We interrupt all of you applying for funds from Tim Geithner’s special bank bailout fund to bring you the weekly email early today. Bound for Kansas City in the snow, where ModernIR is sponsoring today’s NIRI lunch meeting at Cashew downtown.
Moving to trading, programs generally sort of reset within the first three days of trading in a new month. Program trading is principally the domain of primary dealers, the big prime brokers allied with the US Federal Reserve.
We saw something different in the detail beneath volume last week. Big money downgraded long and short positions ahead of March trading. What would cause them to move both bunker and bivouac, IR folks?
Fear, yes. But we don’t see fear in trading data now, so much as opportunism. Members of government often miss this lesson when running models to size up policy ramifications: At some point capitalists figure out what you’re doing and get past the pity party and start trying to make a buck. And we think institutional money has again increased its capacity to react to the moment by reducing conventional hedging.
What’s that mean? It’s possible that we could get a bounce on good news – say, the president or Congress or both reject more consumption. Could be a thousand points over a number of days. Or not.
We want to help you look cool in the IR chair, not prognosticate on markets. And this is a possibility from a trading standpoint even if no reason beyond opportunism exists. Well, there’s one: primary dealers could use it. They’ve been stretched to the far reaches of capitalist tensility. After all, the great portion of our global banking crisis involves the primary dealers, who range from Citigroup to the Royal Bank of Scotland and most big US and European banks between. Coincidence? There are no coincidences.
So, should such a run happen, don’t be surprised or fooled. It’ll be short-lived unless something drastically changes.
What’s not changed is that most people think “we’ve got to get credit going again.” Who says? Who tries to convince us that spending and consumption are superior to savings and production? Inflation, or constant increase, befriends only debtors. No one possessing assets benefits if things constantly increase in value, because it means your assets actually buy…less.
We’ve bought what government sells: Economies can only grow and never contract. Do markets only go up? Well, how can economies only go up, then? This permanent growth façade underlies policies that produce slavery to W-2s, economic data, taxes, monetary policy, deficits, credit, and the whole rest of the house of cards we’re told is too big to let fail.
Are you prepared if we languish for years? You’ll have to do two things efficiently: a) communicate; and b) know your market structure. IR in the 21st century turns on these two linchpins that will preserve your value in the IR chair, even when value seems as illusory as oases in the desert.
Margaret E. Wyrwas - Knight Capital Group, Inc. (Nasdaq: NITE)
Senior Managing Director, Corporate Communications & Investor Relations
Equity Analysis™ subscriber since March 2007
"In global markets driven by automation, changing market structure regulation and dynamic investment objectives, today's investor relations professionals require new data points in order to remain relevant and add value in their company's quest to reduce its cost of capital."
RSS feed
