Wall Street thread

Baron Scicluna · May 11, 2010

NoOneLikesUs said:

An audio recording of the S&P pit as this market plummeted yesterday. A must listen. If you're pressed for time move forward to 3:00.
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I'd hate to hear how this guy would act if Roger Clemens was in George's box.

poindexter · May 11, 2010

More on the birth/death adjustment bullshit:

http://globaleconomicanalysis.blogspot.com/2010/05/jobs-increase-by-290000-unemployment.html

Cousin Oliver · May 11, 2010

poindexter said:

More on the birth/death adjustment bullshit:

http://globaleconomicanalysis.blogspot.com/2010/05/jobs-increase-by-290000-unemployment.html
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Wow you found someone on the internet that agrees with you, despite a huge majority believing something else? Well, that's all the proof I need.

Now, if you'll excuse me, I'm going to post a link to a guy who believes the moon landing was a hoax. And if you don't believe me, then you're all idiots! AAHHHH!!

Armchair_QB · May 11, 2010

Sucks to be proved a fool, aye Oliver?

Cousin Oliver · May 11, 2010

Armchair_QB said:

Sucks to be proved a fool, aye Oliver?
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I'll take your word on that.

Boom_70 · Dec 15, 2014

poindexter said:

Cousin Oliver said:

Biggest job gains in four years.

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All bullshit, of course.

Interesting look at last week's jobs number....

As we suggested in yesterday’s Comments, Friday’s non-farm payroll numbers got swallowed up by the on-going worries about Greece. But, the “jump” of 290,000 new jobs was a big topic on the weekend talk shows. There was a lot of “we’ve turned the corner” portrayals. Longtime readers know I’ve thought some of the improvement in the data was “suspect” (to be kind). For the last eight weeks, Initial Unemployment Claims have averaged 450,000 per week. So, over the last four weeks, 1.8 million people were laid off. How does that fit in with the claim that 290,000 new jobs were created? The obvious answer is that it doesn’t. So, let’s drill down into the payroll numbers to see what’s going on. The CES Birth/Death adjustment added 188,000 of those jobs. Birth/Death does not refer to people but to businesses. The BLS guesses how many new companies opened versus how many closed their doors. The BLS then uses that guess to guess again how many jobs those business created or lost. Another 66,000 of the new jobs came from census hiring. Those are temporary jobs and those folks will be laid off later in the year. Speaking of temporary, another 26,000 of the new jobs were non-census temporary. Let’s recap. A guess produced 188,000 of the jobs, 66,000 were census and 26,000 were temporary. Thus, it seems 280,000 of the 290,000 “new jobs” were either temporary or the result of guesswork. Some turn. Some corner.
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A good start to cutting Federal deficit would be to lop off about half the federal work force who sits around collecting $75 G a year to produce this guess work.

Cousin Oliver · May 12, 2010

Worrying about the deficit is stupid. Deficits don't matter.

http://voices.washingtonpost.com/ezra-klein/2010/05/galbraith_the_danger_posed_by.html

"James Galbraith is an economist and the Lloyd M. Bentsen Jr. chair in government and business relations at the University of Texas at Austin. "

EK: You think the danger posed by the long-term deficit is overstated by most economists and economic commentators.

JG: No, I think the danger is zero. It's not overstated. It's completely misstated

EK: Then why are the bulk of your colleagues so worried about this?

JG: Let's push a bit deeper on the CBO forecasts. They publish a baseline set of projections. One of those projections holds the economy will return to a normal high-employment level with low inflation over the next 10 years. If true, that would be wonderful news. Go down a few lines and they also have the short-term interest rate going up to 5 percent. It's that short-term interest rate combined with that low inflation rate that allows them to generate, quite mechanically, these enormous future deficit forecasts. And those forecasts are driven partially by the assumption that health-care costs will rise forever at a faster rate than everything else and by interest payments on the debt will hit 20 or 25 percent of GDP.

At this point, the whole thing is completely incoherent. You cannot write checks to 20 percent to anybody without that money entering the economy and increasing employment and inflation. And if it does that, then debt-to-GDP has to be lower, because inflation figures into how much debt we have. These numbers need to come together in a coherent story, and the CBO's forecast does not give us a coherent story. So everything that is said that is based on the CBO's baseline is, strictly speaking, nonsense.
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Michael_ Gee · May 12, 2010

The collection and compilation of statistics on a country of 300 million plus people is of its very nature going to involve some uncertainty. There are a lot of different methodologies used precisely to allow for rough general concepts. Were there 290,000 jobs created last month? Beats me. Was the employment situation somewhat better than in January? Almost certainly. That's why graphs are useful -- for trend lines.
Boom, we could always save money on statistics the way they do in China, where they're all made up.

Cousin Oliver · May 13, 2010

More good news:

http://money.cnn.com/2010/05/13/news/economy/initial_claims/index.htm

Jobless claims down for 4th straight week
By Annalyn Censky, staff reporterMay 13, 2010: 9:45 AM ET

NEW YORK (CNNMoney.com) -- The number of first-time filers for unemployment insurance fell last week for a fourth straight week, according to a weekly government report released Thursday.

