Today the Dow dropped 1000 points in about ten minutes.
stockcharts.com
stockcharts.com
In this case, essentially every person that had a "stop loss" order was just hunted down by a wave of HFT programs and all those stop loss orders were triggered, which send "market orders" which means, fill my order at the current market price.
When everyone does this at the same time, there are more sellers than buyers so prices drop dramatically. However, this presents an opportunity for HFT programs especially when they have similar strategies, meaning they all are doing the same thing, pushing the market in the same direction. Now, the HFT programs forced people to get stopped out, then they bid the market up and buy, which pushes it right back to the prior level.
Take a look at AAPL, RIMM, GOOG, SPY, etc. and you'll see it is all the same pattern.
One of the reasons the forex markets are MUCH more difficult to manipulate is that you have $3.5 trillion traded daily. Not sure who can simply move that market. Equities on the other hand, much easier....
http://www.cnbc.com/id/36998463
That sounds hard for me to believe, but thats one rumor. That wouldn't account for the 10% drop but it might have put initiated the drop and then caused other people (and computers) to panic and sell.
[Edit] Actually the stock was down at $39.37 from $61. On normal days PG barely moves at all.
It probably should.
It's really surprising, assuming this is really the cause, that a single letter typo could have such an effect and this has 1) never happened before and 2) not been caught in testing.
http://news.bbc.co.uk/2/hi/business/4512962.stm
In the above case the trader got the price and number of share fields confused.
I will tell you what though - someone... someone, made a lot of money from this. Inadvertently, but more than likely otherwise.
I have actually worked on such software. When a price comes in - a quote - you have a fixed amount of time to respond before it goes stale, usually a few seconds. It's assumed you know what you're doing and that you want to move quickly. Same as operating any other high-powered machinery.
I remember a feature request from a client of ours, we had keyboard shortcuts of k for thousand, m for million and b for billion. They wanted t as well.
Would this rumor create insane profits for some? If that is so, those getting the profits should be investigated. Some employee could have been promissed a large sum in a off-shore account to enter a 'b' instead of an 'm'. It should look like an 'oops' to everyone else while a bunch of HFT algorithms could rake in serious profits as everyone's stop-loss triggers get hit. The employee might get fired, but he the pay-off was large enough, he might not need to work ever again.
Welcome to the world of positive feedback loops, enjoy your stay.
CNBC: Trading Error at Major Firm Blamed for Market Plunge: Sources (Story Developing)
CNBC does NOT know what the cause of this was. The exchanges will come out with some "computer glitch" story or the "fat finger" excuse, but neither of those are true. FWIW, the fat finger excuse is, in a nutshell, some trader accidentally pressing the wrong button on the trading desk.
The market was at a technical support level with various moving averages, timelines, etc. all coming into play. Many people had/have stop losses because the market was/is looking due for a correction. Algo/HFT pounced on this, collectively, and thus the massive drop.
Trust me, if you are buying into what CNBC tells you, you are really missing the truth...
(...) on December 8, 2005 in which a Mizuho dealer mistakenly sold 610,000 shares in J-Com, a recruitment business, at 1 yen instead of selling 1 share at 610,000 yen.
The dealer, understood to be a 24-year old woman, immediately realised the mistake but was unable to cancel the trade because of a technical glitch in the exchange's trading system. Mizuho was forced to buy back the shares, leaving it with a 40.7 billion yen loss, prompting the firm to cancel year-end bonuses for all staff in the trading unit.
Note in Japan executed trades cannot be canceled (though in this case the trader was supposed to be able to cancel the orders before they were executed). Many brokers made a big profit. Some institutional investors too. One particular day trader became quite rich and to this day is a sort of legend on internet trading boards.
Breaking News of cnbc.com reads:
Trading Error at Major Firm Blamed for Market Plunge: Sources (Story Developing)
(I don't buy it. CNBC is propaganda.)
I call B$ on this.
Fast traders don't click on icons and enter values, they enter an entire trade on one line.
Buy 1000 shares of Apple computer at 250.05 might be entered as:
buy1000aapl250.05
Maybe you should have had an example not contrary to what you said.
Text based systems: FBSI, SIS
GUI based systems (when not pointing and clicking): Patsystems JTrader<A>, Trading Technologies' XTrader<A>
<A> These are systems I have used for personal use but not at work
However I find it extremely foolhardy that mistyping one character has an impact one thousand times greater, and that such an action can be performed without some kind of validation (whether explicitly via a confirmation, or implicitly in how the UX is designed).
