Dow drops 1000 pts . . .

[smeagol]

. . . only to bounce back 700 pts in less than an hour. It was down by more than 300 pts, which is bot pocket change.

This shit going on in Greece appears to be serious. Just when the economies of the world appeared to be stabilizing . . .

[Stringer_Bell]

I think a "big" firm made a trading error and POOF. It should be okay.

[Spurminator]

If that's the case, gonna be a lot of angry folks who had stop limits triggered by that "error"

[EVAY]

If that's the case, gonna be a lot of angry folks who had stop limits triggered by that "error"

Absolutely.


And if it is true, the market should recover some tomorrow...but I would guess that there will be another move to stabilize intra-trading mechanical factors.

[exstatic]

Accenture dropped from $40 to ONE CENT per share, and then back up to $35. Oh, to be a day trader at that moment with a couple of grand to play with....

[Nbadan]

What a crock....there are only two real currency reserves in the world, the Euro and the Dollar...the Euro is gonna take a big hit because Greece is Euro...that means that if you have money you can do ine of two things with it, keep it in your mattress, hope it doesn't disappear and depreciate in value down to nothing before you need it, or put it into the American economy..

[Yonivore]

Accenture dropped from $40 to ONE CENT per share, and then back up to $35. Oh, to be a day trader at that moment with a couple of grand to play with....
It'll be interesting to see who, exactly, did benefit from the "error."

Seriously, if a key entry error can trigger such a market anomaly, that's a fucked up system.

There was talk of voiding the transactions that occurred during the "event." That would really piss off your day traders, exstatic.

[Bartleby]

the Euro is gonna take a big hit because Greece is Euro

It's been dropping like a rock the last few days. Right now 1 Euro equals just over $1.26 USD. The pound is taking a hit as well. Good news for me . . . I'm going to be in Europe most of June.

[TDMVPDPOY]

lol greek govt

GFC 2 is looming....ir ur country out of ammo?

so what happens if the greeks forfeit? there bases belong to the other creditors?

[Yonivore]

CNBC's Bartiromo: 'That is Ridiculous. This Really Sounds Like Market Manipulation to Me' (http://www.businessandmedia.org/articles/2010/20100506174136.aspx)

If true, I hope they're able to figure out who's responsible.

Now, this is an investigation I'd like to see produce a suspect in 72 hours or less.

[Stringer_Bell]

CNBC's Bartiromo: 'That is Ridiculous. This Really Sounds Like Market Manipulation to Me' (http://www.businessandmedia.org/articles/2010/20100506174136.aspx)

If true, I hope they're able to figure out who's responsible.

Now, this is an investigation I'd like to see produce a suspect in 72 hours or less.

Apparently some trader moved shares and instead of doing 16m he did 16b...huge difference that turned a companies "futures" market worth into the combined total of the US & Chinese markets. The trade dealt with those thingies that got Goldman Sachs in trouble, those fake numbers that people put money on and expect to grow - I forgot the term for those things, think it starts with a D.

Anyway, all trades done within the time frame of the incident will be rolled back. People could have made hundreds of thousands and now it'll be taken back. :(

[Yonivore]

Apparently some trader moved shares and instead of doing 16m he did 16b...huge difference that turned a companies "futures" market worth into the combined total of the US & Chinese markets. The trade dealt with those thingies that got Goldman Sachs in trouble, those fake numbers that people put money on and expect to grow - I forgot the term for those things, think it starts with a D.
Derivatives?

Seriously, a typo did this? Seems to me there should be some formula that would have caught the errant "b," Such as, oh I don't know, a big red dialog box that popped up and told the idiot, "Dude, you're trading the entire US & Chinese markets in one transaction, are you sure?"


Anyway, all trades done within the time frame of the incident will be rolled back. People could have made hundreds of thousands and now it'll be taken back. :(
I see lawsuits...

[Stringer_Bell]

Derivatives?

