Overall, the new job news is good. More people are getting jobs, and some who had given up are back looking.
But since it’s been well established that a few facts about the economy can’t overrule some fat-fingered trader, we’ll just have to wait breathlessly for the final verdict from the alpha seekers.
Belafon (formerly anonevent)
I love some of the statistics from yesterday, that Rachel Maddow pointed out:
1. Samuel Adams briefly was free.
2. Sotherby’s briefly was worth $100,000 per share.
chopper
that’ll happen when your unemployment benefits run out.
Linda Featheringill
We are not out of the woods yet by a long shot but it is nice to see some improvement.
Don’t really know that Greece, Spain, and Portugal are going to do to us. It would be nice if we could dodge that bullet.
I predict that if we can get the Gulf oil under control, the economy will pick up even more. If we cannot, we might just go straight to hell in a handbasket.
stevie314159
It’s SkyNet vs. Colossus: The Forbin Project, winner take all.
dmsilev
Traders actually type in ‘million’ or ‘billion’ rather than 1000000 or 1000000000?
dms
jwb
@Linda Featheringill: From the economy’s standpoint, I think what happens in Europe is far more important than the Gulf. However horrible it is environmentally—and it is undeniably horrible—I don’t see the Gulf spill causing a double dip recession, unless it somehow ends up affecting energy prices in very unpredictable ways. The situation in Europe, on the other hand, has a potential to send the world economy back into a tailspin.
One big problem at home is that the states are all starting to run out of money, as the stimulus package expires. Without a second stimulus package, the next budget cycle for the states is liable to be even grimmer than the last. But I really don’t see a second stimulus in the cards—at least not until after the November election.
El Cid
Hey
I thought it was supposed to be an invisible hand, so, maybe it’s harder to type.
scav
@El Cid: That’s it! They’ve gone totally digital. The Invisible Keyboard!
jwb
@dmsilev: I think they just type 1m and 1b. Actually, I find it extremely implausible that they didn’t have a filter to catch the error—otherwise this kind of thing would have certainly happened before. And that makes me think that this was a blatant attempt at market manipulation, a tactic to divert attention from something going on elsewhere, or, as someone suggested in one of the discussions yesterday, a warning to the administration and congress of what traders will do if regulation is more than cosmetic.
PeakVT
+290K is a good number, no doubt. Let’s hope that it stays at least that high for the next (…does math…) longer than I care to say.
Buried in the details was a nice bonus: manufacturing jobs were added.
geg6
Well, from my purely anecdotal viewpoint, things do seem to be improving a bit on the jobs front.
My guy has had two inquiries to put in consulting bids after a veeeerrrry long dry spell.
Our graduating students here on my campus seem to be getting job offers. Not in the numbers they got them in the past, but most who will be graduating have at least one solid one. And those who don’t are the ones going on to grad school.
And two friends who have been unemployed for a long time (one for over a year and the other 9 months) just got hired.
After almost two years of unrelenting bad news in hiring, this makes me more optimistic. I’ll grasp at any straws I can.
Montysano
@dmsilev:
I don’t buy the “fat fingered” explanation. Denninger thinks it was High Frequency Trading run amok. Others think it was a shot across the bow, fired by Teh Masters of Teh Universe, warning against overly stringent (IOW sensible and sane) regulation in the reform bill.
scav
@jwb: Not to presuppose the conclusions about what exactly happened yesterday, but
a) fat-fingers have happened before
b) the context in which fat-fingers happen matter because of the positive or negative feedback situation. In this case we’ve got
i) a jittery market because of, well, everything and
ii) a lot more high-speed automated trading
so yeah, I can kinda see things getting a little out of control very very quickly in these circs. Course, you might remember that this comes from someone increasing convinced that the Wall Street Economy may be nothing quite so much as a virtual reality game with guys in suits instead of viking helmets and magical +3 swords.
frankdawg
Thank FSM that the ‘T’ key is not close to the ‘M’ or the market might still be diving & picking up speed.
I read that Accenture started the day around 41, was under a buck for a bit & closed around 41. Someones computers made a craptonne of cash on that.
BTW – there were mandatory stops put in after computer trading did this same sort of crap in the 80’s. Those controls were removed in 2007. I am sure there was a really great reason for that.
ksmiami
I know people are really worried about the contagion in Europe, but devaluing the Euro and having a strong dollar is actually better for us in the long run and in fact weak dollar policy was one of Bush’s most horrible legacies. Clinton believed in the strong dollar as the world’s currency reserve. It translates into less inflationary pressure, political strength for the US government and more flexibility in paying off debt. In fact I think an over-valued Euro has been bad for everyone except for some rich German tourists. I guess what I am saying is hang on and believe in America – we ain’t perfect, but we do have a lot going for us.
TooManyJens
@frankdawg:
They nullified the trades that happened when (for instance) Accenture was worth a buck, so maybe not.
jwb
@scav: “the Wall Street Economy may be nothing quite so much as a virtual reality game with guys in suits instead of viking helmets and magical +3 swords.”
