BizJournals Portfolio
Home >   Business Views, Opinions and Blogs >   Business Blogs >   Market Movers >  

Socgen The Cause Of Mondays Sell Off

Market Movers

by Felix Salmon
Main
Extra Credit, Soros Edition   Gates: Underwhelming

Recent Blog Posts

Links

Jan 24 2008 12:00am EDT

SocGen: The Cause of Monday's Sell-Off?

Was a single 30-year old French equity-derivatives trader directly responsible for the emergency 75bp rate cut that Ben Bernanke announced on Tuesday morning? It's entirely possible.

The fraud at Societe Generale was uncovered over the weekend, at which point the bank got to work on Monday morning unwinding an absolutely massive long position in equity futures. It's hard to prove causality, but it might well have been the case that the unwind was the trigger for the huge global stock-market sell-off on Monday, which in turn undoubtedly caused the Fed rate cut on Tuesday.

Here in Davos, French prime minister Francois Fillon is in denial, saying that "it has nothing to do with the situation on the financial markets". Dude - it was an equity futures position. If that has nothing to do with financial markets, what does?

Comments

If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.


Connect With Portfolio.com
Like Portfolio on Facebook

Come on, like us—you know you want to.

Follow Portfolio on Twitter

Follow us and if you're an innovative entrepreneur, we'll return the favor.

The Mix

Today's top stories, conversation starters, and the back nine business bites.

spotlight on

People & Ideas

Whisky To-Go-Go

Now there's a company that let's you taste your knowledge of fine blended Scotches by mixing a whisky of your own. Read More