Seriously, a typo did this? Seems to me there should be some formula that would have caught the errant "b," Such as, oh I don't know, a big red dialog box that popped up and told the idiot, "Dude, you're trading the entire US & Chinese markets in one transaction, are you sure?"

Yea, derivatives! Those things sounds dangerous.

And yea, the excuse that's been going around is some dude making a mistake with money he didn't even have :lol

[Winehole23]

Remains a mystery (http://www.nytimes.com/2010/05/08/business/08trading.html?ref=todayspaper), two days later.

[Winehole23]

On Friday, the Nasdaq market said it would cancel all trades that had occurred in the 20-minute period between 2:40 p.m. and 3 p.m. on Thursday that were 60 percent higher or lower than the last trade at 2:40. “This decision,” the exchange noted on its Web site (http://www.thestreet.com/story/10749500/1/nasdaq-nyse-arca-to-cancel-60-swing-trades-in-selloff.html?kval=dontmiss), “cannot be appealed.” http://www.nytimes.com/2010/05/08/business/08cancel.html?src=me&ref=business

[Winehole23]

The *fat fingers* offered to the reading public as an initial possibility have begun to be ruled out. Nice one, guys. :jack

[Ignignokt]

http://www.nytimes.com/2010/05/08/business/08cancel.html?src=me&ref=business

cool, guy.

[Winehole23]

“Somebody got Accenture (http://topics.nytimes.com/top/news/business/companies/accenture-ltd/index.html?inline=nyt-org) at a penny. They’re ready to announce their retirement,” joked Daniel Seiver, a finance professor at San Diego State University.

[Cant_Be_Faded]

It's going to be a very interesting Monday.

Black Monday II?

[Winehole23]

The discovery of a structural flaw in US trading, is not opportune.

[Winehole23]

The level of official understanding of the flaw expressed publicly so far, does not inspire confidence. JMO.

[TDMVPDPOY]

i think they usually cancel those type of transactions cause of the error

[Winehole23]

Uh. Hmm.

I meant I don't think the technical disruption is well understood at this point, at least, not that *they'll* give out publicly.

[Winehole23]

Were you making a point or just repeating one? I couldn't really tell.

Little help?

[smeagol]

I should be long on SDS . . .

[Wild Cobra]

It'll be interesting to see who, exactly, did benefit from the "error."

Seriously, if a key entry error can trigger such a market anomaly, that's a fucked up system.

There was talk of voiding the transactions that occurred during the "event." That would really piss off your day traders, exstatic.
I'll bet it's the people who wrote the programs that trigger the events. I read something that this was cause by computers.

Think about it. If you have a large volume of traders using the same triggers... At the computerized internet trading speeds...

[EVAY]

CNBC's Bartiromo: 'That is Ridiculous. This Really Sounds Like Market Manipulation to Me' (http://www.businessandmedia.org/articles/2010/20100506174136.aspx)

If true, I hope they're able to figure out who's responsible.

Now, this is an investigation I'd like to see produce a suspect in 72 hours or less.

me too.

[EVAY]

Just when Wall Street was fussing about congressional oversight and insisting that the 'markets hould be left to their own devices'...said markets rise up and bite them on the butt.

These jerks (Wall street types) set themselves up by letting this crap happen, and then cry persecution when they get regulations that are an attempt (perhaps a ham-handed attempt, but nonetheless an attempt) to prevent this sort of debacle from happening again.

Count on more investigations and regulations...and more bitching about both from the people who are responsible for bringing it on.

[EVAY]

The Latest Market Fiasco, brought to you by the same folks who brought you the 1987 meltdown, and the 2007-2008 crash of Depression-era proportions.

[Wild Cobra]

Count on more investigations and regulations...and more bitching about both from the people who are responsible for bringing it on.
I'll place my money on software by thousands on investors using the same triggers. Then if they are smart, they will see if the programmers profited.

[EVAY]

I'll place my money on software by thousands on investors using the same triggers. Then if they are smart, they will see if the programmers profited.

