Over the past month, the US markets have rallied in part due to rumors coming out of Europe each day that inevitably prove untrue, but are enough to carry the exchanges through the final hours of trading. In fact, today's trading on the DOW has helped stocks rise over 290 points in the first hour because of rumors of Germany's pledge to help recapitalize Euro banks.
While today's rumor may once again be true or false, one assertion that is coming out of Italy on October 10th is that stock market volatility in Europe over the past few months is due in part to high cocaine usage by the floor and office traders.
"Italian Prime Minister Silvio Berlusconi's Undersecretary Carlo Giovanardi said the government will study if it's feasible to conduct drug tests on stock-exchange traders, with the help of the Milan Bourse and the country's market regulator. Giovanardi, who is in charge of family policy and drug prevention, said that the abuse of drugs including cocaine might explain part of recent stock volatility." And there you have it: cut out the Cocaine abuse by traders and all shall be well in the stock market, and retail will be delighted to flood right back in and throw what little money it has left into the grand global ponzi. We are not quite sure what binary stimulant will be used to explain the HFT-driven volatility - after all, and especially on days like today, about 80% of market volume is purely robotic, but we are confident Carlo will figure something out. - Zerohedge
(See video to the left of this article - note, it is in Italian)
Rumors and assertions such as this one by the Italian government to mask the debt problems of their markets and banking industries are some of the primary reasons why many Americans are afraid to play the stock markets, or re-enter after the crash of 2008. When stocks are no longer valued on fundamentals, growth and technicals, but instead daily rumors that create volatile swings, then the retail investor is in a losing game with very little hope of success.
Markets run by rumor are also a telling sign to the stocks of companies that find it imperative to drop news on the public at a time when their share values are falling. Just last week, Morgan Stanley leaked out hints of their own earnings numbers, along with those of Goldman Sachs, well before the appointed 3rd quarter reporting season as a way to stem their falling stock price.
Playing the stock market is no longer a game by which the average investor has any real chance of success when nations, corporations, and central banks can willfully throw out rumors to the public as a means to make stocks go a certain way. And as we have seen over the past few months, institutions are using rumors, unsubstantiated or not, to manipulate the markets before, during, and after trading sessions. This newest assertion by the Italian government to downplay the debt crisis in Europe by blaming cocaine and trader use of the drug is a ludicrous and desperate attempt to mask the underlying problems that are engulfing the global markets.
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