I would agree, except that would be an insult to people playing virtual reality games with viking helmets and magical +3 swords—they at least know what they are doing.
Zifnab
My roommate actually just got laid off. :-p That said, he’s in week one of his 59 weeks of unemployment, so it’s more mandatory vacation than economic death knell.
jwb
@TooManyJens: If they were going for manipulation, you have to figure that they knew most of the trades would be backed out. That’s why I think that if it was intentional it was more likely a diversionary tactic concealing something going on elsewhere.
stevie314159
Here is my (educated) guess of what happened yesterday:
1. Many computer trading algorithms are of the IF X THEN Y type, such as if a stock makes a new low for the day sell it, or if the yen goes up, sell stock Z.
2. As we’ve moved away from the NYSE Specialist system, more trading is done on electronic exchanges. Since who needs people, those markets are made by other computer algorithms, such as: if the stock futures drop by X in Y amount of time, lower my stock bid and only bid for Z amount of stock.
3. When a stock order is placed, usually it gets routed to the best market available. BUT, in this fast is good times, you just route it to the fastest electronic exchange. After all, it must be close to the best market, even if it’s not the best, right?
Well, it doesn’t take a PhD from Vampire Squid University to see what happens when you combine 1 and 2 and 3 with a few big sellers wanting to get out of the market. No need for fat fingers, errors, etc, just computers doing EXACTLY what they were programmed to do. Any one algorithm doesn’t kill you, but combine all three and …….
Humans may have their flaws, but computers are relentless:
“Listen, and understand. That terminator is out there. It can’t be bargained with. It can’t be reasoned with. It doesn’t feel pity, or remorse, or fear. And it absolutely will not stop, ever, until you are dead.”
danimal
Job increases in manufacturing and construction. You know, jobs that real Americans do. That’ll kill the (tea) party real fast if these numbers keep up.
Poopyman
@TooManyJens:
I have to wonder who decides which get nullified and which (read “the little people”) are allowed to take the hit?
scav
@jwb: Agreed. I much prefer the furry guys with horns. But the existence of bad blogs doesn’t disprove the existence of good blogs and it’s a joy to open the physical paper or digital one and think “Let’s see what’s happening in the NYT (for example) VR section” and get breaking reports from Bloomberg about Azeroth. (and yes I had to look that up. I never even Mudded. Did Adventure, but that was about it. Plugh.)
jwb
@ksmiami: A strong dollar is bad for exports and so also tends to hurt the manufacturing segment and tends to adversely affect employment in manufacturing. It’s good for imports and so negatively impacts the balance of trade. In general it makes consumer goods and foreign travel cheaper and keeps inflation low. Definitely a mixed bag.
scav
oh, and mistermix? Did you mean the whole pins and needles, Threadneedle Street connection? If so, kudos.
Poopyman
Oh, and since yesterday’s little dustup has all been sorted out I’m assuming the Dow will climb back to where it was?
(Checks market report)… And after about an hour and a half of trading … yep! The Dow is up, uhhhh, negative 167 points.
Well, I’m glad that’s over with.
yellowdog
@chopper: So, Chopper, are you one of those who think that unemployment benefits make people lazy?
If so, you are seriously misinformed and/or have never been on unemployment (or are a troll). It is not enough to live on, it is barely enough to keep a roof over your head. People on unemployment are for the most part actively looking for work if they think there are jobs out there. More people are looking for work (whether or not they are receiving unemployment insurance benefits) because they they think they can find a job. It is a matter of perception and confidence in the job market.
me
@Montysano: I have no personal knowledge of this but, as a programmer, I’d guess that to allow the machines to trade as quickly as possible, there are few fail-safes or accounting for corner cases in their code. When the input goes way outside what the model expects, the trades the machine outputs get absurd.
mistermix
@scav: You’re giving me way too much credit.
IndieTarheel
Windows has confirmation messages for damned near EVERYTHING, and a trading system doesn’t ask whether or not you REALLY meant billion instead of million? Uh-huh. And I’ve got a zipper in the back of my head.
jwb
@scav: I love reading market reports precisely for their fictive character—and the nature of the genre is such that the writer can’t not attribute market movement to a very particular cause (“OMG, bears run amok!!” “OMG, the bulls are charging!!” or the more staid “profit taking,” “program trading,” and “triple witching” explanations), even though everyone knows that market movement is mostly noise. I can see that there is a story and probable cause when you get something like yesterday. But, generally, when the market is just doing its normal swinging to and fro, the market reporters are still geared to giving overly precise explanations for basically random market movements.
scav
@mistermix: Well, too much credit is probably what got us here in the first place. Run with it. Tranche it.
Montysano
@me:
Do some reading on High Frequency Trading, or “front running”. It seems to me, a financial dumbass, like outright fraud, like the very definition of cheating. Denninger, who I read in spite of his wingnut leanings, agrees. Apparently, the computer algorithms and market access needed to front run are available only to the Select Few.
DPirate
Thought some might be interestedd in this graph, regarding earlier thread about fireman pay, etc
http://innovationandgrowth.wordpress.com/2010/05/03/public-sector-pay-outpaces-private-pay/
moja31
@danimal: no they’ll probably just praise the free market gods, whose divine inspiration convinced the selfless management to hire a few real americans in these hard times.