"There were 444,000 initial jobless claims filed in the week ended May 8, down 4,000 from an downwardly revised 448,000 the previous week, according to the Labor Department's weekly report. The number of claims is the lowest since the 442,000 reported in the week ended March 27.

The downward trend in initial claims continues to show general improvement in the economy, and is consistent with monthly reports that show employers are starting to add jobs, said Michael Hanson, senior economist with Bank of America Merrill Lynch. "

YankeeFan · Aug 22, 2010

Still trying to figure out what happened back in May when the Dow dropped 600 points & then rebounded:

It sounds like “Wall Street” meets “The X-Files.”

The stock market mysteriously plunges 600 points — and then, more mysteriously, recovers within minutes. Over the next few weeks, analysts at Nanex, an obscure data company in the suburbs of Chicago, examine trading charts from the day and are stunned to find some oddly compelling shapes and patterns in the data.

To the Nanex analysts, these are crop circles of the financial kind, containing clues to the mystery of what happened in the markets on May 6 and what might have caused the still-unexplained flash crash.

The charts — which are visual representations of bid prices, ask prices, order sizes and other trading activity — are inspiring many theories on Wall Street, some of them based on hard-nosed financial analysis and others of the black-helicopter variety.

To some people, like Eric Scott Hunsader, the founder of Nanex, they suggest that the specialized computers responsible for so much of today’s stock trading simply overloaded the exchanges.

He and others are tempted to go further, hypothesizing that the bizarre patterns might have been the result of a Wall Street version of cyberwarfare. They say high-speed traders could have been trying to outwit one another’s computers with blizzards of buy and sell orders that were never meant to be filled. These superfast traders might even have been trying to clog exchanges to outflank other investors.

Jeffrey Donovan, a Nanex developer, first noticed the apparent anomalies. “Something is not right,” he said as he reviewed the charts.

Mr. Donovan, a man with a runaway chuckle who works alone out of the company’s office in Santa Barbara, Calif., poses a theory that a small group of high-frequency traders was trying to introduce delays into the nation’s fractured stock-market trading system to profit at the expense of others. Clogging exchanges or otherwise disrupting markets to gain an advantage may be illegal.

http://www.nytimes.com/2010/08/23/business/23flash.html?hp
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YankeeFan · Oct 1, 2010

YankeeFan said:

Can't wait to hear more about this story.

Dude sold $16 Billion worth of P&G stock instead of $16 Million, sending it down by a third.

They must have lost a fortune.

When I worked on Wall St., I had to deal with a few buy/sell errors. Unless you got very lucky, you almost always lost money.

But trying to get out of this trade? Holy Shit! Impossible. There's no easy way to do it.
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The SEC & CFTC say they now know what happened:

A single sale of $4.1 billion in futures contracts by a mutual fund touched off a series of events that led to the so-called flash crash, the sharp stock market decline that shook investors and markets on May 6, federal regulators said on Friday.

In a long-awaited report, the Securities and Exchange Commission and the Commodity Futures Trading Commission said they had identified the sequence of events that erased more than 600 points from the Dow Jones industrial average in minutes on the afternoon of May 6 before the markets recovered just as quickly.

Significantly, the report found that the plunge was not caused by any market manipulation but by a single firm trying to hedge its investment position, if in an aggressive and abrupt manner.

The regulators hope the report lifts the uncertainty that has hung over the nation’s exchanges — and in investors’ minds — since the wild gyrations in May.

“This report identifies what happened and reaffirms the importance of a number of the actions we have taken since that day,” Mary L. Schapiro, the S.E.C. chairwoman, and Gary Gensler, the chairman of the C.F.T.C. said in a statement.

“We now must consider what other investor-focused measures are needed to ensure that our markets are fair, efficient and resilient, now and for years to come,” they said.

The regulators had already identified in an earlier report the single large sale of futures contracts as playing an important role in the May 6 plunge.

But in the new findings published Friday, the regulators emphasized the central role this large sale played on a day when markets were already under pressure because of the debt crisis in Greece.

It said that at about 2:32 p.m., a mutual fund — which was not identified in the report, but which officials have identified as Waddell & Reed Financial of Kansas — started a program to sell 75,000 E-Mini Standard &Poor’s 500 futures contracts, using computer sell algorithms. Normally, a sale of this size would take place over as many as five hours, but the large sale was executed in 20 minutes, the regulators said.

The algorithm was programmed to execute the trade “without regard to price or time,” the report said.

The selling pressure was then transferred from the futures markets to the stock market, leading to the abrupt drop in individual stocks.

Stock and stock-index futures prices were already declining on May 6 when, about 2:42 p.m., they suddenly plunged by more than 5 percent over the next five minutes.

When prices bottomed at about 2:47 p.m., the Dow Jones industrial average was down nearly 990 points, 9.1 percent below where it had started the day. Almost as quickly as prices dropped, however, they rebounded, with the Dow industrials recovering 543 points in about 90 seconds. The Dow finished the day down 347.80, or 3.2 percent, at 10,520.32.

http://www.nytimes.com/2010/10/02/business/02flash.html?_r=1&hp
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