Today CNBC had a fluff piece on Paris Hilton. She's a spokesperson for her perfume, Can Can and it's doing quite well. The media portrays her as a hapless bimbo, who served 23 days for violating her parole while, Mike Tyson, who was caught smoking crack, got 24 hours for felony cocaine possession and a DUI. That's news we can talk about, but it's harmless because it isn't gameable by traders. But Goldman's downgrade today on Citi? That's completely different.
That's financial news. And it affects companies and the market. When Goldman downgraded C, the stock futures promptly dropped, and it affected the psychology of the marketplace and traders. (As in what does Goldman know?) This news should have already been in the price of the stock. But Goldman's been beating the drums of bigger problems, and GS's skill is attacking when the market is weak.
Now if C is going to drop another 15 points, it's a good call. But traders normally don't advertise news unless they want the market to move in the direction they are advertising it. A perfect example today was Echostar (DISH) which was up 7 points today, and was sitting just at 48 two minutes before the bell. UBS then layed out 350,000 shares of stock, knocking it down 50 cents. Good trading? Or good information? At 3:59, the WSJ deal blog said that ATT and DISH were not immediately hooking up on a buyout. This information hit the paper at 3:59. Now you know why UBS desperately sold the stock. A half hour later, everyone knew the WSJ story, and the stock was trading a smidge under 44. A sharp trader made $1.4 million in a couple minutes. Was this advertised? No. This news didn't hit the tape until later. And that's the point. And here was the news at 3:59 pm, when it wasn't advertised by the traders!
November 19, 2007, 3:59 pm
AT&T and EchoStar: Reasons to be Skeptical
Posted by Dana Cimilluca
In spite of market speculation that has driven up EchoStar shares more than 20% today, no deal between AT&T and EchoStar is imminent, people familiar with the matter tell us.
One person close to AT&T says the two sides aren’t even talking about an M&A deal at the moment. What is more, it still isn’t clear that any bankers have been hired to arrange the long-anticipated deal or that AT&T has decided to go after EchoStar and not DirecTV.
Of course, these conditions can always change at a moment’s notice. But from what we can divine so far, enthusiasts of an EchoStar acquisition may not feel much gratitude this Thanksgiving.
Does Goldman need Citigroup down? We know they are still massively short subprime. Why not add some fuel to the fire while the Fed is thinking about Thanksgiving instead of conducting monetary policy that is relevant to the market today? And advertise your views for all of Wall Street to see?
At any rate, we'll soon know if it was prescient!
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