Friday, March 02, 2007

Turning up the volume

Another example of the media's nonsense was underscored this morning when John Thain was on a call with Prudential forecaster, Robert Rutschow. Mr. Thain denied the ridiculous rumors that have been perpetuated in the pop media. The usual suspects: Wall Street Journal and CNBC helped perpetuate this nonsense. Meanwhile, while all of this talk about systems issues ensues, there's been a real surge in volume -- and that's good for bidness (maybe not so good for selling papers though).

All of the banter about the cliff dive helping to shake up complacency in the market is interesting to think about. Looking at the VIX and wearing out the term "volatility" is in vogue, and again, if these occasional dips (which have occured in equity markets since they first existed back in 1602) generate increased interest in the equity markets, that's a good thing for NYX in the long run.

Greater demand for market data, increased share volume, and tremendous source of liquidity, are all beneficial byproducts that have been overlooked by the media and the Street's bearish NYX-covering prognosticators.

Getting back. Here's the Dow Jones piece from today about Thain's conversation with Pru.

"NYSE Group's Thain Denies Rumor Of SEC Probe Into Volume

In a conference call with Prudential Equity Group, NYSE Group Inc. (NYX) Chief Executive John Thain denied the Securities and Exchange Commission is investigating the New York Stock Exchange, analyst Robert Rutschow said in a note to clients late Thursday.
The Wall Street Journal reported Friday the SEC is eying the shrinking of the NYSE's floor and whether it affected the Big Board's ability to handle a surge in trading volume such as occurred on Tuesday, according to a person familiar with the matter cited by the newspaper. Shares of the NYSE Group rose 2.5% to $83.78 in recent action."
Source: Dow Jones, Steve Gelsi 3/2/07

Thursday, March 01, 2007

Countering Media Marlarky

Tuesday's global cliff dive certainly spooked many investors, gave the media all sorts of stuff to blab about (nearly every major rag in the US had Tueday's dive featured on the front page), and invigerated forecasters' doubletalk.

The WSJ's Aaron Lucchetti was scribed an article for today's WSJ with the frightening headline, "NYSE's Trading Overload Draws Attention of the SEC." In another one of Lucchetti's "NYSE's nothing to get excited about" articles, he starts the article off by stating, "The New York Stock Exchange's move into the electronic age happened almost overnight. Now the Securities and Exchange Commission is looking into whether it happened too fast and contributed to this week's trading troubles" (Source, Wall Street Journal, 3/1/2007, By: Aaron Lucchetti and Kara Scannell).

In all liklihood, the SEC is probably not going to examine whether the NYSE's incredibly methodical and phased rollout of Hybrid happened to fast. Though Lucchetti might rope readers into his story with such a dramatic claim, the facts, once again, get distorted.

Please see this CNBC piece from yesterday. It's Bob Pisani, a tremendously respectable reporter -- in fact, has had a recent version of the Stock Traders Almanac dedicated to him -- discussing the systems glitch from Tuesday with long-time NYX/AX bear, Charlie Gaspirino. Good ole Charlie belches erroneous information as he tries to explain how Hybrid works. He goes to pontificate about his views on the proper staffing levels for specialist firms.

Pisani takes issue with Gaspirino's nonsense, and actually corrects some of Charlie's malarky. Then this afternoon, Gaspirino tried to dispute what John Thain told CNBC earlier in the day about the eye-popping idea that the SEC is investigating the NYSE. Unfortunately, Pisani wasn't around to keep Charlie, so his rant went unchallenged.

The point to all this is just to point out that the revolutionary changes occuring at the Big Board have many foes in the way of folks that have been steeped in an archaic, members-only, system. I'd truly like to know what Italian-American specialists Charlie spoke to to find out they were offended with the "Vinnie" comments.

No doubt, the huge point drop, the already nervous "here comes a correction" folks, and the timing of Hybrid make for jaw-dropping headlines -- point swings in the near-term voting machine.

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