Given the extraordinarily low volume associated with the meltdown on Thursday, the triggers were likely a function of lots of the institutional investors who have automatic required sells if stocks lose x% of their value in y trading time period. It is sort of like the buy-side investors (pension funds, teacher funds, endowment funds, etc.etc) who are forced by their own internal rules to automatically sell if one of their investments falls below a certain bond rating or something. There are similar rules in place for equities, and I would guess that is what got a lot of this started.

Given the economic rebound occurring, I would have assumed that this would be seen as a terrific buying opportunity on Friday. The fact that that did not happen leaves me perplexed and very, very nervous, and perhaps agreeing with Bartiromo...some manipulation somewhere.

[Wild Cobra]

Given the economic rebound occurring, I would have assumed that this would be seen as a terrific buying opportunity on Friday. The fact that that did not happen leaves me perplexed and very, very nervous, and perhaps agreeing with Bartiromo...some manipulation somewhere.
Maybe so. I've been meaning to look at my mutual funds on a day by day value basis to see if they were affected. Got to locate my password I forgot first. I so hope they weren't on the wrong side of any of this trading.

[Cant_Be_Faded]

Can you imagine day trading and striking gold, only to find out a few days later that the nasdaq is going to nullify your trade

meanwhile goldman sachs will somehow profit mad off this

[EVAY]

Maybe so. I've been meaning to look at my mutual funds on a day by day value basis to see if they were affected. Got to locate my password I forgot first. I so hope they weren't on the wrong side of any of this trading.

I had, with my own exquisite sense of timing, tried to get out of some funds I was in at the end of March. They have put up 'gates', however, which means that they will not be available until the end of the next quarter, at least. I fear that I am screwed beyond belief. I don't have the guts to look just yet, because I can't control it. I am in the awful position of having to hope for a significant rebound from people who seem intent on screwing us over.

[Wild Cobra]

I had, with my own exquisite sense of timing, tried to get out of some funds I was in at the end of March. They have put up 'gates', however, which means that they will not be available until the end of the next quarter, at least. I fear that I am screwed beyond belief. I don't have the guts to look just yet, because I can't control it. I am in the awful position of having to hope for a significant rebound from people who seem intent on screwing us over.
I have a feeling I will be doing a major recalibration of my allotments around August or September. Next quarter earnings expectations with expected 2011 tax hikes...

[EVAY]

I have a feeling I will be doing a major recalibration of my allotments around August or September. Next quarter earnings expectations with expected 2011 tax hikes...

yeah, and add re-regulation to the inevitable tax hikes... and likely inflation beginning to be read into the market by the latter part of this year (I don't mean that we will have inflationary problems by then, but I bet you the market starts discounting it a future basis by the last part of this year)...buckle up, cowboys.

And then of course, Europe...

[Winehole23]

Can you imagine day trading and striking gold, only to find out a few days later that the nasdaq is going to nullify your trade Nullification appears to have preceded both explanation and indeed any basic understanding of the problem.

What was the very compelling fucking reason cited for nullifying the trades in the first place? The curbs didn't go in fast enough? The market dropped too fast? What?

Anyone, please?

[Winehole23]

Think about it. If you have a large volume of traders using the same triggers... At the computerized internet trading speeds...No doubt there was an element of that early on, but the market thinned out considerably after a brief surge of panic selling.

The NYT piece linked upstream references low volume anomalies...

(presumably, at very low trading volumes, massive -- and probably even merely large -- trades distort the market relatively more. )

[Stringer_Bell]

Nullification appears to have preceded both explanation and indeed any basic understanding of the problem.

What was the very compelling fucking reason cited for nullifying the trades in the first place? The curbs didn't go in fast enough? The market dropped too fast? What?

Anyone, please?

I think of it like playing an online game where someone or some people gain an unfair advantage due to a malfunction that they use (perhaps even accidentally) against other players. For example...if I came across a glitch that allowed me to beat up people with invincibility or supreme accuracy and rise to the top of the leader boards - Admins would check it out and roll back stats because I had an unfair advantage. Does that make sense? At least that's how I understand why they'd take back profits gained during a glitch.

