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The Stock Market Had a Psychotic Episode After the Fed Rate Cut Yesterday, Plunging 479 Points from the Day’s High
by Gunnar Larson 19 Sep '24

19 Sep '24

https://wallstreetonparade.com/2024/09/the-stock-market-had-a-psychotic-epi… By Pam Martens and Russ Martens: September 19, 2024 ~ Fed Chair Jerome Powell Speaking at the FOMC Press Conference on Wednesday, September 18, 2024 Fed Chair Jerome Powell Speaking at the FOMC Press Conference on Wednesday, September 18, 2024 The Federal Reserve yesterday cut its benchmark interest rate, the Fed Funds rate, for the first time in four years. The cut was by half a point rather than the customary quarter point increments typical of Fed rate moves. Only one member of the Federal Open Market Committee (FOMC), Michelle Bowman, voted against the action. Bowman wanted a quarter point cut according to the FOMC announcement. A Fed rate cut of a quarter point to a half point was widely anticipated by the market, so the stock market’s wild swings were puzzling to veteran Wall Street watchers. The FOMC released its written announcement at 2 p.m. As the chart above indicates, the written announcement produced a surge in the Dow Jones Industrial Average to an intraday high of 41,981.97, which was also an all-time high on an intraday basis. But within a few minutes, the Dow had plunged by more than 300 points, then spiked by over 200 points as Fed Chairman Jerome Powell’s press conference got underway at 2:30 p.m. Wild market gyrations like this, as the Chair of the Fed is about to take the podium, are not in keeping with what Michelle Smith, the long-tenured and detail-oriented Communications Director at the Fed, wants as background noise as the Fed Chair interacts with the press. (See Reporters Who Ask Tough Questions at Fed Press Conferences Have a Habit of Being Disappeared from the Room.) The Dow gained some ground back as Powell read his prepared statement at his press conference but plunged further as reporters began questioning the Fed Chair. Craig Rugaber, the Federal Reserve and Economics reporter for the Associated Press, asked this question about 11 minutes into the press conference: “The projections show that the Fed officials expect that the Fed Funds rate to still be above their estimate of long-run neutral by the end of next year. So does that suggest to you that you see rates as restrictive for that entire period? Does that threaten the weakening of the job market you said you’d like to avoid? Or does it suggest that maybe people see the short-run neutral as a little bit higher.” Powell responded with this: “I think the way I would really characterize it is this: people write down their estimate – individuals [on the Federal Open Market Committee] do – I think every single person on the Committee, if you ask them what’s your level of certainty around that, and they would say, ‘there’s a wide range where that could fall.’ So I think we don’t know. There are model-based approaches and empirically-based approaches that estimate what the neutral rate will be at any given time but realistically we know it by its works. So that leaves us in a place where we expect in the base case to be continuing to remove restriction and we’ll be looking at the way the economy reacts to that and that will be guiding us in our thinking about the question we’re asking at every meeting, which is – is our policy stance the appropriate one….” Powell’s press conference ended 50 minutes after it began, at about 3:20 p.m. EDT. Some of the worst damage of the day occurred after the press conference ended, with the Dow moving into negative territory and closing with a loss on the day of 103 points. From its high of the day to its closing price, the Dow had plunged 478.87 points. As Michelle Smith must have noticed, this was not a comforting vote of confidence that Jerome Powell – a lawyer, not an economist – knows what he’s doing. (See, for example, For the First Time in History, the Fed Is Reporting Billions in Losses Weekly; It’s Still Paying High Interest Income to the Mega Banks on Wall Street.) Two of the components of the Dow Jones Industrial Average, JPMorgan Chase and Goldman Sachs, are megabanks that have an incestuous relationship with the Fed. The Fed is their regulator; their serial source of bailout loans in the trillions of dollars; their trading partner at the New York Fed’s open market operations; and the banks’ executives sit on the New York Fed’s advisory committees, recommending “best practices” for Wall Street megabanks which have a serial history of getting slapped with felony counts by the U.S. Department of Justice, rigging markets and engaging in predatory behavior against their customers. (See watchdog Better Markets’ Rap Sheet Report here.) And, most dangerous of all, the Fed is the federal agency that just cut in half the amount of capital it said in July of 2023 these megabanks need to hold to operate in a safe and sound manner. The share prices of Goldman Sachs and JPMorgan Chase also experienced wild swings between the 2 p.m. FOMC statement and the close of trading at 4 p.m. Both megabanks, however, own their own Dark Pools where, bizarrely, they are allowed by the Securities and Exchange Commission to trade their own bank shares in darkness, which might offer a possible explanation as to why they fared better by the closing bell than the Dow index. (See Wall Street Banks Are Trading in Their Own Company’s Stock: How Is This Legal? and Goldman Sachs Is Quietly Trading Stocks In Its Own Dark Pools on 4 Continents.) The Goldman Sachs’ chart below, showing how its shares swung wildly yesterday afternoon, bears an uncanny resemblance to the Dow chart. New York Fed Trader A Trader on the New York Fed Trading Desk Monitors the Latest Market Intelligence While the megabanks on Wall Street own their own Dark Pools, the New York Fed (the largest of the 12 regional Fed banks) has its own trading desks – one at its lower Manhattan headquarters at 33 Liberty Street and one near the futures market in Chicago. (See Mission Creep or Creepy Mission: The New York Fed’s Trading Desk Has Ballooned to $6.59 Trillion Today from $576 Billion in 2008 and The New York Fed Has Quietly Staffed Up a Second Trading Floor Near the S&P 500 Futures Market in Chicago.) If all of this has the feel of an institutionalized wealth transfer system instead of an efficient market system worthy of a democracy, please contact your U.S. Senators today. Tell your Senators to hold immediate hearings on the Fed’s non-stop bailouts of the megabanks and demand the restoration of the Glass-Steagall Act, which would separate federally-insured commercial banks from the trading casinos on Wall Street.