Then again it is probably because of the typo risk that bankers get paid so much ...
I once deleted all my source code instead of backing it up to my floppy by doing "del ." while command.com was in wrong drive. (Should have done "del a:\."; two letters cost me a night of running an undelete program)
Interactive brokers has an API for their software. It's fairly easy to use.
http://interactivebrokers.com/en/p.php?f=programInterface...
They say it right on the web page and I'll repeat it here: Try it with paper trading first! Bugs in these kinds of algorithms are costly.
Just don't expect hand holding. You're supposed to be an experienced trader to even sign up with them (for a few products, like options, you have to pass a ridiculously easy test to trade them), and they won't save you from yourself - they'll happily let you buy 500k Euros with only $20k in your account, so be warned: if you'd made that mistake today, you'd be flat broke right now, though IIRC they do close out positions for you so at least you shouldn't end up too far in the red once your account is dunzo...
...which, to reiterate fnid2's point, it will be, unless you make sure to paper trade your damn code first! I'd also suggest that until you're really sure it's working, you never ever EVER leave it running unless you're watching it like a hawk. And code yourself a big bright red "PANIC" button that closes all your positions and shuts everything down, because you're going to end up in a situation some day where things go wonky and you just want to get out, but you'll have a dozen open positions and you don't want to have to click around to close them all.
Also, it's always a good idea to put in "everything's gone to hell" stops and place orders that time-out, even if your strategy doesn't require them (algo strategies don't typically use actual stop orders for exits): you never know when your connection might die, and you really don't want to end up stuck with nasty positions that you don't even have any way to track or close out b/c your cable went out...the positions that you hold when doing algo stuff can on occasion end up frighteningly large, which is only acceptable if you're holding them for very short period of time.
HFT computers identify "direct arbitrage," and make a profit off of someone else's loss.
Perhaps people should wait until the facts emerge before posting more stories filled with inaccurate information.
"There were a number of erroneous trades," said NYSE spokesman Rich Adamonis."Our guys just told me Nasdaq is investigating the erroneous trades. What happened today in P&G for instance, the bad print was on Nasdaq, not here," he said, referring to a 37 percent plunge in Procter & Gamble Co.
The Nasdaq said it is investigating the plunge.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aQKb...
And more - including canceled trades of Accenture:
Nasdaq OMX Group Inc. said it’s investigating potentially erroneous trades involving multiple securities between 2:40 p.m. and 3 p.m. New York time, when the U.S. stock market tumbled.
Trades in Accenture Plc that drove the second-largest technology consulting company’s stock price down more than 99 percent to a penny were canceled by the CBOE Stock Exchange, according to data compiled by Bloomberg.
A total of 19 trades of 100 shares each were executed at 1 cent in seven seconds from 2:47 p.m. to 2:48 p.m. in New York, a minute after the Dow average plunged by the most since the market crash of 1987, the data showed.
Eighteen of the trades were executed on the CBOE Stock Exchange and were canceled. The first trade that sent Accenture to a penny was executed on the Nasdaq Stock Market. That transaction has yet to be canceled, the data showed.
It's like being at a car auction with a robot auctioneer and putting in a one-penny starting bid, and then the robot's sensors malfunction so he can't see any more bids. He'll declare you the auction winner, but that result doesn't reflect the car's actual value and will almost definitely be canceled.
Unless the value of the car is defined as whatever someone on NYSE or NASDAQ is willing to pay for it.
As the result of this there were some losers and some winners. Losers will want the trades reversed, winners won't. Reversal of trades could start a dangerous trend. Who gets to decide which trades get reversed? I wonder if many HFT firms will start to incorporate such kind of behavior into their trading model, so we'll see more of these "accidents" in the future.
Last I heard, the Nasdaq was going to cancel any trades that were during the glitchy time window and were more than 60% away from a baseline price (an amount people were "willing to pay for it" when the system wasn't glitching). I don't know how they came up with the number, nor how deeply the SEC and other agencies were involved in setting it. There will still be plenty of winners and losers coming out of this, just not the ones who thought they bought or sold Accenture at a penny.
I'm not saying this is a "good" fix, but it is well within the Nasdaq's authority.
