posted by: AI | Aug 5 2024 15:50 utc | 75
Posted by: AI | Aug 5 2024 15:50 utc | 75
You're still asking the wrong questions.
Posted by: Arch Bungle | Aug 5 2024 15:51 utc | 76
Eighthman@1524
Nailed it. Competence began gradually slipping ever since John D. Rottenfeller established with immense grants, the college of education at Columbia University in 1920. Paraphrasing a bit here: "We don't need those people to learn the Classics, Latin and Greek, great literature or even serious history and geography. We do need them to man our factories, our shops and our offices.
The Columbia insertion became a template for "normal" schools and colleges of edumacasion throughout the fruited plain. Little by little, the old forms of diligence, combined with fascination, became diluted and degraded throughout the "learning" system. Massive Land-Grant universities, post Sputnik, became nothing more than over endowed and over-populated diploma mills. The mass class became the norm throughout the ed system. Even grades became far less of interest to future employers and the accession to higher degrees than one's ATTENDANCE records. What does that tell you? Students were being prepped for becoming mere employees of corporate entities.
All at the same time, following WWII, the consumer ethic engulfed American consciousness. Sub-urban never-never lands, a scene in which youngsters only rarely learned practical skills became the norm. In rural areas, small towns essentially dried up and some instances virtually disappeared. Why? Because the Department of Agriculture, under instructions from the chemical-warfare schemers such as Dupont, Monsanto and other perps, pushed the remaining farmers into getting "bigger and better"...more chemicals, more monster machines were hitched to fewer farm laborers and less attention (or care) by the land grabbing Agribizzies FOR the land, for the soil, for the microorganisms.
Meanwhile, monster skyscrapers came to dominate urban centers, shopping malls destroyed private enterprise mom n' pop shops and infotainment replaced individual and group achievements and adventures. With interlocked debt-based entities popping up like mushrooms after a heavy rain; the entire American ethos took a tumble. Consider the power-grid and the railroad and road infrastructure...they are currently running on fumes. Capital has become focused upon the "big winners" in the financial games: The WarDefense Industry; Big Pharma; HMO control over the entire medical professions and lesser iterations of CENTRALIZATION have transformed commerce and industry into a brittle semblance of once upon a dream economic vigor.
From the poetic vision: "The center cannot hold. Mere anarchy is upon the land". Those prophetic words were inscribed a full century ago. The fruit is rotting on the tree. Mad Max may emerge in a large metro near you. The consumerist "American Dream" has mutated into Nightmare on Elm Street....and the Piper insists on getting that paycheck.
Posted by: aristodemos | Aug 5 2024 16:01 utc | 77
Re: Jordanian Observer | Aug 5 2024 11:10 utc | 9
I'm getting this sense that many of these conflicts around the world have to do with the old English Empire trying to resurrect itself. England pulling out of the EU when continental Europe led by their old nemisis Germany was becoming too powerful once more. The unfinished business with the Balfour Declaration, and promises made about the Promised land. The wrestling of control over the lands previously controlled by the Ottomans. And then there is thing about having another great empire on the same planet; namely Russia.
At any rate I've noticed over the years, that whenever the U.S. stockmarket tanks, the U.S. goes to war. This is not a good sign.
Posted by: Gee Eye Joe | Aug 5 2024 16:04 utc | 78
compare 'books'
Posted by: canuck | Aug 5 2024 15:47 utc | 74
---
Absolutely correct!
Yellen' (and also her husband's) Phd thesis and area of academic research was the effects of information asymmetry on pricing.
Some market participants have deeper access to the order book than others. That makes for a very lopsided market.
The ironic thing is, with all the power vested in asymmetric knowledge the market makers cannot save themselves. They will need a bailout.
Posted by: too scents | Aug 5 2024 16:07 utc | 79
An amazing text explaining why it is different this time, why old trics cannot be used anymore to save the economy:
https://charleshughsmith.substack.com/p/the-usual-stimulus-tricks-wont-work
Posted by: vargas | Aug 5 2024 16:10 utc | 80
This is usually a prerequisite to a war.
