Notes From Underground: SHOULD THE SEC CLOSE DOWN DAVOS AS IT IS THE EPITOME OF INSIDER TRADING?

Now that the lights have been turned off at the World Economic Forum in Davos, and all the sycophants have praised the wealth creators of the world, the question must be asked: What takes place in this beautiful resort that people spend up to $500,000 for the privilege of sharing thoughts with the global movers and shakers? If so much can be gained by listening to policy makers in private sessions, shouldn’t the whole FORUM be deemed an inside trader’s paradise?

The SEC has been playing fast and loose with the definition of what constitutes insider trading and it seems that those hedge fund operatives have done nothing that the corporate chieftains and high-powered analysts don’t do in DAVOS. What ideas are exchanged in those private sessions, and, if it’s potentially market moving, why is the SEC not utilizing the prosecutorial power of EXTRATERRITORIALITY to close the criminal enterprise down? Nothing sums up what takes place in DAVOS better than the following quote from Adam Smith:

“People of the same trade seldom meet together, even for merriment and diversion,but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.”

Adam Smith did not anticipate the existence of the SEC, so now the PEOPLE have the institutional remedy to counteract the global gathering that has done so much harm to the global financial system. Insider trading is a serious act and its enforcement should be EQUALLY applicable, even to the global movers and shakers.

Tomorrow morning is the ECB‘s interest rate decision. Even though Trichet has talked tough about curbing inflationary pressures, I agree with the unanimous consensus that the EUROPEANS will leave the lending rate at 1 percent. In the press conference which begins at 7:30 CST, we can certainly expect to hear more strident comments from Trichet about ECB vigilance on price increases. Now that the EURO is trading more than 138.00, I doubt the market will respond to Trichet’s stridency as the U.S. employment data will become far more significant. Therefore, the JOBLESS CLAIMS number will carry far more weight–420,000 expected–than will anything that the ECB president has to say.

 

I will have more on the employment number tomorrow night but it appears that a strong number will not do anything to halt the FED‘s QE program, so any robust number will give the momentum traders an opportunity for better entry levels. The fact that the 2/30 steepener in the U.S. has made historic highs gives the “wealth effect” traders a powerful platform. When the curve begins to “flatten” or correct it may be time to change, but until then I just don’t see that this market is for turning.

 

 

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One Response to “Notes From Underground: SHOULD THE SEC CLOSE DOWN DAVOS AS IT IS THE EPITOME OF INSIDER TRADING?”

  1. Chris Says:

    How about the Bilderberg Conference?

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