[1] http://news.ycombinator.com/item?id=1325574 - notes that broken trades are fairly common, and that they're usually quickly mediated
No, we'll see less of these trades. Because the next guy will set up "buy everything at $ 0.02", so that the $ 0.01 guys don't get everything. Of course they anticipate each other, and will bid each other up to sensible prices.
Ok, we disallow 0.01% of price,penny bids. However, should 10% of price bid orders be left standing, how about 20%, 50%? Certainly 75% of price bids should be honored?
I am afraid we might seeing these kind of things more often.
IS THIS NOT WHY YOU ARE HERE?
Personally I checked only to see everyones noodles flailing.
I believe he made clear what he expects on this forum.
i don't think it's such a good idea to mount the monkey that scratches you.
And, perhaps more fundamentally: how much of market volatility is the consequence of automated decision making? It seems, again naivete is at play here, but it seems like that could be a pretty unstable system.
I guess I think of it like this: the U.S. utilizes Permissive Action Links and other security measures to provide for launch security. Given the centrality of the economy (though not wanting to overstate it), it seems like a large-scale mistake in some models could cause misfiring in ways we wouldn't want but that a human agent could (theoretically) prevent.
Look at market trading volume over the last 15 years.
Oh, happy days.
http://news.bbc.co.uk/2/hi/business/10101581.stm
Doesn't sound like a panic to me.
However, the sellers were real -- and increasing. I think there is a danger that people will see it as only a glitch and not the beginnings of trouble. The glitch might mask the true sentiment.
Things seem rather stable at -4% now...
"This is an electronic market where bids can be cancelled at the flick of a button, and everyone cancelled at the same time," said Joe Saluzzi, of Themis Trading in New Jersey.
Does this make sense? With the time horizons that today's programmed trading operates at, is this really a reasonable explanation?
Current status: probably a fairly rational reflection of the badness of the situation (which is not new, and although serious, probably not catastrophic).
Seems to be about Greece.
There are 100 people on HN that know this stuff better than I do, but maybe by babbling I'll irritate one of them enough to explain.
Greece is in fairly immediate danger because of a combination of three things:
(a) a large quantity of government bonds are up in a few days (19 May IIRC),
(b) they just don't have the money to honour the promises at present, and
(c) they have lost much of the ability to borrow that money from the usual market sources due to the downgrades in their credit rating a few days ago.
Because the Greek economy is tied to the Euro-zone, if Greece goes down it's a very serious problem for the other Euro nations as well. Thus we see some of the more financially powerful nations like Germany stumping up billions of Euros to avoid Greece defaulting, as long as Greece agrees to some pretty heavy "austerity measures" over the coming months and years so the money isn't just being thrown away because they're going to default eventually anyway.
Those measures in turn have already led to fatal riots in the streets, as to the average non-economist citizen, taxes are about to skyrocket, pension/retirement arrangements are getting significantly worse, etc. and no-one really knows why.
The trouble has actually been brewing for several years, since things like the Olympics broke their budget dramatically, but it's only with the recent worldwide economic conditions that it has become really obvious.
That's my understanding of why Greece in particular is in trouble today, but a somewhat similar story could be told about several other European nations, hence the general malaise in the markets.
I suspect this is a bit of a mountains and molehills situation. The odds of the rest of the Euro-zone actually allowing Greece to go bankrupt must be fairly slim, but of course the price of bailing them out is then being carried by those other countries and it's not loose change, so the markets are going to take a substantial hit all the same.
Another problem with EU is that it seems to lack a clear external policy. The E in the EU might as well stand for 'Economic' as in 'Economic Union', as politically these countries still have different & sometimes divergent interests (both externally and internally). Especially, as some members are also in NATO while other aren't.
At the end of the day, it is not possible isolate the economy from politics and social issues. They are intertwined too tightly. It is like co-signing loans for the neighbors that you don't completely know that can go and spend as they please then you are stuck with paying for their extravagance.
This is where I got lost. Can somebody explain why the domino effect? I understand that other debtor nations hold some Greek debt, but that doesn't look to be significant enough...
Ok...well now those loans are coming due, and Greece has further compounded their problem by essentially lying about the state of their finances. Eurostat (an EU watch dog) recently released a report confirming that Greece has essentially been lying about the bad state of it's finances and revised their budget deficit and debt-to-GDP ratio upwards - http://epp.eurostat.ec.europa.eu/portal/page/portal/publicat...