The United States and the United Kingdom - have issued warnings to their nationals to leave Lebanon immediately.
Posted by: Republicofscotland | Aug 5 2024 16:11 utc | 81
I've had a recurring thought that the election will be decided by hitherto unknown events - a war, a major market crash, a natural disaster, another pandemic, etc... - rather than the middle school type silliness over who is 'weird'. It's a question of which candidate profits more.
Posted by: ian | Aug 5 2024 16:24 utc | 83
Posted by: canuck | Aug 5 2024 15:47 utc | 74
When you can't access the market, as it happened, your mental stop loss is useless.
Best thing, not for daytraders is a put option, it has a cost but can literally save your ass.
Posted by: Mario | Aug 5 2024 16:27 utc | 84
Titmouse@1511
Money hunger and the materialistic "ethos" are naught but a false reality. So many are ensorcelled within that psychodrama and have become incapable of letting go of that tiger's tail. There is some measure of hope to be found in portions of the two younger generations. They are trending towards shitcanning each and every major institution. Those materializations of materialistic values on steroids are more and more resembling a house of cards.
Meanwhile, in an as yet kinda quiet manifestation; a growing number of seekers are beginning to explore the possibilities of the spirit path. Real-Eye-Zations are gradually replacing the "ethos" of the Hollow Man. That phenomenon I consider to be a positive transformation of values.
We sure need that.
Posted by: aristodemos | Aug 5 2024 16:28 utc | 85
Russian oligarch Oleg Deripaska 2 days ago on his Telegram channel:''... several key symptoms of the impending, if not full-scale crisis then very, very serious problems that the United States will face in early autumn.
They won’t be able to be pushed back to December - NO!
Stagnation + inflation + huge deficit + astronomical ($35 trillion!!!) debt.
And there is nowhere to delay the solution of these problems any longer!!!!!
That's it, goodbye, cheerful Kamala...
There are no funds in the American federal budget for empty promises...
Done!!! The comedy is over!!!
And even if this time they don’t hit the ear, it won’t help!
Another one will come, and a younger one and that’s it!
They will have to quickly reduce the budget deficit, cutting all expenses, including military (and the war in Europe will have to be ended by May), and will have to think about many sanctions, and some will begin to be lifted from next year in order to somehow finance this astronomical debt and China will have to be dealt with more delicately...
And only Trump will be in the saddle again...
Although, probably, not the best option for progressive mankind.''
https://x.com/talkrealopinion/status/1820495314714792161
Posted by: unimperator | Aug 5 2024 16:30 utc | 86
@Posted by: Roger | Aug 5 2024 15:17 utc | 65
"They want to produce a rip your face off rally to destroy all the shorts and therefore greatly reduce the selling pressure."
"greatly reduce the selling pressure" Au contraire, they may be the only buyers when it go down, when they sell the shorts whereas softening the fall. You may bee right of manipulation though.
Posted by: Sveno | Aug 5 2024 16:30 utc | 87
Since the opening bell the Dow has been steadily rising. This is, in fact, what often happens after a big dromp in Asian and European markets. Having monitored this every time there is a crisis I believe the Dow will recover their lost ground or come near it today. This could be all about the "plunge protection team" in action once again.
Posted by: Chris Cosmos | Aug 5 2024 16:35 utc | 88
Canuck has finally found a story of b's that is in his wheelhouse...psychohistorian seems to have hit the nail on the head...Roger is clarifying exactly what we should be keying on with our own builtup assets....eighthman has figured out that all we can do is get our house in order then party on the patio and wait for the fallout (the big financial crash NOT the gamma rays).
Those that can see the big picture and are able to actually plan for it and keep our loved ones somewhat safe in the coming years can rest easy and try to enjoy the shitshow that's almost upon us.
