Seriously. If you or anyone you know has money in a Penson-cleared account, you really, really need to be getting out of there. This includes futures, stocks, anything. In fact, the vast majority of their business is on the equities side. The stock was down 11% yesterday, and is now down another 8.5% today. New lows today at $0.30, last trade at $0.32.
It is getting very ugly very quickly. Given everything that has happened (MF Global), is happening (Facebook IPO ripoff), and is going to happen (JP Morgan clusterbungle), if you think that you are somehow “safe” and “everything will shake out okay” and “no worries”, you’re simply out of your gourd.
Here’s the chart. Remember, this is just a THREE MONTH chart. My blanket response to ANY question about PNSN is simply, “DUDE, LOOK AT THE CHART.”
Just as predicted on Monday: Here it is, folks – PNSN failed to satisfy its restructuring agreement, and that news is now public with the Form 8-K filed yesterday (see below). The only money they have left is customer money, which they just “loaned” from their Broker/Dealer division to their back-end brokerage division for continued operations: they are “continuing their efforts complete strategic transactions” -- to pay out to clients who have trades in play…in other words, “we’re doing our best, but no guarantees, Mr. Customer.” This is the ‘Lit Fuse’ on the next financial bomb to go off here in the US.
https://ncrenegade.com//editorial/the-next-mf-global-pnsn-coming-soon/
Who is next? Stay tuned, as the queue of ready-to-fail’s is getting long…
You were correct in your earlier article. My money is on Morgan Stanley to take the fall for the Clusterbook fiasco. But then again, the losses for Jamie Dimon are now estimated to be $30 billion. Unwinding derivatives for too big to fail may be the next ready to fail.
That is the strange fact about the Black Swan: you only see it afterward.
Without speaking out of school, I can say that the covert China/US bond transactions program is the “mother of all black swans” -- a financial “Extinction Level Event” for the western world. Before we see the parent unfurl its wings, however, I believe we will meet the children, and there are a whole gaggle of them. In no partucular order, they are:
1. A number of Broker/Trader outfits, such as PNSN, which operate in the realm of the former MF Global -- several of these are at various stages of unraveling presently, and pose a substantial risk of consuming segregated customer funds…
2. Euro Conflagration -- it’s not just Greece anymore. The biggest risks are from Italy (most leveraged banks), Spain (highest unemployment and worst economic contraction), and ultimately France (contagion risks, continued increases in govt. spending, despite demanding austerity elsewhere in Europe). The EU is intractable, and so it is only a matter of time before a bond-market D-Day comes to call. No asset will be safe on that day, although some will do better than others
3. The rise of a “super-bloc” to displace the US Dollar as the reserve currency -- Russia, China, and India are already actively working to achieve this. Iran, Venezuela, and numerous other African and South America nations are being wooed aggressively to join. Once they achieve sufficient ‘mass’ they will begin punitive trade policies against the US to seal the transition by grossly devaluing the Dollar within their economies…
4. WAR -- in Mid-East and/or Europe, regardless of whether we engage militarily, we will feel a substantial and persistent financial (asset) and economic (trade) loss if this comes to pass, and the likelihood is rapidly increasing
5. A radical devaluation of certain ‘mass-less’ companies traded primarily on the US Equity exchanges. Facebook is a good example, but other media and internet -based companies who derive their income from “alternate revenue streams” such as advertizing, including Google, Sony Music, and various others. Since these companies have little/no physical product, and therefore substantially smaller asset footprints [asset/market-cap ratio] than more traditional companies, saddles this class of businesses with enhanced precipitous downside risk… in other words, these companies can crash with amazing speed, and are uniquely positioned to “crash through zero” (residual equity value zero or negative)
6. Oil or other Commodities embargoe *against* the US (see #3, above)
These are the top of my list of pertinent issues. While this is not a comprehensive set, taken together these risks describe some ~85% of the aggregate hazard compact, and more than 90% of the span which we are presently modeling.
Regards,
LT
If you want to follow a resonably deterministic indicator of fear/volatility, then look at DXD and VIX. DXD is an “ultra-short” ETF against the market, and VIX is a volatility Instrument. Taken together, they give a rough approximation of what the expectations are in terms of market down-turn. DXD is the breadth of the sentiment (how many contracts trade, and at what price), and VIX is the depth factor -- how deep the trough of an event is expected to be.
Again, this is a very broad, coarse bit of instrumentation, but it works as a reliable warning alarm that things are about to change for the worse.
Now, if you look at where ^VIX was in July of last year, and evaluate the spike in August, and see the corrrelation with DXD over the same period, then you can see what I am talking about. Some lesser portion of the peaking in these symbols is seasonal, but mostly not, so a seasonally corrected model is not required for a warning indicator, which is all I am proposing here.
Respond apropriately when these two symbols move upward in close concert, and you’ve cut your risk of being burned in a crash by 90%, (assuming you are attentive) but be warned, the DXD:VIX instrument described will NOT protect you from a flash-crash! Such a general instrument does not, to my knowledge, presently exist.