[Winehole23]

The NYT article mentions that nullification of trades takes place on a somewhat routine basis, but usually applies to single trades. Nullifying all the trades in the time window, seems to be the novelty here.

[Stringer_Bell]

Ohhhhhhh, ALL trades? That's fucked lol

[Winehole23]

I think of it like playing an online game where someone or some people gain an unfair advantage due to a malfunction that they use (perhaps even accidentally) against other players. For example...if I came across a glitch that allowed me to beat up people with invincibility or supreme accuracy and rise to the top of the leader boards - Admins would check it out and roll back stats because I had an unfair advantage. Does that make sense? At least that's how I understand why they'd take back profits gained during a glitch.I can see that. Highly sophisticated electronic trading desks would appear to have the clear advantage in volatile sessions, just as they do in normal ones. One apparent difference is, in the volatile session the fortunes to be made (and lost) are much larger.

So they shut down the big boy poker party, after the big boy poker party scared off all the other players. There's gonna be a few pissed off players.

[Winehole23]

But probably, more grateful ones. Pension and retirement funds and what not.

[Winehole23]

Anyone with a 401k.

[Winehole23]

Until Monday, at least.

[Winehole23]

Whoops, we're already there.

[RandomGuy]

No doubt there was an element of that early on, but the market thinned out considerably after a brief surge of panic selling.

The NYT piece linked upstream references low volume anomalies...

(presumably, at very low trading volumes, massive -- and probably even merely large -- trades distort the market relatively more. )

Those low trading volumes are the reason for the volatility in 2008 and 2009 from what I am given to understand.

[RandomGuy]

Until Monday, at least.

Speaking of today... the euro rescue package (http://news.yahoo.com/s/ap/20100510/ap_on_bi_ge/eu_europe_financial_crisis)sent markets there up by close to 5-10% in one day.

The US markets are following suit so far with the DJIA up about 4% for the day so far.

Wheeeeeee!

[boutons_deux]

Insiders in Europe, including employee of Wall St firms in Europe, certainly passed this rescue pkg info to Wall St before opening. Occam's Razor.

[Winehole23]

Speaking of today... the euro rescue package (http://news.yahoo.com/s/ap/20100510/ap_on_bi_ge/eu_europe_financial_crisis)sent markets there up by close to 5-10% in one day.

The US markets are following suit so far with the DJIA up about 4% for the day so far.

Wheeeeeee!One trillion dollars. How timely.

Just curious, how much is the USA on the hook for through the IMF? (The IMF portion of the bailout is $250B, according to one story this morning)

[EmptyMan]

CNBC's Bartiromo: 'That is Ridiculous. This Really Sounds Like Market Manipulation to Me' (http://www.businessandmedia.org/articles/2010/20100506174136.aspx)

If true, I hope they're able to figure out who's responsible.

Now, this is an investigation I'd like to see produce a suspect in 72 hours or less.


Who else....

http://open.salon.com/blog/files/gold1231583227.jpg
http://www.bestweekever.tv/bwe/images/2007/07/BIG%20MAN%20LITTLE%20MAN1.JPG
http://www.jackcreekfarms.com/images/grain%20sacks.jpg

[boutons_deux]

The Vampire Squid(s) Gorges Itself With Impunity

AlterNet

Was Last Week's Market Crash a Direct Attack By Financial Terrorists?

By David DeGraw, Amped Status
Posted on May 10, 2010, Printed on May 11, 2010
http://www.alternet.org/story/146793/

Last week, the U.S. stock market suffered the greatest sudden drop in its history, for reasons that nobody on Wall Street can seem to decipher. But of all the explanations being examined—a tech glitch, Greek debt worries and fraud have all been discussed--the most troubling is not being given sufficient attention.

