WASHINGTON, April 2, 2013 — Improved auto sales and other assorted catalysts have kicked U.S. markets up this morning as the averages try to reverse yesterday’s low-volume clobbering. First out the gate, Chrysler’s U.S. sales rose 5 percent in March as the company sold more cars and trucks than in any month since the Great Recession began in December of 2007.
The strong numbers are another sign that Americans are buying cars in increasing numbers as their financial situation improves. U.S. car and truck sales are estimated to have reached their highest level in nearly six years in March, as buyers armed with tax refund checks were lured by flashy new vehicles and low interest rates.
Chrysler said it sold almost 172,000 cars and trucks in March, led by the Ram pickup with an increase of 25 percent. Pickup truck sales are recovering from a five-year slump as businesses start to replace older work trucks. Full-size pickup truck sales are expected to have risen nearly 15 percent in March, following big gains in February, the car pricing company Kelley Blue Book said.
Regarding the rest of today’s market–we mentioned low volume earlier, something that’s perturbed us about this market for some time. Low volume trading, combined with HFT action has distorted many traditional market indicators for a considerable amount of time now making it difficult for even the most experienced analyst to find a path through our pea-soup economic fog.
But now another issue that’s been bothering us is starting to poke its head above the surface. Problem is, this issue is a bit like the iceberg that sank the Titanic, we fear: “dark pools.” Dark pools, essentially, are more or less secret mini-markets where individuals quietly trade stocks and bonds with one another, out of sight and off the exchanges. They were developed primarily by large banks, it appears, to provide a secret place where corporations and elites could cut stock deals away from the public eye and away from SEC scrutiny.
It’s now estimated that upwards of 40% of all stock trading in the U.S. is executed in dark pools. The result: less and less transparency in pricing, and fewer opportunities for individual investors to discover the best prices. For the Maven, this has resulted, frequently, in passing up good investment opportunities because it’s simply too difficult to catch a good bid on some up and coming stocks.
What happens when volume dries up on the exchanges is that bid and ask spreads get wider and wider, making it hard to put in a realistic limit order to get the best price whether you’re buying or selling. If a good part of this developing problem is attributable to secret trading in dark pools, as it appears to be, then we don’t have a volume problem in this market at all. We have a transparency problem. I.e., a disclosure problem.
The SEC, of course, as always, is asleep at the switch as its members behave politely toward the elite so they’ll be rewarded with cushy jobs when they exit. Former SEC head Mary Schapiro is an excellent example, having reportedly copped a swell job with an elite New York firm that likely pays an order of magnitude better than the SEC ever did. So if you were with the SEC, why would you want to offend these bigwigs, right?
This is a scandal of major proportion. It may also be at least a partial reason why what we are perceiving as a low-volume market may, in fact, be proceeding at normal volume after all. We just don’t get to see it. Another fine example of this Administration’s screwing of the middle class.
That said, all this chicanery has been going on for a long time and to the distinct disadvantage of the average working American. But we still see no sign that the average working American is anywhere near waking up to the extent of this problem, even as he, she, and their family slowly sink into the LaBrea Tar Pit of social oblivion that thus far has characterized this miserable new century of kleptocracy ascendant.
Short column today given morning appointments. But we’ll be back tomorrow, and hope, in the meantime, that the market keeps its positive tone.
Disclaimer: The author of this column maintains several active trading and investment portfolios and owns residential and investment real estate.
Any positions mentioned above describe this author’s own investment decisions and should not be construed as either buy or sell recommendations. The current market is highly treacherous and all investors travel at their own risk, so caution should be exercised at all times.
Illustrations, charts, commentary, and analysis are only the author’s view of current or historical market activity and don’t constitute a recommendation to buy or sell any security or contract. Views, indications, and analysis aren’t necessarily predictive of any future market or government action. Rather they indicate the author’s opinion as to a range of possibilities that may occur going forward.
References to other reporters, analysts, pundits, or commentators are illustrative only and do not necessarily represent an endorsement of such individuals’ points of view. If specific investment vehicles are mentioned in any article under this column heading, the author will always fully disclose any active or contemplated investments in said vehicles.
Read more of Terry’s news and reviews at Curtain Up! in the Entertain Us neighborhood of the Washington Times Communities. For Terry’s investing and political insights, visit his Communities columns, The Prudent Man and Morning Market Maven, in Business.
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