Where Has All the Trading Gone? … It's one of the biggest mysteries on Wall Street. How can stocks be in their fourth year of a bull market and trading activity be so low? During March, average daily volume in equity shares was at their lowest level since December 2007, according to new data from Credit Suisse. This is the same month that marked the three-year anniversary of the bull market that caused the Standard & Poor's 500 to double from its March 2009 credit-crisis low. – CNBC
Dominant Social Theme: What's wrong with the stock market? It's just in the doldrums and will recover shortly. In fact, it already did …
Free-Market Analysis: This kind of question is a kind of elite dominant social theme, no doubt about it. It frames the conversation and presupposes that the market itself is a greater good and that its growing failure is bound to be mitigated by additional success.
The elites are wedded to the stock market, which allows them to monetize various financial promotions. The bigger companies (stocks) receive the most attention. Facebook is a prime example of this. The company is likely in some sense an Intel operation, but it is being rolled out as investment opportunity of tremendous consequence. For our take, just Google "Facebook" and "Daily Bell."
Smaller equity opportunities and private equity opportunities are, ironically, perhaps more sincere ones, in that they are less subject to elite manipulation. For the most part, the powers-that-be don't bother so much with the small fry, but there's no doubt the elites value the stock market for their larger efforts.
This can be seen with the nascent "green" economy. Without a stock market, the "new" economy that the elites are trying to put into place cannot be properly positioned. Stock markets are supposed to provide a public buy in, to essentially validate these vast, industrial promotions.
Middle classes are actually entangled in them as part of their "portfolios" and this provides further support for even the most dubious corporate efforts. Now howver, as the Internet creates further skepticism about the Way the World Works, it would seem this strategy generally is attracting increased scrutiny.
Of course, every time the market goes down these days it seems it is soon going back up. On Tuesday, stocks were up in many major capitals around the world. But this does not mean that the troubles of public equity generally are over. Far from it.
Looked at from the standpoint of directed history, the evolution of the stock market cannot now be said to be entirely natural. As with most mainstream monetary facilities, it was cultivated and raised in the United States.
The evolution of the stock market – and securities markets generally – into what it is today began after the Civil War in the US when the New York Stock Exchange went on a buying binge, acquiring up to a dozen or more New York area exchanges.
This seems to have been a trigger for a massive rise in equity trading that turned railroads into the first big equity bubble. JP Morgan was one of the catalysts for this evolution, and the advent of the Federal Reserve in 1913 provided the fiat money fuel that rocketed the market into the Roaring 20s.
After the Great Crash, subsequent Depression and World War II, the mavens running the NYSE went on a countrywide tour, reselling equity as a logical investment methodology. The American public eventually bought it and for the rest of the century the stock market prospered. But no more. Here's some additional text from the article:
"There's no way to sugar-coat it: Volumes are down and trending lower," wrote Ana Avramovic of Credit Suisse, in a note to clients. "A growing preference for other asset classes may be drawing money away from equities." Daily equity volume in March was 6.59 billion shares a day, the lowest since a sub-6 billion volume month in December 2007, according to Credit Suisse. (The firm adjusted December 2011's low figures to account for the holiday-skewed week.) …
The Credit Suisse analyst also notes that high-frequency trading, which accounts for half of all market activity, has been on the decline since last summer … After two vicious bear markets in a decade, the average investor simply doesn't trust this market anymore. "There is no fresh money going into the markets," said Doug Kass of Seabreeze Partners. "Why should we be surprised the retail investor is not there? We've had two huge drawdowns in stocks since 2000, a flash crash two years ago and real incomes are stagnating."
Stock mutual fund flows are negative on the year despite a double-digit percentage gain for the S&P 500 in 2012. Meanwhile, bond funds of all kinds keep garnering more assets, even with interest rates in the basement … "The financial industry has placed itself above the investing public," said Alan Newman, author of the Crosscurrents financial newsletter. "The public's confidence has been shattered, possibly beyond repair."
The power elite that apparently wants to run the world is intent on expanding the large public equity market and has been successful in doing so in the past half century. But this drive toward a seamless world marketplace would seem to be faltering of late. The elites have done what they can to reignited the meme, even putting in place – in the states – a "plunge protection team."
At this point, we'd speculate that the market for the elites biggest stocks is a fairly inflated oned, kept up by all sorts of inflated trading. But we wonder how long this can last in an era where commodities and precious metals investment is obviously ascendent. The markets went up and down in the 1970s, a decade analogous to the first decade of the 2000s in our view.
There will no doubt be further ups and downs of the stock market over the course of this year, without necessarily a resolute trading trend. This is because, as we've often pointed out, the business cycle has trended toward gold and silver and will like do so until either the elites interfere strongly, or until finally there is a paper blowoff of junior miners.
Smaller equity plays, private deals, bootstrap equity created locally among family and friends, all this has a place in the modern investment paradigm. But the large-deal market is surely not what it was. In fact, in our view, the elites themselves realize this and are getting ready to pound Wall Street with yet more regulations and purges as they did during the 1930's Great Depression.
People have certainly lost faith in stocks – but this must be seen within the context of the larger bull market in money metals. This is what the paper money crowd is fighting against and why stocks are resistant to re-stimulation.