Coming on the very day that Congress considered two key financial reforms, the timing of the "flash crash" raises concerns that Wall Street is resorting to extreme tactics in its efforts to intimidate politicians who want to rein in the capital markets casino. Thursday's market plunge could have been an act of financial terrorism. Wall Street has both the motive and the means: Goldman Sachs, which is currently under investigation for a very different kind of fraud, has the trading power to make just such a market crash occur, and has much to lose from financial reforms moving through Congress.

On Thursday afternoon, the Dow Jones Industrial Average plummeted 700 points in about 10 minutes. A few hours later, top Democratic negotiators reached a compromise with Sen. Bernie Sanders, I-Vermont, over a plan to audit the Federal Reserve's secret bailout operations. The Fed has pumped nearly $4.3 trillion in bailout funds into the banking system since the onset of the crisis, and we know almost nothing about that money. The "Audit The Fed" amendment would finally tell the public the full extent of Wall Street's bailout operations.

Later Thursday night, Congress voted on—and rejected—an amendment that would have forced the break-up of the six largest U.S. financial behemoths into banks that can fail without wrecking the economy. Goldman Sachs would have been one of those six banks. Meanwhile, riots in Greece and inaction from the European Central Bank raised the possibility of major trouble for our financial titans across the pond.

This amalgamation of events is eerily similar to what took place on Sept. 29, 2008, after the U.S. House of Representatives shot down the Troubled Asset Relief Program. Immediately after the vote, big banks made the market plunge a record 778 points, sparking widespread fear and panic that helped convince Congress to eventually pass the bailout.

Can these conveniently timed market freak-outs be chalked up as a simple, if stunning, response to significant political events? Or is there something more sinister going on?

Right now, there is enough financial firepower concentrated in the hands of a few individuals to move the stock market whichever way these people want it to go. These 10-minute 700 point drops could very well be a precision-guided High Frequency Trading (HFT) attack designed to show Congress who's boss.

In today's stock market, 70 percent of all trades are executed by computer algorithms via High Frequency Trading. And Goldman Sachs completely dominates the HFT business, with a virtual monopoly over trading at the New York Stock Exchange, as Tyler Durden describes for Zero Hedge:

Goldman's dominance of the NYSE's Program Trading platform, where in addition to recent entrant GETCO, it has been to date an explicit monopolist of the so-called Supplementary Liquidity Provider program, a role which affords the company greater liquidity rebates for, well providing liquidity, and generating who knows what other possible front market-looking, flow-prop integration benefits. Yesterday [5/6/10], Goldman's SLP function was non-existent. One wonders -- was the Goldman SLP team in fact liquidity taking, or to put it bluntly, among the main reasons for the market collapse.

Importantly, Durden notes that in April, Goldman executed a huge proportion of trades for its own account—enough to significantly move the market, if it wanted to.

What is notable here is that of the 1.4 billion in principal shares, or shares traded for the firm's own account, Goldman was the top trader by a margin of over 100% compared to the second biggest program trader.

We have long claimed that Goldman is the de facto monopolist of the NYSE's program trading platform. As such, it is certainly the case that Goldman was instrumental in either a) precipitating yesterday's crash or b) not providing the critical liquidity which it is required to do, when the time came. There are no other options.

For further investigation, I turned to Max Keiser, who has written and authored similar Program Trading and HFT computer algorithms. I asked him if he thought this was an attack, and here is his response:

May 6th was an unequivocal act of domestic financial terrorism in America. A day that will live in infamy. To scare the lawmakers, themselves large owners of the very banks and stocks that they are supposed to be regulating, a financial weapon of mass destruction was put to their head and they acquiesced.

As the inventor of the continuous double-action, market-making technology (VST tech. US pat. no. 5950176) that is referenced 132 times by program trading and HFT patents since 1996, I can tell you that Goldman, JP Morgan and the gang simply pulled the "buys" from their computer trading programs and manufactured a crash. And when the coast was clear, and it was clear the politicians were not going to vote for anything that would break up the "too big to fail" banks; all the "sells" were pulled from the computers and the market roared back.

