Archive for derivatives

Slot Machine Malfunction In the Big Casino – Winnings Cancelled….for some

Posted in Uncategorized with tags , , , , , , , , on May 7, 2010 by highboldtage

For others, a big payday(or a big flotation device)  when a stock goes from $40 to 1 cent in less than an hour.  This is like when you hit a big jackpot these days in the casino and they tell you that the machine malfunctioned.  The stock market game is fixed.  Is there any doubt any more?  All of the workers pension retirement money invested there, just to be scammed away.  Tsk, tsk.

The big question is what happens to all the derivative bets made on the values of the underlying trades that have been cancelled?  They are worth much more (in fantasy money)  than the underlying stocks.   Oops.

from CNN Money:

“Accenture (ACN) fell from $40.13 at 2:45 p.m. all the way to just 1 cent before quickly rising back to $39.57.

Sam Adams maker Boston Beer Co. (SAM) also fell to a penny before recovering to $55.82.

Oxford Industries (OXM) tanked to $1.34 before soaring back to $19.51 a minute later.

But some other wild trades were not canceled by Nasdaq. For instance, Apple (AAPL, Fortune 500) traded down 22% to $199.25 before recovering, but those trades were upheld.

Most notably, Nasdaq did not cancel trades of Procter & Gamble (PG, Fortune 500) or 3M (MMM, Fortune 500), which momentarily fell 37% and 22%, respectively.”

Here is a list of the canceled stock trades, courtesy of Nasdaq:


U.S. Stocks Plunge; Worst June For Dow Since Great Depression

Posted in Uncategorized with tags , , , , , , , , , , , , , , , , , , , on June 26, 2008 by highboldtage

U.S. Stocks Plunge; Worst June For Dow Since Great Depression

June 26, 2008

U.S. stocks fell sharply Thursday with the blue-chip index enduring its worst June so far since 1930, and plunging to its lowest finish since Sept. 11, 2006, after getting slammed hard as crude soared to new highs and Goldman Sachs disparaged U.S. brokers and advised selling General Motors Corp.


“We’re going to move in the opposite direction of oil, and General Motors is going to go out of business, at least according to Goldman Sachs,” said Art Hogan, chief market strategist at Jefferies & Co.

The Dow Jones Industrial Average (DJI) tumbled 358.41 points, or 3%, to 11, 453.42, leaving it down nearly 1,200 points, or 9.4%, for the month, with one trading day yet to go. As things stand, the month is the worst June so far since 1930 when the index declined 17.72%.

Oil and the Fed

Posted in Uncategorized with tags , , , , , , , , , , , , , , , , , , , , , , on May 23, 2008 by highboldtage

Oil and the Fed

(Wall St. Journal)

May 23, 2008; Page A14

So the Federal Reserve is signaling that its rate-cutting binge may finally be over, and we can be grateful for that small favor. The consequences of its easy-money bender will roll through the economy for years to come, however, so it’s important to draw the right lessons.

All the more so because the Fed’s most senior officials continue to insist that recent price increases have almost nothing to do with . . . monetary policy. .



If Mr. Kohn really believes this, we’re in more trouble than we thought.

For starters, he is simply wrong about the relative price of commodities and other currencies. The price of oil has risen far more rapidly in dollars than it has in euros since 2002. David King points this out today with a chart that we have run in the past. Had the Fed merely kept the dollar stable against the euro, the price of oil would be closer to $80 than to $131 a barrel.


As recently as last August, the dollar price of oil was only $70. The current spike in oil and other commodity prices coincides almost exactly with the Fed’s decision to turn the monetary spigots wide open as a response to the credit crunch. They have since taken the fed funds rate down to 2% from 5.25%, while commodity prices have soared.


As for inflation, this week’s producer price numbers were alarming. The wholesale inflation figure is up 6.5% in the last year.


Yet some at the Fed continue to insist that inflation expectations are “well-anchored.” Anchored on what planet?

The price for this Fed blunder is going to be very high.


Politically, meanwhile, the Fed’s commodity spike is proving to be deadly for the Republican Party