Trader Talk

Financials, Commodities Both "Unwinding"

There are two events occurring today:

1) The finanical services industry is systematically unwinding. Firms that are involved in financial execution are getting hammered midday: Interactive Brokersdown 25 percent, ETrade down 12 percent, TradeStation down 12 percent. What's going on? The brokerage system is not the banking system...a stock and a bond are not the same thing, and a trading account is not an FDIC account.

Simply put, customer accounts that are non-FDIC insured are now shown to be potentially at risk. There's clearly concern that some may be liquidating their trading accounts, either from fear or margin calls. There are also questions about how big the financial services markets will be in the future.

2) The commodities industry--and the brokers and exchanges around it--are systematically deleveraging and unwinding.

Commodity related trading firms are all weak: MF Global down 63 percent,FC Stone down 42 percent, Nymex down 21 percent, CMEdown 15 percent. Commodity-related stocks (steel, coal, aluminum, iron ore) are also weak because commodities are down.

Commodity rout:
Copper down 2.3 percent
Platinum down 3. 1 percent
Coffee down 9.1 percent
Heating oil down 2.3 percent

Questions?  Comments?