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Elon Musk Says He'll Sue FAA Over 'Political' SpaceX Fines
by Gunnar Larson 19 Sep '24

19 Sep '24

Elon Musk Says He'll Sue FAA Over 'Political' SpaceX Fines <https://www.law360.com/compliance/articles/1880148?nl_pk=ab5ce197-c1fb-4d8e…> By Nadia Dreid Tech billionaire Elon Musk says he'll be suing the Federal Aviation Administration after learning that the agency plans to slap his space company with $633,000 in fines for not following licensing requirements during two launches, calling the proposed penalties "politically-motivated." 2 documents attached | Read full article » <https://www.law360.com/compliance/articles/1880148?nl_pk=ab5ce197-c1fb-4d8e…> | Save to favorites » <https://www.law360.com/compliance/articles/1880148?nl_pk=ab5ce197-c1fb-4d8e…>

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DOJ Says Ship Is Liable For $100M In Baltimore Bridge Collapse
by Gunnar Larson 19 Sep '24

19 Sep '24

DOJ Says Ship Is Liable For $100M In Baltimore Bridge Collapse <https://www.law360.com/insurance/articles/1880035?nl_pk=59612751-8689-4b1e-…> By Linda Chiem The U.S. Department of Justice is suing to recover $100 million from the owner and the manager of the cargo ship that slammed into Baltimore's Francis Scott Key Bridge in March, alleging gross negligence on their part killed six people and destroyed a vital transportation corridor. Complaint attached | Read full article » <https://www.law360.com/insurance/articles/1880035?nl_pk=59612751-8689-4b1e-…> | Save to favorites » <https://www.law360.com/insurance/articles/1880035?nl_pk=59612751-8689-4b1e-…>

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Calif. Atty Can't Escape Billing Scandal's Hacking Claim
by Gunnar Larson 19 Sep '24

19 Sep '24

Calif. Atty Can't Escape Billing Scandal's Hacking Claim <https://www.law360.com/banking/articles/1880121?nl_pk=feb6bbba-7878-4d39-be…> By Madison Arnold A San Fernando Valley attorney will have to face his ethics case that alleges he tried to hire "Israeli military hackers" to access personal accounts of a judge overseeing a public utility class action, after the California State Bar court rejected his motion to dismiss. Decision attached | Read full article » <https://www.law360.com/banking/articles/1880121?nl_pk=feb6bbba-7878-4d39-be…> | Save to favorites » <https://www.law360.com/banking/articles/1880121?nl_pk=feb6bbba-7878-4d39-be…>

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GameStop CEO Pays $1M For Failure To Flag Bank Stock Buy
by Gunnar Larson 19 Sep '24

19 Sep '24

GameStop CEO Pays $1M For Failure To Flag Bank Stock Buy <https://www.law360.com/banking/articles/1879914?nl_pk=feb6bbba-7878-4d39-be…> By Jared Foretek GameStop CEO Ryan Cohen has agreed to pay nearly $1 million to settle U.S. Department of Justice claims that the Canadian entrepreneur violated the Hart-Scott-Rodino Act when he bought more than $20 million worth of Wells Fargo shares in 2018. 2 documents attached | Read full article » <https://www.law360.com/banking/articles/1879914?nl_pk=feb6bbba-7878-4d39-be…> | Save to favorites » <https://www.law360.com/banking/articles/1879914?nl_pk=feb6bbba-7878-4d39-be…>