Then, to add insult to injury Standard & Poors recently downgraded Greece's gov't bond ratings to junk status. That basically means that if they wanted to borrow money from the international capital markets, they would pay much higher interest than say Germany. That was expected though, because news was slowly being released that Greece is in a much worse state than they are letting on. The downgrade just 'solidified' it.
Now, in terms of the domino effect, every country in the Eurozone is connected by a number of elements. The eurozone is the largest economic area of cooperation on the planet (geographically). All the countries use the same currency, but not all are controlled by one central bank. Each country has their own individual central bank. But they all share a promise that no one will let any fail, because that invalidates the purpose of the single currency. It would be the equivalent of California going bankrupt. The Federal government will never let that happen, because it would undermine the entire union.
Anyway, so the other countries within the Eurozone that have a similar fiscal profile as Greece are Portugal, Italy, Ireland & Spain (also known as the 'PIIGS'). By similar fiscal profile I mean that whatever happens to Greece, something similar will have to happen to the others. So if Greece is allowed to bankrupt, then investors fear the same thing will happen to the others. If Greece is bailed out, then the same will happen to the others. It really is damned if you do, damned if you don't, because if Greece is bailed out - then they are essentially being 'rewarded' for their profligate spending and 'devious' fiscal behavior over the years. But if they don't bail out Greece, the entire Euro will likely collapse. So they have no choice, assuming they want to preserve the Euro. If they bail out Greece though, moral hazard is created because the other countries are essentially given a guarantee that the Euro authorities (and IMF) will not allow them to go bankrupt either.
All in all, every countries banks have extended loans to (and bought bonds from) companies, governments, and individuals in other countries. So if the debtor defaults, many banks throughout the EU will have an increasing amount of bad loans on their balance sheet - which could force their governments to bail them out (provided the defaults are big enough). Not only that, but credit will dry further and companies that rely on short-term financing for purchasing inventory and paying employees will go out of business because they can't get access to this financing (i.e. the financial crisis will restart). That will then spread to America, the UK, etc.
I know this has been pretty verbose and might be a bit confusing, but I hope that kinda sheds some light on the situation.
http://www.reuters.com/article/idUSTRE63Q3FF20100427
P.S. Oh yes, did I mention that Greeks don't want the bailout and they don't want to do what needs to be done. They are actually rioting - http://online.wsj.com/article/SB1000142405274870396110457522...
I am glad I don't live in Greece right now.
In other words, is this necessarily the beginning of a chain reaction, or is there, in your opinion, some route by which the effects of Greece's economic death rattle may be confined locally?
Also, can anyone elaborate on "they all share a promise that no one will let any fail"? Does this 'promise' have a strong legal basis, or is that simply an implied economic obligation in the face of mutually-assured destruction (i.e., as per the California comparison, is leaving Greece out in the cold even an option, legally?)
Well, I wouldn't say the Euro is near collapse just yet. The Obama Administration would never let that happen...i.e. assuming that the Eurozone bigwigs (i.e. Germany, France, etc.) want it to collapse - which I don't see why they would - a collapse of that nature right now would threaten the overall economic recovery. So the powers that be, are doing (and will do) everything in their power to prevent that from happening.
In terms of the impact over the long term, i.e. coming decade, I would say that provided that the Euro can get through this it should prove good for the EU. Because the only way they are going to get through it, is if the EU + IMF bailout the problem states. We have already seen the major sacrifices that have been demanded of Greece as a condition for getting the bailout - http://news.bbc.co.uk/1/hi/8656649.stm
Although Greeks might be pissed at the 'financiers' for imposing 'harsh' conditions to the bailout, in the long term it will be healthy for Greece. They have to go through a bitter, deep, cleansing period (kind of like the bankruptcy proceeding that GM had to go through to get out of their onerous contracts they had with labor unions & dealer network) to get to a more healthy fiscal position. Unless I am mistaking the resilience of the politicians to weather the storm, I strongly suspect that they will persevere through the political maelstrom and do what needs to be done. Then in 5 - 10 years, we could see some strong growth coming from Greece again - however it all depends on what policies (aside from the austerity measures) they implement.
By bailing out Greece and demanding significant austerity measures, they are attempting to contain it locally. The issue is that if they don't take their pound of flesh, the other states/countries will expect the same. So to nip the moral hazard element of it, they (the EU & the IMF) have to be harsh. It's for everybody's own good.
