Wall Street Archives - Page 4 of 26 - Money Morning - Only the News You Can Profit From
Stock Market News Today: What and Who to Watch
After last week's onslaught of economic indicators and earnings reports, the stock market today is down in morning trade.
As earnings season winds down, this week has fewer economic reports in the pipeline and the stock market today is slightly weighed.
Goldman Sachs, the Judas Penguin, and the Tip of the Iceberg
News from Wall Street this week reminded me of the penguins that inhabit the icy, turbulent waters of the Southern Ocean.
These penguins are preyed upon mercilessly by tremendous, ravenous orcas – a terrible beast to feel gnawing on your leg if you derive your daily bread from the frozen, watery wastes.
But the penguins have devised a clever, if brutal, warning system.
A flock of penguins will gather apprehensively at waters' edge… and one luckless penguin will be pushed into the sea. If the penguin is ripped to shreds by killer whales, the rest will hang back a while.
Otherwise, the rest of the flock piles into the briny deep.
Goldman Sachs Group (NYSE: GS) bond trader Fabrice Tourre is one of those luckless, doomed penguins.
The predator in this case is unlikely: a normally toothless flounder otherwise known as the Securities & Exchange Commission.
Fabrice Tourre, a bond trader of the middling ranks, was earlier this week found liable for six of seven fraud charges relating to Goldman Sachs' trading of toxic mortgage assets.
The civil trial – a rare prosecution – provided a rare victory to the SEC, who, after a loss and a draw, are desperate for a win. At issue was whether or not a full $1 billion worth of collateralized debt obligations (CDOs) were fraudulently marketed.
Glass-Steagall Act 2013: When Financial Regulation is the Best Thing Ever
Unlikely political bedfellows Senators Elizabeth Warren (D-MA) and John McCain (R-AZ) have put their voices together to call for a 21st century version of the Glass-Steagall Act, also known as the Banking Act of 1933.
This proposed regulation will rebuild the "wall" between investment banking and commercial banking, and prohibit large banks from taking speculative steps – bets, really – with depositors' assets.
There will still be a place for the big bad boys of banking to bet, to make the moves that make big money, but it will not be your money – or mortgage, or 401(k), or IRA – that they will play with.
According to Senator Warren, until Glass-Steagall was passed in 1933, American banks reeled drunkenly through cycles of rapid expansion and collapse about every 15 years since the late 18th century.
Glass-Steagall, though, threw up a brick wall around investment banking and commercial banking. Among other things, it prevented banks from making big bets with customer deposits.
The Shocking Story Behind "News Feed Trading"
Pssst…Want to buy a watch?
I don't have one for sale, but I know some folks that are willing to sell you… well, it's not a watch, but it's something much, much better. They'll sell you time. You want to buy some time?
Turns out, and who knew, you can buy time. You, yes you, can buy a few seconds for a whole bunch of money. High-frequency trading outfits and apparently tons of other "traders" and "investors" are buying this time. You can, too.
For a "Fistful of Dollars," what you get is a few seconds head start on knowing some very important economic data points.
It's amazing what money can buy.
Forget integrity, it's not for sale because it's out of stock. But if you want to buy the University of Michigan's highly regarded and market-moving report on consumer confidence, you can get it, right alongside the "investors" like the HFT boys and girls who pay the University to get the numbers two seconds before the rest of the world sees them.
Or you can pony up next to the same crowd that buys the Institute for Supply Management's manufacturing index numbers before the world sees them.
It's not insider trading. It's totally legal.
The Truth About "Dark Pool" Trading
Well, this ought to be interesting – not for what might be revealed, but for what will likely remain in the shadows.
One of the weakest, least effective regulatory bodies around, the Financial Industry Regulatory Authority (FINRA), is now saying they want to shed some light on "dark pools."
FINRA is the self-regulatory body, backed and stacked by the broker-dealers and brokerages that channel your trades from your desktops and through brokers, whom FINRA is responsible for registering and regulating, to various exchanges for execution.
They're going to be looking into dark pools, which are off-exchange trading venues where stocks are traded "blindly." That's supposed to mean buyers and sellers don't know who's who.
But the truth is, even dark pool customers are blind to how these shadow operators really operate.
Here's the deal…
A Look Back at the Flash Crash of 2010: When Will it Happen Again?
We've just marked the third anniversary of the Flash Crash of 2010.
That May afternoon was already a down day for the Dow, with the index off by about 300 points since trading opened. Then, at 2:45 p.m., the Dow rapidly plunged by another 600 in just five minutes. By 2:47 p.m., the Dow had lost a staggering 998.5 points.
By 3:07 p.m., the losses had reversed and the Dow picked up most of those 600 lost points. In just about 20 minutes, the Dow had lost close to 9% of its total value – and then regained it.
But those 20 minutes were a virtual eternity, during which nearly $1 trillion in market value essentially disappeared.
The Next Wall Street Mega-Scandal Has Arrived
Well, it looks like the major financial institutions can't learn a lesson. They're neck deep in yet another financial scandal of global proportions.
U.S. and international securities regulators investigating manipulation of LIBOR, the world's most important set of benchmark interest rates, have uncovered another price-rigging scheme, this one in the $379 trillion market for interest rate swaps.
$379 Trillion, not Billion. Trillion.
The Commodity Futures Trading Commission (CFTC) has already issued subpoenas to Wall Street's biggest banks and is interviewing a dozen former and current brokers from the Jersey City, NJ, offices of ICAP Plc.
For investors in the big banks, new revelations may put an end to the upward push to the groups' stock prices, whose earnings of late have been helped by reductions in reserves meant as a cushion against future asset hits and litigation expenses.
The Ugly Truth About Bail-ins, Magic Wands and Con Men
Last week, I was emailed a link to Barry Ritholtz's "The Big Picture" site.
That's where David R. Kotok, Chairman and Chief Investment Officer of Cumberland Advisors, posted a piece on the "bail-in" of Cypriot banks, versus the bailout fixes that we're used to seeing.
As it was an email, a lot of people were copied on it. And a lot of them hit "Reply All," and forwarded their reactions and comments.
I read everyone's responses.
No one had any clue about what's really going on, or how to fix the banking mess the world faces, or whether bailouts or bail-ins are the answer.
Myself? I got really angry.
Why JPMorgan Wants to See More Americans on Food Stamps
Every time an American signs up for food stamps in one of 23 states, JPMorgan Chase & Co. (NYSE: JPM) adds to its revenue stream.
That because JPMorgan Chase contracts to operate as the processor of the Electronic Benefits Transfer (EBT) cards in those states. JPMorgan earns a fee for each recipient, ranging from 31 cents to $2.30, depending on the state, every month for the term of the contract.
JPMorgan's seven-year Supplemental Nutrition Assistance Program (SNAP, the official name for the federal food stamp program) contract with New York state, for example, brought in more than $126 million of revenue to the big bank.
Florida has paid JPMorgan more than $90 million since 2007. Pennsylvania's seven-year contract exceeded $112 million.
It brings a whole new meaning to "corporate welfare."