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Wayne State Law Student Refused Accommodations, School Says
by Gunnar Larson 19 Sep '24

19 Sep '24

Wayne State Law Student Refused Accommodations, School Says <https://www.law360.com/health/articles/1880005?nl_pk=6422bbc2-a823-4be5-9a9…> By Andrea Keckley Wayne State University argued Wednesday it did not violate the Americans with Disabilities Act by not letting a law student attend class virtually, telling a Michigan federal judge the student, who sued the university, turned down its offers of in-class accommodations, on-campus housing and other resources to help her attend lectures. Response attached | Read full article » <https://www.law360.com/health/articles/1880005?nl_pk=6422bbc2-a823-4be5-9a9…> | Save to favorites » <https://www.law360.com/health/articles/1880005?nl_pk=6422bbc2-a823-4be5-9a9…>

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Harvard Rips Morgue Theft Appeal's Immunity Claim
by Gunnar Larson 19 Sep '24

19 Sep '24

Harvard Rips Morgue Theft Appeal's Immunity Claim <https://www.law360.com/health/articles/1880091?nl_pk=6422bbc2-a823-4be5-9a9…> By Brian Dowling Harvard University told Massachusetts' intermediate-level appeals court that litigation over the alleged theft and sale of cadaver body parts from its medical school's morgue relies on a "crabbed" reading of an immunity law related to anatomical gifts. Brief attached | Read full article » <https://www.law360.com/health/articles/1880091?nl_pk=6422bbc2-a823-4be5-9a9…> | Save to favorites » <https://www.law360.com/health/articles/1880091?nl_pk=6422bbc2-a823-4be5-9a9…>

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FBI Dismantles Chinese Botnet, Urges Victims To Seek Aid
by Gunnar Larson 19 Sep '24

19 Sep '24

FBI Dismantles Chinese Botnet, Urges Victims To Seek Aid <https://www.law360.com/cybersecurity-privacy/articles/1880282?nl_pk=3dfd2fd…> By Lauren Berg FBI Director Christopher Wray announced Wednesday that the law enforcement agency has knocked out a botnet operated by a Chinese government-sponsored hacker group that was stealing confidential data by infecting internet-connected devices. Read full article » <https://www.law360.com/cybersecurity-privacy/articles/1880282?nl_pk=3dfd2fd…> | Save to favorites » <https://www.law360.com/cybersecurity-privacy/articles/1880282?nl_pk=3dfd2fd…>

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Split 5th Circ. Upholds Oxy's $38M Win Over Wells Fargo Bank
by Gunnar Larson 19 Sep '24

19 Sep '24

Split 5th Circ. Upholds Oxy's $38M Win Over Wells Fargo Bank <https://www.law360.com/capitalmarkets/articles/1880176?nl_pk=abe82add-2a33-…> By Hannah Albarazi A split Fifth Circuit panel upheld a $38 million judgment against Wells Fargo in a published opinion Wednesday, affirming that the bank breached its trustee duties by failing to timely sell Occidental Petroleum Corp. stock and is judicially estopped from arguing that the trust agreement was not a contract. Opinion attached | Read full article » <https://www.law360.com/capitalmarkets/articles/1880176?nl_pk=abe82add-2a33-…> | Save to favorites » <https://www.law360.com/capitalmarkets/articles/1880176?nl_pk=abe82add-2a33-…>

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Colo. SG Urges Lawyers Not To Lose Sight Of Human Harm
by Gunnar Larson 19 Sep '24

19 Sep '24

Colo. SG Urges Lawyers Not To Lose Sight Of Human Harm <https://www.law360.com/legalethics/articles/1880122?nl_pk=153d4a8a-6fb9-4a5…> By Thy Vo Colorado Solicitor General Shannon Stevenson on Wednesday urged appellate lawyers to use their cases to keep judges "in touch with real people," lamenting that the U.S. Supreme Court's recent decision on true threats ignored the profound impact a man's Facebook messages had on a stalking victim. Read full article » <https://www.law360.com/legalethics/articles/1880122?nl_pk=153d4a8a-6fb9-4a5…> | Save to favorites » <https://www.law360.com/legalethics/articles/1880122?nl_pk=153d4a8a-6fb9-4a5…>

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