In terms of the strong legal basis...I will cover this in my blog post. I believe there is some legal basis for it - but I am drawing a blank right now. I am going to do some research and include it in my post. Stay tuned, will post on HN once I am done. At the very least, even if there isn't an explicit legal basis for the bailouts, there is a strong implied economic obligation - because it is in everybody's best interest to bail out the weakest state. Just like it was in America's best interest to bail out the banks - as annoying as it was to do, with them paying record profits - the alternative would be significantly worse. Emphasis on significantly.
You say that "by bailing out Greece and demanding significant austerity measures, they are attempting to contain it locally", but doesn't the process of a group of nations bailing out a member nation (or, likewise, any multinational corporation), by definition, extend the problem beyond local/intra-national economics? Especially when a currency is shared among many disparate nations? What happens if/when a nation such as Greece decides that adhering to the Euro is more trouble than it is worth?
The idea of a "a bitter, deep, cleansing period" I can get on board with -- most nations seem to be due for a fundamental economic/structural revaluation -- but like you said, not bailing out Greece could have dire 'domino' consequences, and doesn't leave much of a choice. But then, when Greece is bailed out, a nasty precedent is set, and what reputation/value will the Euro have when Spain or Portugal inevitably start to experience these very same issues?
So, I guess I return to my original question: is it at all possible for Greece to play the "tank" and absorb most of the serious economic fallout from the present situation, or are the Greeks the canary in the global coal mine? Or am I presenting a false dichotomy?
Also, you suggest in another comment that printing their own money would be a worse scenario for Greece -- why? Many countries do so, and I'd suggest that most of those countries have "profligate governments", but as far as I can tell aren't facing these obstacles to quite the same extent.
This recent crisis has shown that Argentina never did recover from that initial default and has had to default a second time. Talk about going back to the well!
The reality is that when you look at what has been powering Greece's astounding growth from 1996 - 2006, it was mainly tourism + foreign direct investment.
If you do an Argentina-type default, tourism will instantly be hit and FDI will go to nearly zero (or very close) VERY quickly. The unfortunate truth is that pulling out of the Eurozone wouldn't be a cure all. Without the discipline being forced on the politicians by the EU + IMF, what will force them to change and be fiscally prudent? Nothing will. If anything, things would only get worse because they would be able to print their own money again.
You know what happens when a profligate government can print their own money? Ask Zimbabwe.
On the inflationary side, Zimbabwe is an obvious example (with Weimar Germany) of the levels you don't want to go to, but the 1970s Italian/Greek levels of circa 30% annual inflation (with a sort of punctuated equilibrium yearly distribution, i.e. 5-10% most years and 1000% once a decade) aren't quite the same as circa 30,000% annual inflation. It has a lot of effects, some negative, some positive, but is a different sort of beast.
Thanks. This statement is the key that I wasn't aware of.
Here's a google result from FT: http://www.ft.com/cms/s/0/c60cba60-2246-11df-9a72-00144feab4...
The issue with Greek bonds is that the ECB requires the collateral for the assets that banks are allowed to use, to have a certain rating level or above.
This article has a nice explanation of what happened: http://www.ft.com/cms/s/0/3797c8d8-37f9-11df-9e8e-00144feabd...
So, basically the ECB knew that Greek bonds were in jeopardy, and in an effort to continue accepting them as collateral from the banks they had to relax their standards. Basically saying you can give us crap in exchange for cash, rather than giving us gold for cash.
Hope that makes sense.
A major problem is that the Euro covers a very wide and very variable region; some economies are on the tipping point already.
(and I am so glad we (UK) didn't jump into bed with the Euro now! :D)
They can always come up with a story after the fact.
This is everything that is wrong with program trading in a nutshell and I am telling you that this was a multi-billion dollar crime. Someone "fat-fingered" Billions of shares instead of millions and that’s all it takes to send the markets down 10% in one day and the only reason trading didn’t shut down was because Mr. Fat Finger just so happened to make his mistake minutes after the usual trading brakes come off at 2:30. What a friggin coincidence, right? Well, bad luck to all who got wiped out and what a funny stroke of luck for those with multi-billion dollar shorts (including us fortunately so we shouldn’t complain too loudly). It’s amazing what "THEY" get away with right in front of us, in broad daylight….