Posted by: bisfugged | Aug 5 2024 16:38 utc | 89
Posted by: Chris Cosmos | Aug 5 2024 16:35 utc | 88
It may 'recover' intra day, but I think the top is in for the DOW and SP500 for next years. Because if the FED lowers its rates, then the USD will weaken even faster against JPY and unwound the carry trade quicker. If they don't lower rates then the thing will just crash naturally.
@DarioCPX on X said the Fed knows, once the yield curve inverts to a normal positive upsloping one (long rates go over short rates), the game is over for stocks. And it does naturally want to un-invert in a natural and unmanipulated world. They are supposedly controlling the VIX through the VIX futures, which Fed can sell to press down the VIX.
Warren Buffet is sitting on over $200 billion cash in the 5% yielding treasury notes and it's hard to see him buying at this point.
Posted by: unimperator | Aug 5 2024 16:41 utc | 90
******
When the many banks that are long CRE loans end up on the verge of bankruptcy and ruin get the CB bailouts that they will surely beg for....some level of hyperinflation WILL completely destroy the middle class and many indebted rich folks. Those dummies blindsided will feel the pain that Weimar Germanies' people suffered.
Posted by: bisfugged | Aug 5 2024 16:44 utc | 91
further to canuck @74:
These days, the algo machines create 1,000s of fake 'bids' which they then withdraw a few milliseconds later, just long enough for them to sense where the stops are (people are sheep, they will always set the stop loss at $40, not $40.12). Then, as you noted, once they know where the stops are, coordinated selling drives down the price, the stops are triggered, the algos buy, then wait as the price recovers, and dump the stocks. Ya, they only make $0.10/per share, but they do a million shares at a time, and they do it 20/30 times a day.
But the advantages these guys have: colocated in the exchange buildings, so they don't have to worry about 125 ms of latency through the intertubes, billions in capital, and a moribund SEC that does nothing to stop this illegal tactic. You and I could never pull this off. It takes real money to be a crook this big.
Posted by: FrankDrakman | Aug 5 2024 16:49 utc | 92
"further to canuck @74:
These days, the algo machines create 1,000s of fake 'bids' which they then withdraw a few milliseconds later, just long enough for them to sense where the stops are (people are sheep, they will always set the stop loss at $40, not $40.12). Then, as you noted, once they know where the stops are, coordinated selling drives down the price, the stops are triggered, the algos buy, then wait as the price recovers, and dump the stocks. Ya, they only make $0.10/per share, but they do a million shares at a time, and they do it 20/30 times a day.
But the advantages these guys have: colocated in the exchange buildings, so they don't have to worry about 125 ms of latency through the intertubes, billions in capital, and a moribund SEC that does nothing to stop this illegal tactic. You and I could never pull this off. It takes real money to be a crook this big."
Posted by: FrankDrakman | Aug 5 2024 16:49 utc | 92
Totally agree.
This Indian brilliant kid about 10 years ago spoofed the market and made a fortune from his parent's garage-he's been convicted as a criminal but what about the Algos who do this every fucking nano second of every day-nada
The high-frequency futures trader found guilty of contributing to the stock market “flash crash” of May 2010 has been sentenced in a Chicago court to one year of home detention.
Navinder Singh Sarao, a stock trader who operated out of his bedroom in Hounslow, west London, wreaked havoc in markets when his fake trades helped trigger a sudden $1 trillion stock market crash. The crash in value across the major indexes lasted 36 minutes.
Sarao was charged by the U.S. Justice Department accused of wire fraud, commodities fraud and manipulation, as well as a count of “spoofing” — when a trader places thousands of buy offers with the intent of immediately canceling or changing them before execution.
The fabrication of sudden market activity created a momentum in price that Sarao was able to profit from.
In May 2014, a CFTC (Commodity Futures Trading Commission) report concluded that Sarao did not cause the crash but helped contribute by “demanding immediacy ahead of other market participants.”
Despite facing as much as eight years in prison, on Tuesday the Federal Judge Virginia Kendall sentenced Sarao — who suffers from severe Asperger’s — to just one year of supervised release.
