I have a question for you, it’s about the all-time biggest Dow Jones Industrial Average up-day in history.
You know, that 1086.25-point, 5% rocket ride up we all witnessed on Wednesday.
The question is: Do you think on December 26 that traders and investors woke up, got on their computers, called their brokers, and started buying stocks like it was a day-after-Christmas sale at the mall?
Before you answer that question, let me remind you. On the day before Christmas, the Dow Jones fell 653.17 points, hammering the average down to a new 52-week low.
So, I ask you again – this time your answer counts – were investors and traders and retail customers and retirees buying up beaten-down stocks on Wednesday, levitating all the major averages?
The question then should be: Who the heck was buying on Wednesday like there was no tomorrow?
Treasury Secretary Steven Mnuchin just shined a very bright light on a very dark corner of Wall Street.
Last week in a Bloomberg interview, Mnuchin said, “In my opinion, market structure has led to a lot more volatility. Part of this is a combination of the market presence of high-frequency traders combined with the Volcker rule.”
While the Treasury Secretary got a lot of flack for not pinning the stock market’s recent woes on President Trump’s trade war with China, the President’s threat to shut down the government, the President’s tweets about the Federal Reserve raising rates, he at least got the real narrative right.
Of course, rising rates are weighing on the stock market. Fears that a trade tiff with China will turn into a full-blown war is definitely weighing on the stock market. So were fears that there might be a partial government shutdown. And, that global growth is slowing is a heavy weight on stocks.
But those weights have nothing to do with the market moving 500 points one way or another in a day.
Here’s what we know about The Goldman Sachs Group Inc. (NYSE:GS) and their involvement in the outrageous 1MDB fraud scheme:
On the heels of Goldman Sachs’s horrific 2008, the then-investment bank was forced, on a Sunday night in September, to become a bank holding company to get saved by the Federal Reserve on Monday, staving off insolvency and its likely bankruptcy. It gathered itself and set its sights on greener pastures.
Recognizing that Asian institutions held more than $12 trillion in assets and Goldman had relationships with only about 15% of managers controlling those assets, CEO Lloyd Blankfein pointed his finger towards Southeast Asia.
In 2010, Blankfein’s rallying cry was “we need to ‘be Goldman Sachs in more places.'”
The bank proceeded to double its staff in the targeted area. That included Andrea Vella, the former aeronautical engineer and JPMorgan Chase & Co. (NYSE:JPM) derivatives designer, and Tim Leissner, subsequently a 10-year partner at Goldman, as rainmakers.
And make it rain, they did.
In 2012, Vella, Leissner, and Leissner’s deputy, Roger Ng, brought a debt deal to the Goldman bond deal committee in Hong Kong for consideration and due diligence.
The charge was to raise $1.75 billion for the newly formed Malaysian government investment company, 1Malaysia Investment Bhd., for the fund to purchase energy assets from Tanjong Energy Holdings, owned by Malaysian billionaire Tatparanandam Ananda Krishnan.
It didn’t go so well. The committee cited “potential media and political scrutiny” and noted the fund’s “scant record.” But, Vella, Leissner, Ng, and the credit traders they enlisted to help them prevailed.
The Goldman Sachs Group Inc. (NYSE:GS), the most prolific moneymaking machine in the history of Wall Street, was charged Monday by Malaysia’s Attorney General with criminal wrongdoing in the massive 1MDB scam.
While it’s not the first time Goldman’s boiling greed has got it in hot water, the size and scope of the bribery, fraud, theft, and money laundering in the criminal affair known as 1Malaysia Development Bhd. could permanently scald Goldman’s reputation and cause it to lose banking licenses worldwide.
This is a rather long-winded story, so I’m going to split it into two parts. You’ll get the first half today, and I’ll conclude the story on Friday.
I’ll be honest, I am not comfortable with this market. Monday, the Dow swung more than 1,500 points in one day.
From the month of October, the Dow has swung more than 11,000 points, that’s a 41% swing in terms from the top to the bottom. That is a staggering amount of volatility, and I don’t think the market is done yet.
That being said, I’ve received tons of questions from my readers about everything from the role of high-frequency trading (HFT) to what I think about Warren Buffett’s bullish stance on the banking sector.
I’m always interested in hearing your feedback, and if you didn’t get a chance to ask me something before this issue, you can send me an email here.
The phrase “artificial intelligence” is one that can ignite either wonderment or anxiety; there’s scarcely a gray area in one’s reaction.
Artificial intelligence, or simply A.I., according to a recent Bloomberg article, can “… recognize faces, translate between Mandarin and Swahili, and beat the world’s best human players at such games as Go, chess, and poker.”
The limits to the reach that artificial intelligence can have seem to not exist. It really can do just about anything.
The A.I. industry is booming, with speculations that it will grow to improve healthcare, create more and better jobs, and completely change how we view the world.
Just this morning, Chinese tech giant Tencent Music Entertainment Group (NYSE:TME) made its public debut, opening at a price of $14.10. The question now is, can Tencent compete with the already popular streaming services like Spotify Technology S.A. (NYSE:SPOT) and Apple Inc. (NasdaqGS:AAPL)? Shah Gilani says that now’s a terrible time to come to the market, and that the stock isn’t worth a buy.
On the latest episode of Varney & Co., the hot topic right now is whether Teresa May’s vote will move the markets. Shah says, yes, it’s going to have an effect on British markets and move the European stocks. Then, Netflix Inc. (NasdaqGS:NFLX) beat everyone else at the renewal game, coming out on top with the highest renewal rates of any other like service. The stock’s on fire and shows no signs of slowing down… Click here to watch.
You’ve probably been stricken, too – you just don’t know it.
I’m talking about the pain being inflicted on us all by some egregiously greedy generic drug makers.
Yeah, those generic drug manufacturers, the ones we’ve been thanking our lucky stars for because we don’t have to pay insane, inflated prices for designer name-branded wonder drugs.
If you haven’t heard, sixteen generic drug makers have been colluding (allegedly, of course) to jack up prices of what are supposed to be cheap versions of brand name drugs we pay through the nose for.
Now it turns out we’re paying excessively for generics we thought we were so lucky to have.
If you thought the Dow Jones Industrials Average gapping down at the open yesterday, then dropping a heart-stopping 785 points, and then rallying back 709 points to close down only 79.40 points was normal, you might be right.
As abnormal as that sounds, it’s not unusual for equity markets to make intraday moves like that.
And while it’s not unusual, the truth about how it happens is frightening.
Nothing sets investors’ hearts racing like a 1,500-point rally in the Dow Jones Industrials Average in less than two weeks.
Unless, of course, hearts are pounding because the Dow’s down almost 2,500 points in less than a month.
Welcome to the last couple of weeks and months. The market’s seen both extremes twice since October.
Instead of trusting their racing hearts, investors should be using their brains to ask themselves, why did markets rally bigtime twice since October? Why did stocks tank twice before they rallied? Is the coast clear or not? And, are there any signposts they need to be watching?