On October 19, 2011, the stock ENV went $9.48 to $0.02 in 1 second and then quickly recovered in pre-market trading. This is something the public has been told can no longer happen with the improvements made since the Flash Crash of May 6, 2010. Apparently, it can happen and as shown below, it was clearly an algorithm that took the price to almost zero in just one split second.
While the 253 errant trades were later canceled, it is painfully obvious that lurking algos are still ready, willing and able to bring the price of a stock to zero if given the chance. Perhaps the “improvements” that have made should be implemented during all hours a stock can trade.
While Equities are doing their own thing, under siege by the HFT Community, let’s review how it all looked back in 2008. We have seen a lot of weakness in Dr Copper lately. Despite the sharp sell offs, the metal has not managed to recover more than a few percentage points. We had a similar situation in 08. The set up looks rather similar, but of course, this time they will quick fix Europe in 8 days, no problem. Chart is rather self explanatory. (Green Copper, blue USD/EUR, orange SPX.)
No Way Out?-EU banks could need up to €370bn in event of painful, but necessary eurozone debt restructuring
The window of opportunity for stabilising, or even saving, the eurozone is closing quickly. As EU leaders gear up for a series of key meetings this week, Open Europe has published a new briefing looking at the short-term options available to the eurozone for tackling the most immediate crisis.
Open Europe argues that Greece should default on 60% of its debt through a managed restructuring, and that the planned second Greek bailout should be scrapped altogether, replaced by a limited transition fund designed to control the default. This would radically reduce the burden on taxpayers. Portugal should simultaneously take a 25% write-down on its debt.
BOE’s minutes. Worth reading, since we are entering Stagflation in the UK.
There had been increasingly visible symptoms over the month of rising stress in financial markets as concerns about the vulnerabilities associated with the indebtedness of several euro-area governments and banks had intensified. These symptoms had included continued high levels of volatility in asset prices; a reduction in liquidity across a range of markets; signs of pressure on some individual institutions; and a generalised withdrawal from risk taking, reflected in price falls in an array of markets, including those for emerging-economy assets, commodities and high-yield credit.
Apple missed bullish quarterly earnings expectations for the first time in years, sending its shares down almost 6 per cent in after-hours trading, reports the FT. The maker of the iPhone, iPad and Mac computers still reported strong numbers, http://ftalphaville.ft.com/thecut/2011/10/19/705776/apples-results-fall-short-of-expectations/
Foreign direct investment in China grew in September at the slowest pace in three months, reports Bloomberg, gaining 7.9 per cent to $9bn, compared with growth of 11.1 per cent in August and 19.8 per cent in July. http://ftalphaville.ft.com/thecut/2011/10/19/705766/chinas-fdi-growth-slows/
US Federal Reserve chairman Ben Bernanke said that communication about future policies will become an increasingly important tool for central banks, in a possible hint about its strategy, says the FT. Addressing a Fed conference in Boston on Tuesday about the effects of the recession, http://ftalphaville.ft.com/thecut/2011/10/19/705756/bernanke-hints-at-communication-changes/