Martin
@Montysano: If they’re trying to warn off regulation, they did the worst possible job of it because everyone now thinks the system needs more sanity checks, not fewer ones.
You need to come up with better conspiracy theories.
Sentient Puddle
There’s a YouTube clip of Erin Burnett and Jim Cramer on CNBC during the drop sort of freaking out and trying to figure out what the fuck just happened. I should find it…
jwb
@Martin: I think it’s already been established that no one thinks these guys are particularly smart, and everyone is agreed that they are unbelievably arrogant. So, just because the action massively backfired is not really evidence against the conspiracy theory; it’s just evidence that it was poorly executed. (Personally, btw, I don’t believe this was intended as a shot across the bow.)
Martin
@jwb: Nobody is going to risk $16B to make a point.
PurpleGirl
The problem with the jobs numbers is that Republicans will use this as proof we don’t need to extend UI benefits for longer periods. And those who have run out of benefits will have no way to keep themselves and their families going. How many will become homeless, experience extreme hunger and fall further behind economically. We still need economic support, we still need benefits.
(ETA: I’m leaving for a computer class at the library and will be out for a few hours.)
Michael
You’d think that there would be limitations on the desk authority of any single trader or executive to prevent fuckups or massive frauds, if nothing else. Keep it rational – I don’t know – something around $100,000,000 or so.
It isn’t as if they haven’t had examples of being burnt – the young Master of the Universe who destroyed Barings on derivatives trades comes to mind.
“Brightest guys in the room”, my ass. A fast food manager has to fill out paperwork to comp a happy meal to an unhappy customer, and is probably more trustworthy.
fucen tarmal
@stevie314159:
ok, because i am suspicious of accidents involving money…
could it be possible, that someone tripped the algorythm wires on purpose, just to take a peek into the huddle and see how various traders, or specific traders, had their put/calls set up…
given that all the transactions were x’d out and the refs called for a do-over, which one could reasonably anticipate.
Bob L
@Martin: Actually it would follow the kind logic of the clown who wrote that chest beating e-mail about how they eat what they kill and don’t take sissy bathroom breaks in their eighteen hour days. Figure Wall Street is just a bunch of gambling addicts, they an’t thinking straight so crashing the market as a “Warning” to the rest of us fits their general pattern of instant gratification but long term dumb they work on.
scav
@Michael: But then again, you’d think the oil companies would have procedures in place to deal with blowouts and explosions. Welcome to the Rabbit Hole. There are no grownups here.
jwb
@Michael: Yeah, you’d think they’d have these limits. And I have a hard time believing they don’t. So, then, how did the trade get through?
On the other hand, I agree with Martin that this would not be a particularly effective way to score a political point and I imagine that the trading house that introduced the faulty trade is on the hook for cleaning up the mess it caused.
If I were a regulator, I would consider whether a mess-up like this could be used to disguise shady activity elsewhere in the market; and then I would look for that kind of activity, especially in one of the other branches of the trading house that caused the problem.
Mnemosyne
@DPirate:
Did you read the comments? They make a pretty good case that the graph shows, well, pretty much nothing at all, except that private employers are really screwing their workers.
Montysano
@Martin:
First of all, I’m reporting what I’ve read. I’m not sure I buy it. But do you seriously think they’re concerned with what “everyone” thinks?
scav
@Mnemosyne: Hey, aren’t you sposed to be off knitting? Go have fun!
ETA oh, wait, sorry, quick bob, your Serene Majesty!
Mnemosyne
@scav:
I’m still getting packed up. I’m a little cranky because I managed to lose my ATM card last night, aka the only “credit” card I own. Fortunately I discovered this after I filled up my gas tank but before I was 90 miles from home, but I’m still irritated. My bank lets you freeze the card and re-activate it if you find it, so I’ll probably stop by the gas station again before I leave to see if someone turned it in.
scav
@Mnemosyne: KO and good luck, but I still hope you develop a quick temporary amnesia and thoroughly enjoy the weekend as the credit card issue is at least stable (if irritating).
ruemara
Oh good. SOMEONE HIRE THE SO. pls, before I strangle him. I can see the next wow expansion now, Azeroth Gone Galt. Goblin free market traders crash the economies of all horde & alliance kingdoms, everyone has to hock their mounts to survive.
chopper
@jwb:
if it really is that easy, and there are no barriers at all to accidentally knocking out a billion shares of something, then all you need to do is worm your way into a job on the trading floor putting in trades for some big bank and you can take the whole damn market down.
this is nice to know.
chopper
@yellowdog:
nope. sorry to burst your bubble.
Llelldorin
There have been periodic stories of futures traders screwing up and accidentally taking delivery of absurd quantities of various commodities (scrap metal, coal, and eggs are the three cases that I’ve heard of). Given these guys’ arrogance and “what do you mean, am I sure, you’re costing me millions!!!” attitude, it wouldn’t surprise me in the slightest if the code simply accepts m or b without any checks.