"Eighteen of the trades were executed on the CBOE Stock Exchange and were canceled. The first trade that sent Accenture to a penny was executed on the Nasdaq Stock Market. That transaction has yet to be canceled, the data showed."
One of the clauses lets the exchange break trades under certain circumstances, typically in the case of obvious errors and "unusual circumstances". So it's fairly likely that trades above and below a certain price on some stocks will be broken.
See Rule 11890 (c) (2) of the NASDAQ.
http://nasdaq.cchwallstreet.com/nasdaqtools/platformviewer.a...
[edit: I previously attributed the NASDAQ rule to NYSE.]
Nasdaq is breaking trades that occurred between 14:40 and 15:00 which executed at more than 60% away from the previous (consolidated) print price.
A total of 19 trades of 100 shares each were executed at 1 cent in seven seconds from 2:47 p.m. to 2:48 p.m. in New York, a minute after the Dow average plunged by the most since the market crash of 1987, the data showed.
Eighteen of the trades were executed on the CBOE Stock Exchange and were canceled. The first trade that sent Accenture to a penny was executed on the Nasdaq Stock Market. That transaction has yet to be canceled, the data showed.
Or a bit more precisely: Someone might have entered a big sell order at $0.01/share by mistake, but when this happens the stock exchanges usually undo those trades, so even if you think you bought ACN for $0.01/share, you probably didn't.
but we've paid people to buy houses, cars and appliances. And we've given billions to banks so they can lend it back to the government at a tidy no-risk profit.
So, this correction makes no sense. The stock market should be zooming to the moon.
Those who exploited the bubble will always be ready to exploit government foolishness, so a new crop will sprout overnight.
This seems to have been expected given the European markets today. It's all over concern for Greek default. Which makes Spain and Portugal up next, which is the bigger concern since they are a larger part of the Euro-zone economy.
One benefit of this all (to Americans), is that the dollar has gotten stronger against the Euro, so while the markets are losing ground, the dollar can buy more from Europe.
google for proctor and gamble fat finger.
"I think the machines just took over," said Charlie Smith, chief investment officer at Fort Pitt Capital Group. "There's not a lot of human interaction. We've known that automated trading can run away from you, and I think that's what we saw happen today."
Welcome to the future?
Buying a few thousand $ worth at a penny wouldn't have been a bad trade.
http://finance.yahoo.com/q?s=ACN
EDIT: Such as trade would most likely be cancelled though.
Ok, so you find a way to bet on Greece failing... don't you think the people on the other end of that deal are also watching CNN and have priced the deal accordingly?
Not exactly the bargain of the century at this point in time.
Edit: for context, that's roughly the same price as Venezuela and Argentina.
Can anyone explain (and possibly cite sources) what the price represents that is displayed when you obtain a stock quote directly from one of the major exchanges?
Is it:
A) The highest unfilled bid
B) The lowest unfilled ask
C) The most recent filled trade
D) The most recent trade at some min. % of float
E) Some combination of the above
F) Other: _______________________
This is a teachable moment and would go a long way towards helping us understand what happened. On the surface, most of these pricing models seem incredibly easy to game.
Bonus; are other quote sources priced using alternative methods? If so, please explain.
Not so much secrecy; however, that doesn't mean there aren't errors, and it now sounds like today there were a few coming through NASDAQ re: Proctor and Gamble, which made the brief decline appear a lot more catastrophic than it actually was.
I've asked this to my finance professor and professionals; there seems to be little/no consensus on it. There must be arbitrage opportunities here... maybe that is what HFT are doing?
According to the NYSE, this was purely the result of an economic supply-demand mismatch. I think the result of this, is the realization that the quoted price can be a poor (exploitable) indication of an equity's value at any given moment.
Which means the debt issues are spreading in Europe... Not that US is in a much better position...
I wouldn't consider myself an expert on this, but, my understanding is that a lot of the economic decline is due to a decline in tourism to Romania (well, to Eastern Europe in general, not just Romania) in the past year or two. And hotels/restaurants/etc account for ~20% of Romania's GDP, IIRC.
And the US is in a much better position than most of the world. We had what? Two quarters of negative growth of -2 or -3% at most before we're back in the plus? Compare that to countries that have been in double digit negatives for multiple quarters in a row.
