Picture: REUTERS
Picture: REUTERS

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THE business model of Wall Street is fraud. The business model is that ‘We keep 90c of every fraud dollar we make’." — Max Keiser.

A rant: to speak or write in an angry manner; to express at length a complaint or negative opinion. — The Free Dictionary

"Stock exchanges once were operated as not-for-profit public utilities, managing the listing and trading of companies in the public marketplace. Today, they have morphed into rent-seeking, publicly traded companies in the zero-sum game of executing orders." — Barry Ritholtz at The Big Picture. "Where once there were many winners, now there are distinct winners and losers. High-frequency, algo-driven traders — and the exchanges that now exist to serve them — are the winners; everyone else is a loser. The result is that a business that once helped to create wealth now only serves to shift some of it around.

"Exchanges now operate primarily to move money from investors to high-frequency traders — and, of course, to themselves. They charge for services that are not exactly the epitome of a public good — server collocation for firms that spoof, packet sniff, quote stuff, flash and ultimately, front-run orders … Those who complained about specialists — an exchange member who posts quotes, executes trades and serves as the buyer and seller of last resort — now must contend with something far worse …"

A rant: to take your own tangent about a subject. — the Urban dictionary

In Musings on Markets, Aswath Damodaran challenges the wisdom of investing in Chinese markets: "The nature of markets is they go up and down and it is that unpredictability that keeps the balance between investors and traders. In China, the response to up and down markets is asymmetric. Up markets are treated as virtuous and traders who push up stock prices (often based on rumour and greased with leverage) are viewed as good investors.

Down markets are viewed as an affront to Chinese national interests and not only are there Draconian restrictions on bearish investors (restrictions on short selling, trading stops) but investors who sell stock are called traitors, malicious market manipulators or worse.

"Thus, the same Chinese government that sat on its hands as stock prices surged 60% from January to June, suddenly discovered the dangers of volatility when markets gave up much of that gain.

"The bottom line is that the Chinese government neither understands nor trusts markets, but it needs them and wants to control them. By restricting where investors can put their money, treating short sellers as criminals and market drops as calamities, the Chinese government has created a monster …"

Hilltop Securities MD Mark Grant is also worried about China, arguing that "no one believes their numbers any more".

Michael Pettis, a Beijing-based financial strategist, agrees: "There simply is no way of knowing the extent of unreported losses because there are too many moving parts, but Chinese entities are most probably not nearly as wealthy as they think they are."

A rant: an argument fuelled by passion, not shaped by facts. – Vocabulary.com

"While most markets are now back to near record highs, the litany of things investors worry about has grown no shorter over the past year, and new things keep cropping up to be added to the list and further cloud the outlook," says the Financial Times. "Global debt levels continue to rise, deflation fears fester and extraordinary action from central banks has failed to buttress the economic recovery.

"The IMF recently sliced its growth forecast for this year to 3.1%, which, except for the financial crisis, would be the lowest since 2002. International relations remain frosty. Corporate revenues are stagnating or falling, Europe remains weak, politically fraught and vulnerable, the US recovery has hit the skids, and some fear another recession is in the pipeline. Japan’s Abenomics is failing, China’s growth is sliding and emerging markets as a whole are in a funk."

Société Générale’s famously bearish strategist Albert Edwards told clients in New York last week: "It gets a little boring, always rattling my chain and proclaiming the end is nigh," before explaining why the end is indeed nigh. On fears that the US and Europe are going down the same path towards stagnancy trod by Japan, he said: "The West isn’t like Japan, it’s going to be much worse." France is stagnating, Germany will soon become the weakest eurozone country and "Italy is bust". China will devalue further, sparking currency wars, and the US 10-year bond yield will fall below 1% as the economy "inevitably" falls into recession.

Edwards argues that the Fed should just lift interest rates as soon as possible and "trigger the inevitable mayhem, because the longer finance is allowed to pump itself full of crack, the worse the recession will be".

A rant: to utter in a bombastic fashion. – Merriam-Webster

Exaggerated might be a better way to describe Donald Trump’s claim last week that 40 of his 45 stock purchases "rose substantially in a short period of time".

"If factual, it’d be better than the rate posted by any institutional investor in America between April and September," Bloomberg says on its website. It would put him in the 97th percentile among comparable institutions in the first quarter of 2015 and better than all of them in the second and third. Among hedge funds, he’d be in the 94th percentile in the first quarter and beat them all in the second and third."

The claim comes from a page in Trump’s new book, Crippled America: "My income for 2014, as I reported in the PFD statement, was $362m — not including dividends, interest, capital gains, rents and royalties. Income for 2015 will exceed $600m.

"I also did well in the stock market. While that isn’t something that I’ve focused on in the past, and is only a small part of my net worth, 40 of the 45 stocks I bought rose substantially in a short period of time, resulting in a $27,021,471 gain on sale ... the stocks remaining in the portfolio have an unrealised gain of more than $22m."