Posted by Karl Denninger
The “rumor on the street” at the time of the dump in PHK a few days ago was claimed to be a “fat-fingered” trade.
Let me guess. We’ve had three fat-fingered days in a row, right? The first one which was an honest mistake, and now two days of follow-up which were also honest fat-finger mistakes?
Pretty impressive to lose all of the gains since October – in three days.
Of course this isn’t being discussed on CNBS, nor the real reason for it, nor is anyone calling out those who disseminated the “claim” that this was a “fat-finger” mistake originally.
This is high-yield debt by the way. A PIMCO fund on top of it. Closed end, and yes, it does trade at a rather insane premium to NAV, but closed-end funds have a habit of doing that.
But gee, here we are in the New Year, the selling continues at ridiculous volumes compared to the historical average, and in a market where the DOW is up 160 points this issue is down another 5% today.
Who’s whistling past the grave here? If there’s a problem with the constituents in this fund then one has to ask if this is an “isolated incident” or whether it implies some really ugly things around the corner in the credit markets.
If you remember we had “little signals” like this back in 2007 – just before everything went totally to hell. Anyone remember this?
That’s from 2007. There were a few “signals” in this fund during that year…. and of course we all know what came next.
If this is fund-specific then why is it showing up in DPO too – erasing all the gains back to JULY?
Uh huh. A 25% decline in less than 5 days eh?
I’ll go out on a limb here a bit: The “fat finger” claim IS A LIE and there’s something nasty brewing here that, as is the usual practice, has been leaked to certain “privileged” players in the market.
You’re welcome to believe this won’t infest and reflect into the broader marketplace. I believe, as has been the pattern over the last several years, one ignores signals like this at considerable peril.
You, the ordinary trader and investor, will never be “cut in” on the deal and given the opportunity to get out before the curtains are on fire and people start succumbing to the smoke, and those who both leaked whatever inside information there is and who traded on it will not go to prison for doing so.
Nor will the “mainstream media” investigate this and report on it. Not on CNBC, not on Bloomberg, not in the Wall Street Journal, NOWHERE.
Your only defense is to look for signals like this and get damn defensive when you see them – right or wrong – because someone who has more information than you do certain as the sun rising in the eastern sky is doing exactly that.
Posted by Karl Denninger
Yeah, it’s a great idea.
Yeah, ok, there’s nothing going on here…. no problem with corporate credit, whether high yield or otherwise. Seriously, trust us.
There’s no need to worry or rush the door – that’s not smoke you smell, it’s the guy over there by the punch bowl with a bong. Really, come on over, buy some more stocks and enjoy the party! First hit is free so long as you buy 1,000 shares of SPY along with a bunch of GS, BAC and JPM!