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Friday, September 2, 2011

Very scary news items released

Last night I posted "Know when to hold them, when to walk away". When I did that post, I had NOT looked at the blog Zero Hedge yet. I wish I had.
This morning, while checking my RSS feed, to my surprise is very disturbing news, making FAZ and other inverse funds look great, and me wishing I had posted "when to walk away" on Wednesday night instead.

Item 1, Regulators going after High Frequency Trading firms, reviewing code to understand their scalping logic. This is a milestone step for the government to change trading rules to reduce or eliminate HFT. While I support the idea, I also recognize that about 70% of the trading volume of stocks is now computers. Any disruption in the perverted trading arena will likely be a negative one.

Item 2, US Government filing suite against a dozen banks, including BAC for fraudulent practices on mortgages. Filing may happen TODAY (Friday 9/2). Obviously a massive pile on lawsuit from 50 states and now federal regulators can't be good for banks in the near term. Granted once the dust settles, and accounting practices returned to pre-2009 era rules, I'll be optimistic once again about banking. But that means quite a bit of volatility between these two events.

Item 3, Wikileaks releases 65 GB of email archive stolen from Bank of America, uncensored. I am pretty sure executives in BAC did not envision their private communications years later being placed on a global bit torrent. I am also pretty sure at a minimum one damning email will emerge to support the federal and state lawsuits. It isn't unreasonable to think BAC may become the fall guy in this next wave of state and federal lawsuites.

Well there ya have it, quite a bit of significant news. This post has achieves the status of entering Financial Ground Zero series. Good luck.

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