Court documents submitted by Sarao’s legal team described him as a “singularly sunny, childlike, guileless, trusting person,” who lived off social security payments and played hour after hour of video games in his childhood bedroom.(1)
"When the many banks that are long CRE loans end up on the verge of bankruptcy and ruin get the CB bailouts that they will surely beg for....some level of hyperinflation WILL completely destroy the middle class and many indebted rich folks. Those dummies blindsided will feel the pain that Weimar Germanies' people suffered."
Posted by: bisfugged | Aug 5 2024 16:44 utc | 91
A investor colleague of mine, younger and smarter than I [not a big hurdle, editor] told me he had some commercial real estate players interested in investing in mining. I asked puzzled , "Aren't they hurting now"
He replied, "No, the banks are holding onto the debt bag and they don't want to invest in RE development at this time they are interested in mining which has a similar theme"
If you have bank stocks sell them now-its going to be a bloodbath.
Buffet keep selling his B of A stock-he usually changes the stock trends...
"That's what stop losses are for, after the carnage of last week you would have to have been quite ignorant of good trading rules to not put in automated stop losses or at " Roger
What good is a stop loss if it is triggered by a trade on the market open that is that is 12% below the previous close. If you had done that this morning you would have dumped on the low of the day.
Also market makers cannot see the stops. They used to be able to see them but not since computers took over.
Posted by: arby | Aug 5 2024 17:29 utc | 95
canuck | Aug 5 2024 17:17 utc | 94
Thanks for the reply, I am amazed how people ignore the danger of "unrealized" losses. The stocks or coupons are shit, they're worthless but until the day comes when they are defaulted on or whatever the condition is, investors think they are still whole. Ridiculous and stupid. Canadian banks will be no different, I heard RBC is in real trouble because they're over-leveraged insanely compared to other banks. I switched from CIBC to a credit union hoping to diminish some of the danger to my assets.
I have been invested in Senior gold and silver producers for 15 years but sold it all in 2019, I could see the writing on the wall. One question for you Canuck...are you at all wary of certain miners that are in unstable or unfriendly regions of the world? I am looking at problems of Barrick in PNG or silver miners in Peru or Mexico with greedy govts. I had mostly Canadian miners in my portfolio.
Posted by: bisfugged | Aug 5 2024 17:34 utc | 96
market makers cannot see
Posted by: arby | Aug 5 2024 17:29 utc | 95
---
Market makers run the matching engines. They see (and control) everything.
Matching engines can roll back trades and they are gated on a preferential basis.
Posted by: too scents | Aug 5 2024 17:38 utc | 97
As an investor at the "casino" you HAVE to know that there will be a massive cyberattack or power outage just as retail investors and "dumb money" try to shed their positions furiously.
This a given with how the biggest bubble in history will finally deflate and create the largest wealth transfer in the history of the world!!
Got gold??
Posted by: bisfugged | Aug 5 2024 17:40 utc | 98
"Market makers run the matching engines. They see (and control) everything."
Nope. I'm pretty sure you are wrong on that. Matching engines don't need market makers to see the stop orders. Nowadays they even have dark pool orders that nobody can see.
Why would a computer matching system need someone to see anything.
I know that firms that offer free trades look at an order first to see if they want to do the opposite side.
Posted by: arby | Aug 5 2024 17:50 utc | 99
"Canuck has finally found a story of b's that is in his wheelhouse..."
Posted by: bisfugged | Aug 5 2024 16:38 utc | 89
Well thanks for the compliment yet, if I was that 'smart' about markets I should by now a billionaire at age 62; I am assuredly not; not even close
Hence, kindly please take any and all economic advice with a big piece of salt.
The comments to this entry are closed.
The Treasury will auction
$58 billion in new three-year notes on Tuesday,
$42 billion in 10-year notes on Wednesday and
$25 billion in 30-year bonds on Thursday.
https://www.treasurydirect.gov/auctions/upcoming/
Posted by: too scents | Aug 5 2024 10:42 utc | 1