The primary country that I'm really worried about in Eastern Europe is Bosnia-Herzegovina. Three ethnic groups that have distinct political parties and two of the three don't recognize the third. New government every few months and very little is done. Low GDP to start with, and its gone down even more in the past year or two. Its not too far fetched to imagine a situation like Kosovo in the 90's breaking out again..
[1] http://www.imf.org/external/pubs/ft/weo/2010/01/weodata/weor...
Some happy people in the futures market who bought the effects at < 10k!
Similar to Magnatar, this is the "lose a little money to make a lot more" strategy.
This is what cause the crash in the eighties, we have some fail-safes in place to slow it but most trading is done by tuned algorithms during stuff like this. In fact, the PPT (Plunge Protection Team) might have kicked in...
If you can pull it off, you have earned your profit.
This allowed Porsche to build up a huge position, with only a few willing market participants as counter-parties. They also managed to short-squeeze the short-sellers. (http://en.wikipedia.org/wiki/Short_squeeze)
The grandparent post described a long-squeeze. (http://en.wikipedia.org/wiki/Long_squeeze)
http://www.ritholtz.com/blog/2010/05/market-changes-tone-dur...
and one day ago:
http://www.ritholtz.com/blog/2010/05/cash-100/
(Some of) the technicians were looking at a lot of money on the sidelines, a rally that looked like it was cresting, a lot of profits to be locked in - and anticipating a big correction.
There's a lot of luck to it and maybe even some feedback so its sort of a joke but Ritzholz cashing out (and blabbing about it) by yesterday, and turning to shorting opportunities, just confirms that he's a Sooper Genius.
Here is the story: Today was a big bill auction day. Ok. Just chill out for a minute and let me explain.
China ain't no fool. These erroneous trades were made 10 minutes prior to a bill auction. This is just to make sure that selling these bills will get a high return and low rate. It was a great time to sell at the stroke of noon.
Chillax.
http://stockcharts.com/h-sc/ui?s=AAPL
Nobody knows why it's happening. They're talking about a "fat finger mistake" on CNBC.
Some of these people look pretty scared.
It's now conventional wisdom that AT&T has awful cell coverage. It's especially bad in the Bay Area, but it's bad everywhere.
I can't wait to leave.
Nowadays, even when you're downtown, surrounded by farms of cell towers, getting full bars, your phone will still magically not work.
I will try to add links when I get home later. Clearly it was much more complicated than this, but this pattern of falling dominoes going around the world is at least suggestive.
Update:
China reserve requirements:
http://www.businessweek.com/news/2010-05-04/china-s-stocks-d...
Commodities, etc.:
http://www.google.com/hostednews/ap/article/ALeqM5jpti0ArQEl...
http://www.theaustralian.com.au/business/markets/global-mark...
http://www.businessweek.com/news/2010-05-06/corn-soybeans-wh...
Emerging markets:
http://www.livemint.com/2010/05/04214121/The-Chinese-contagi...
http://online.wsj.com/article/BT-CO-20100505-713490.html?mod...
El Erian - the best I can find is this. The lending comment was attributed to him when I saw it, but here it is a "trader speaking on condition of anonimity".
http://www.cnbc.com/id/36986983
If less-than cooler heads prevail, an actual economic event could trigger the exact same response we saw today.
http://www.nytimes.com/2010/05/07/business/07markets.html?hp
So, the Dow ended down about 350 points for the entire day. This happens sometimes. The world economy could crash triggered by problems in Greece, Spain, etc. Or, we could continue to be fine for decades. I think that it is impossible to predict.
One point: it's my belief that if we didn't have HFT and the quants, this would have been a move like 1987.
if (confirm('You entered BILLIONS did you mean MILLIONS?'))
{return false;}
Trading Error at Major Firm Blamed for Market Plunge: Sources (Story Developing)
This is some serious load...
Not to say this isn't August 6, 2007 or September 12, 2008. It may well be.
I was listening to two different people at the same time, and I'm away from my real-time charting program so I coudln't check.
I just changed the title to reflect.
Holy Shit. Accenture dropped from $40 to $0.01, and now it's back in the high $30s.
Regardless of the details, this is an example of how markets aren't perfectly efficient.
No. Just that the last reported transaction may not be `true' price.
There are other arguments against efficiency of markets, but this isn't.
[citation needed]
You might as well consult a historian.
According to the data I'm seeing for ACN now, the whole drop happened over a 1 minute period, and was back up the next minute.
"...the second is that Euro banks are having a liquidity problem of some sort."