No one comes right out and says it.. But in this ' World Economy" what happens in Europe happens in America. Bad news in Europe? the U.S markets react to the negative news with a "sell off" The Dow and the NASDAQ take a nose dive.
Housing crises or negative employment forecast in America? World stock markets take a hit.
News drives the economy, and negative news effects all markets.
A Business world accelerated by 24/7 communication, has resulted in the financial manipulation of markets by a relatively few, mega or institutional traders.
It's not uncommon for an institutional trader to move several million shares per day. These trades effectively " Set" or " Make the Market". It's a legal way to manipulate a single issue in the hopes of driving the market up or down, depending on your position in that issue. Huh?
The Stock Market meltdown of last Week, was a reminder of the fragility of a Global computer controlled trading system that can be triggered into a "Sell" mode by the slip of the finger. Fail-safe? not really.
In a little less than 18 minutes, The Dow Jones Industrial Average free fell 1,000 points before the "Circuit Breaker" kicked in. $3,000,000,000,000, gone south.
That's three trillion dollars.The question remains.. In this world wide electronically traded stock Universe that we live in, are there truly any safeguards in place, that can protect markets from a fiscal meltdown?
It was rumored that a Citibank investment group portfolio manager had keyed in a "B" instead of an " M" for million in a sell order that triggered the panic sell off of last Thursday. Could be. Citi's not acknowledging the mistake, and the S.E.C ? no comment.
Short a Billion Shares of United or Apple, in this case Proctor and Gamble was the target. it's stock dropped 85% in minutes. While it did correct by the end of trade session, it never fully recovered to pre- meltdown levels.
On our side of the pond the Fed has no answer to what actually caused the latest market meltdown.
They may very well not know the answer..