This is a Manchurian Candidate market where program trading bots start the ball rolling in whatever direction Wall St. wants the market to go -- and then hundreds of thousands of day traders watching Cramer on CNBC jump on the momentum bandwagon and commit the crime for the Wall St. financial terrorists, who then say, "It wasn't us, it was 'the market!'"

On Friday, the day after the "flash crash" and the defeat of the "break up the banks" amendment, Goldman just happened to be meeting with the SEC to work out a settlement in the Abacus fraud case.

These two major market crashes are not the only grounds for suspicion. On January 21 and 22 of 2010, President Barack Obama had a press conference and came out in favor of the Volcker Rule, which would have limited these HFT and "proprietary trading" schemes. At that time, the market dropped 430 points. Soon afterward, the Volcker Rule faded away and Obama has not seriously addressed this reform since then.

We know banks are willing to put the entire global economy at risk in order to pursue their own reckless profits. We also know that bankers at the largest U.S. financial firms are fighting like hell to keep their too-big-to-fail gun pointed at the head of the U.S. economy, and to keep their riskiest and most abusive activities beyond the scope of regulators. Consider what they've already accomplished over the past two years:

* 50 million Americans are now living in poverty, which is the highest poverty rate in the industrialized world;
* 30 million Americans are in need of work;
* Five million American families foreclosed on, with 15 million expected by 2014;
* 50 percent of U.S. children will now use a food stamp during childhood;
* Soaring budget deficits in states across the country and a record high national debt
* Record-breaking profits and bonuses for themselves.

Motive and means are not enough to prove a case. You have to show that someone actually executed the dirty deed. But right now there is an alarmingly narrow scope of the calls for investigation into the flash crash. The SEC is considering "market manipulation" investigations, while members of Congress want to investigate whether technological malfunctions are to blame. But shouldn't somebody at least be looking into whether the flash crash was not merely fraud perpetrated for profit, but outright political intimidation—an act of economic terrorism? We'll never know if we don't investigate.

© 2010 Amped Status All rights reserved.
View this story online at: http://www.alternet.org/story/146793/

==========

And yet the Repugs and tea baggers whine and moan about Big Government, while ignoring their owners, Big Finance.

[EmptyMan]

lmao, I don't doubt any of that. But what can we do? Nothing.

The entire thing is built on holograms. To fix it would be to collapse everything. People have lived and made wealth off the market. I'll just assume I'll be able to do the same over my lifetime. Beats stuffing shit in mattresses. These conspiracies are depressing as hell :depressed

[boutons_deux]

"conspiracies are depressing as hell"

corps and capitalists have got USA by the short and curlies, and they won't let go.

America democracy is fucked beyond redemption.

American corporatocracy forever!

Probably most ignorant-as-fuck teabagger pack of rabid dogs don't even realize how duped they are into going after the govt when it's really the capitalists and corps that are the true America-destroyers.

[Winehole23]

If posts like that are in any way the result of giving up caffeine or smoking, please please start again.

[Wild Cobra]

Anyone with a 401k.
When I look at mine, I'll let you guys know.

As I was thinking about it, I am less worried about the stocks in my funds being tied to computerized trade decision making. I believe these large company fund managers make their money from pulling the triggers themselves.

[smeagol]

Hating on capitalism when you live in the country that epitomizes capitalism is . . . well . . . stupid beyond belief . . .

[Nbadan]

American corporatocracy forever!

No doubt...there was no clearer sign of that than when the Supreme Court gave corporations more power than you and I.....but some people don't get it...

Keep the globalist dream alive! Blame the Government! ... while power and money concentrate into fewer and fewer hands of robber-barons .... let the people eat cake...we decide...

[jack sommerset]

Blame the Government!

LoL. You are off your talking points. It's blame Bush"

[boutons_deux]

# The New York Times
May 11, 2010

4 Big Banks Score Perfect 61-Day Run

By ERIC DASH

It is the Wall Street equivalent of a perfect game of baseball — 27 up, 27 down, the final score measured in millions of dollars a day.

