Tuesday, September 30, 2008

Looking Ahead

CNN has pulled the link, but it looks like yesterday could have been much worse: Dow Jones: 'Specialists' Moves on Monday May Have Staved Off Bigger Mkt Fall'

Black Monday could have been even darker.

Proponents of open-outcry trading say that specialist market makers on the New York Stock Exchange, faced with a flood of selling orders late Monday, took the buy side or aggressively solicited for buyers on several large financial companies that were selling off. By assuming the role of buyers or soliciting them, these specialists may have helped limit losses at the bell. ...

... "If this was purely electronic, it could have been down 1200 or 1300 on the Dow," said Bernie McSherry, a senior vice president with Cuttone & Co., the largest independent floor operator at the NYSE. ...

"[Specialists] created trades that otherwise would not have occurred...when someone alerts a broker and says look at this, you create an interest. That facilitates trading that doesn't happen in other markets," said Dave Humphreville, president of the Specialist Association, which represents market makers on the floor of the NYSE.

Well, our "free markets" certainly rebounded nicely on all the good news today - while the dollar rallied and gold fell. Hmm...

Moving ahead to Tomorrow:

- September auto sales are due Wednesday (throughout the day)
- Construction Spending and ISM Index data are due at 10:00
- Additionally, the Senate will vote on the bail out plan at 7:30 p.m. while the House is expected to return to the bill sometime before the end of the week

Credit markets continue to worry about the status of the bail out plan and the London Interbank Offered Rate (LIBOR) rose sharply today - LIBOR is the rate banks charge each other, and many consumer and business loans are tied to it

Current "Economic Panic" headlines:

FDIC asks Congress for the authority to increase insured deposit limits

S.E.C. Move May Relax Asset Rule

The move on Tuesday drew praise from the American Bankers Association, which had complained to the S.E.C. that auditors were forcing banks to value assets at unrealistically low “fire sale” prices, rather than at the higher values the banks believe the assets should be worth in an orderly market.

WNY banker, Paulson discuss economy

“We need somehow to communicate to the general public in a matter of days and hours that this is not a Wall Street bailout. It’s a rescue of our economy.”

So said Salvatore Marranca, president of Cattaraugus County Bank, after a Tuesday afternoon conference call that he and other board members of the Independent Community Bankers of America had with Treasury Secretary Henry Paulson.

The discussion was held one day after a proposed $700 billion bill lost in the House by 23 votes despite having bipartisan support and the urging of President Bush.


My thoughts looking ahead this week - more manipulated markets and possible emergency fed rate cut.

Sleep well



Nikko said...

“We need somehow to communicate to the general public in a matter of days and hours that this is not a Wall Street bailout. It’s a rescue of our economy.”

An economy dependent on citizens borrowing in order to consume. An economy that allows invesment brokers to leverage 30, 40 50 to 1. An economy running a $10 trillion debt.

Why would we want to rescue a POS like that? Pull the plug already!

Randy said...

Nikko - I couldn't agree more.

Thanks for posting

jerry said...

Here is a link that tells about the possible drop in the DOW to 8300 due to a run on money market funds even before the opening bell was rung. Bernanke stepped in with a substantial sum of money before the bell quieting the potential sell calls.

Mike Whitney wrote this article before Monday, making me think this happened on Friday.

500 Trades Away from Armageddon:

Randy said...


I read that article over the weekend - EXCELLENT!