Q: Was yesterday’s 1000+ point drop (on the DOW) the start of “The Collapse”?
A: No, but “The Collapse” is still coming.
Why? Leverage and fraud.
“Billionaire Carl Icahn told CNBC on Tuesday there are too many exotic, leveraged products for investors to trade and one day these securities are going to blow up the market.
The market is a “casino on steroids” with all these exchange-traded funds and exchange-traded notes, he said.
These funds, especially the leveraged ones, are the “fault lines” that will eventually lead to an earthquake on Wall Street, he said. “These are just the beginnings of a rumbling.”
“The market itself is way over leveraged,” Icahn said on “Fast Money Halftime Report,” predicting that “one day this thing is just going to implode.”
Karl Denninger of The Market Ticker had this insight:
“The computers were all shut off today. [Speaking of 2/5/2018]
All those HFT machines? Gone. Liquidity in the /ES futures all day looked like something out of Lord of the Flies. There were entire brackets in the bid/offer stack that had single or two-digit contracts being bid or offered for hours at a time; for context a normal daytime market has hundreds to low thousands all day long.
This is what you get when you allow “HFT” dudes to take over and basically own the stock market; they’re faster, they cheat with their bid-rigging and spoofing schemes, and since they’re colocated they can beat any human, anywhere, no matter how much capital you have.
Basically, the HFT machines were turned off, and the resulting free-fall in bid/ask prohibited human traders from getting orders filled. This all could have ended years ago, but instead of demanding an end to the chicanery, the American People (and many others across the globe) actually cheered as the markets moved higher.
One might imagine that those that cheered were entirely ignorant of the HFT machines or the insane levels of leverage involved in our markets, but we here at FedUpUSA, Mr. Denninger at The Market Ticker, and many others have been trumpeting news of these things for over a decade.
In short, there is no excuse. None.
This information has been in the public sphere for more than a decade, and NOTHING has been done to fix any of it. Heads should have rolled 10 years ago, when it became obvious (even to the uninitiated) that fraud and leverage were cornering our markets…but they didn’t. No heads have rolled, nobody has been fired, no charges were filed against anybody, and no perp-walks have occurred.
In case you’re waiting for a cue, you should already be contacting your Congress Critters and raising holy Hell about this…but we won’t hold our breath. If we did, we’d have died years ago.