Despite the running unease in world markets, four giants of American finance managed to make money from trading every single day during the first three months of the year.

Their remarkable 61-day streak is one for the record books. Perfect trading quarters on Wall Street are about as rare as perfect games in Major League Baseball. On Sunday, Dallas Braden of the Oakland Athletics pitched what was only the 19th perfect game in baseball history.

But Bank of America, Citigroup, Goldman Sachs and JPMorgan Chase & Company produced the equivalent of four perfect games during the first quarter. Each one finished the period without losing money for even one day.

Their showing, disclosed in quarterly financial filings, underscored the outsize — and controversial — role that trading has assumed at major financial institutions. It also drives home the widening lead that a handful of big banks are enjoying over lesser rivals on post-bailout Wall Street.

Experts said it would be difficult to repeat such a remarkable feat this quarter. Even so, the performance could feed the debate in Washington over the role of proprietary trading at banks, as well as sometimes conflicted roles banks play as market makers in matching buy and sell orders.

Risk management experts said the four banks, as well as other Wall Street players, reaped big rewards without necessarily placing big bets that stocks or bonds would go up or down. Instead, they mostly played matchmaker, profiting from the difference between the prices at which clients were willing to buy and sell. Banks said that customer order flows were particularly strong during the period.

“This is not about hitting home runs,” said Jaidev Iyer, who runs his own risk management consulting firm, J-Risk Advisors. “This is just, as we call it, milking the market and your captive client base.”

Still, the quarterly showing was highly unusual. Bank of America said that its trading revenue surpassed $100 million on 26 days, or almost 43 percent of the 61 trading days in the first quarter. It was the first time Bank of America had a perfect quarter since acquiring Merrill Lynch in early 2009.

JPMorgan said that its trading revenue hit the $90 million mark on 39 days during the first quarter, and exceeded $180 million on nine days, or about 14 percent of the time.

A JPMorgan spokesman said the last time the bank had a perfect run was the first quarter of 2003. “The high level of trading and securities gains in the first quarter of 2010 is not likely to continue throughout 2010,” Morgan said in a regular filing with the Securities and Exchange Commission this week.

Goldman Sachs — which is fighting an S.E.C. suit claiming the bank defrauded customers on a complex mortgage investment — posted its first perfect quarter ever. Goldman made at least $100 million on 35 days during the quarter, and at least $25 million on the remaining trading days.

In the wake of the S.E.C. suit, Goldman’s role as a market maker has come under scrutiny on Capitol Hill. It has staunchly defended its business practices and said it had done nothing wrong.

Gary D. Cohn, Goldman’s president, said Tuesday that the standout quarter highlighted the strength of the trading that Goldman executed for its customers, particularly its fixed income, currency and commodities unit, known as FICC. “Our FICC and equities businesses are largely global market-making businesses where we intermediate flows and commit capital and liquidity and in the process generate revenue including bid-offer spreads,” Mr. Cohn said at a UBS conference in New York. “These franchises create numerous opportunities for the firm.”

Citigroup also had a loss-free first quarter, according to a person briefed on the situation. The bank discloses its trading performance on an annual basis, but big daily losses have been a regular occurrence over the last few years. In 2009, it lost more than $400 million on two of its 260 trading days; in 2008, it lost that same amount on 21 trading days.

Morgan Stanley said its losses reached as much as $30 million only four days in an otherwise profitable quarter. A Morgan Stanley spokesman said the firm’s last perfect run was the second quarter of 2007.

Given the recent turmoil, last quarter’s strong showing will be hard to replicate. In 2009, the banks posted losses on less than 20 percent of the trading days; during the turmoil of 2008, losses occurred as much as 40 percent of the time.

“It was pretty smooth sailing last quarter,” said William Tanona, an analyst at Collins Stewart. “I would be very surprised to see history repeat.”

