Juggling Dynamite

This chart of stock volumes captures so much of the risk that keeps us up at night regarding equity markets today. Although long-always investment types have been recommending stock allocations throughout the duration of this chart, rational risk-assessing investors have increasingly moved to the sidelines over the past 4 years. Market prices that are built on a few leveraged-hyper-trading-participants are inherently unstable and full of great capital risk.

See: NYSE Volume chart deceptively informative

Consider what the overall falling volume trend means:

• The financial services industry is shrinking;

• Commissions are falling

• Stock picking is being replaced with ETFs;

• Psychology is negative, as Main St is not participating and Mom & Pop have left;

• Active trading is being replaced with passive indexing;

• HFT Algos may spoof millions of phony bids, but they are having a harder time getting executed.

Nouriel Roubini, co-founder of Roubini Global Economics LLC, talks about Federal Reserve monetary policy, the outlook for the global economy and the U.S. budget negotiations. Here is a direct link. Too bad Tom Keene talks over him so much.

Danielle was a guest today with Phil Mackesy of Talk Digital Network discussing recent trends in the world economy and markets. You can listen to an audio link here.