The glitch: Nasdaq Chief Executive Robert Greifeld has said several factors contributed to last week’s near-1,000-point drop in the Dow: “I think it was a confluence of factors led by the marcro-economic environment, the futures market and then the listed market for those stocks.” Regulators originally thought a trading glitch may have caused the market to freefall, but Greifeld believes that was only one aspect. The fear that financial unrest in Greece could be spreading to other European countries, and heightened activity in the futures market that spilled into the equity market contributed to the issue. On Thursday, 27 U.S. stocks dropped more than 90 percent as U.S. equities tumbled, before recovering by the close. More than 285 securities rose or fell more than 60 percent during the stock-market’s plunge and will have these trades canceled. On Sunday, Nasdaq added another 12 stocks to the list of trades it was canceling following Thursday’s sudden … [Read more...] about Puts and Calls: A stock market crash is beyond algorithmic
Stock market crash of 1929
Sad man on the market floor. Photo: Drew Angerer/Getty Images The stock market has been having a rough week and the president, unsurprisingly, says it is because of impeachment. As I wrote last week, the markets are not pleased about impeachment, but the president’s observation that impeachment “is going nowhere” is instructive. Trump may be impeached but he is unlikely to be removed from office. My read of the situation is that investors are concerned that impeachment may bring out the worst in Trump, from their perspective — trade war escalations, government shutdowns, and the like — and so to the extent the markets are against impeachment, what they’re really against is what Trump will do if he’s impeached. But anyway, while impeachment moved the markets some last week, it does not appear to be the key driver of market moves this week. Stocks fell sharply on Tuesday and Wednesday because of worrying economic data points: the ISM … [Read more...] about Here Are the Non-Impeachment Reasons the Stock Market Has Been Falling
Photo: Mandel Ngan/AFP/Getty Images President Trump says markets would “crash” if he is impeached. That is probably an overstatement, but intraday market moves on Tuesday did make clear that investors consider impeachment to be a negative event. Around noon on Tuesday, as news reports came out that Nancy Pelosi was expected to announce her support for a formal impeachment inquiry, the Dow Jones Industrial Average lost hundreds of points within minutes. Then, just after 2 p.m., when Trump announced he would release a transcript of his call with Ukrainian President Volodymyr Zelensky — a sign the White House was seeking to defuse impeachment pressure with a document it thought might be exculpatory — the Dow quickly regained 200 points. To understand why, we should look through the history of the stock market’s relationship to the president. Or rather, its multiple relationships to the president. Throughout the 2016 campaign, a Trump win was considered … [Read more...] about Why Does the Stock Market Even Care About Impeachment?
London (CNN Business)Happy Sunday. A version of this story first appeared in CNN Business' Before the Bell newsletter. Not a subscriber? You can sign up right here. Just three months ago, the escalating US-China trade war and a troubling signal in the US bond market induced a global panic, sparking a selloff in stocks and, for the first time in a decade, resurfacing the dreaded r-word: recession. Now, investors around the world are shrugging off their concerns. Sentiment is improving — allowing markets to continue pushing higher and higher. US stock indexes hit all-time highs again on Friday, with the Dow climbing above 28,000 points for the first time in history. See here: "Recession concerns vanish" was the takeaway from Bank of America Merrill Lynch's most recent survey of fund managers. Expectations for global growth in the next 12 months had their biggest leap ever between the October and November. Investors are sitting on less cash while boosting their exposure to global … [Read more...] about The case for more stock market records
Others might not be laughing by the time he’s through. Photo: Brendan Smialowski/AFP via Getty Images Ben: You wrote today that to the extent markets are concerned about the probably-imminent impeachment of President Trump, it’s not so much because of the political crisis aspect of the situation — it’s more that a cornered Trump might enact even more damaging trade and other economic policies than he has already put into place. What would such policies look like, do you think? Josh: They could look like some of the things we have seen in the past — higher tariffs on Chinese goods, a floated idea to block U.S. investments in Chinese firms, escalation in the trade disputes with the E.U. (including the valid, WTO-certified dispute over subsidies to Airbus), Trump’s periodically threatened tariffs on European cars. Trump has also periodically threatened to withdraw from NAFTA. He’s been appeased on NAFTA because he negotiated the USMCA, the … [Read more...] about Is the Market Underplaying the Risk Trump Poses?