[Winehole23]

2. Why has no one come forward to take responsibility?

The problem with the "fat-finger trade" theory is this: No firm or person has claimed that the trade was theirs. In fact, several firms, including Citigroup and Terra Nova Financial, issued categorical denials. Refusing to take responsibility is highly unusual behavior for trading firms: Especially in a market crash, it looks particularly craven. To some, the blankness of the faces involved is a good argument for more regulation of "dark pools" that trade securities far away from the prying eyes of the exchanges. But this is also the primary reason that some suspect market manipulation or a cyberattack.



3. Why did the exchanges cancel trades if they insist there was no glitch?

The New York Stock Exchange and Nasdaq denied that there was any technological glitch in their trading, meaning that the bizarre trades were due to forces outside their control. The exchanges could be telling the absolute truth, or they could be avoiding some embarrassing assumptions people might make in light of past, similar technological problems. (Both exchanges have histories of pricing glitches and blackouts.) Nonetheless, both exchanges unilaterally decided that they would cancel all trades in stock whose prices changed more than 60 percent -- the largest single cancellation of stock trades in history.



To traders, this makes no sense: If there were a provable glitch, the cancellations would be fine. But if there was no technical glitch and the system as a whole was just doing its job, then the exchanges interfered with bargain shopping.



4. Why can't the exchanges get their stories straight?




The New York Stock Exchange and Nasdaq are losing market share to electronic exchanges and upstart competitors. They also compete with each other and have a long history of smack-talking on the court.



It's probably no wonder, then, that the first reaction of each was to get into a hand-flapping tizzy blaming the other. Nasdaq blamed the NYSE for walking away from stock trading. The NYSE blamed Nasdaq and others for not jumping in when its own systems slowed down trading. The NYSE, resentful about the loss of many of its floor traders in the rush to technology, also used the excuse as an occasion to settle some scores, strangely insisting that the problem with all these computers is exactly why the NYSE needs to have floor traders.



Perhaps true, but saying "we need humans because our computers don't work" is not a solid defense. Besides, people didn't do great a job of reining things in, either.



5. What is the connection between the stocks that crashed?

There are almost no common characteristics among the biggest stock movers that day: Procter & Gamble is a consumer stock, Accenture is a financial stock; Boston Beer Company sells Sam Adams beer. The e-minis theory partially explains the connections because it's possible for unrelated stocks to appear in a single trading "basket."
In addition, it's unclear why exchange-traded funds, or ETFs, made up the majority, or 69 percent, of the canceled trades. That's too high a number to be a coincidence, but why these funds? It might be because most ETFs are created to track particular indexes, such as the Dow or S&P 500, which experienced wild swings. But as usual on this subject, answers -- not guesses -- are in short supply.


http://www.washingtonpost.com/wp-dyn/content/article/2010/05/15/AR2010051500041_2.html

[Cant_Be_Faded]

Hating on capitalism when you live in the country that epitomizes capitalism is . . . well . . . stupid beyond belief . . .

Assuming you are talking America, dude, this country's economy and financial systems for years now have not resembled capitalism in any fundamental way.

[Winehole23]

Let’s say you manage a highly leveraged, diversified investment fund, and have become so skilled at playing the markets that you have a 70 percent probability of making money any given trading day. This would be a remarkable achievement in most markets. The odds that you would post a daily net gain 63 times in a row, though, would be about one in 5.7 billion. The formula for calculating (http://www.webwinder.com/wwhtmbin/jexpont.html) this is: 1/(0.70 to the 63rd power).



Even if you had a 95 percent likelihood of a winning day, you would have only a 3.9 percent chance of doing it 63 trading sessions in a row.
http://www.bloomberg.com/apps/news?pid=20601039&sid=ax0kTsl0dBXw

[Winehole23]

Dow closed below the flash crash today.

http://online.wsj.com/article/SB10001424052748703303904575292171374533404.html?m od=WSJ_hpp_LEFTWhatsNewsCollection