Internet Hoax Gooses Stock Market

Tuesday, April 01, 2008 | 10:00 AM

Traders woke up to a pleasant surprise on Tuesday morning, with equity Futures strongly higher. CNBC anchors were exuberant as previous earnings and credit fears melted away.

The cause? An internet April Fool's hoax that backfired.

Dedicated short fund manager Doug Kass, of Seabreeze Partners Short LP, put out an early morning, tongue-in-cheek commentary, titled Time to Buy the Bull? The long time Bearish market pundit and writer for The Street.com and Real Money announced that he was raising his year end price targets for the S&P500 to 1,666, which would reflect a yearly gain of 26%.

The Financial press read the commentary literally. The WSJ announced "Bear Flips Bullish!," causing equity futures to rally. CNN Money covered the joke as if it were a real news item, and Marketwatch declared "Short Seller Starts Stock Rampage." Barron's headline read "Longtime Bear Tosses in the Towel; Says New Bull Market is Upon Us."

Bloomberg  data service ran a full news alert, specifying the details of the longtime Bear's hoax, without recognizing it wasn't real:

- The writedown of toxic paper throughout the world's financial system has dramatically overstated the severity of the credit issue.

- The major money center banks and brokers will be a contributing factor to a surprising 25%+ rise in corporate profits.

- Shares of financials, which have been unfairly targeted by the short community over the last year (monoline insurers, banks, brokerages, etc.), could double in price by year-end.

- Oil prices, stimulated almost entirely by managed commodity trading funds and hedge funds are destined to drop below $50/barrel by year end.

- The U.S. economy will avoid recession, as housing has definitely bottomed;

Bloomberg failed to note these comments were all in jest, adding to the upwards market pressure.

The veteran fund manger had assumed that readers would get the April Fool's joke -- but never imagined it would go over the heads of veteran financial writers.

Shortly after the open, US equities were in a strong rally mode. The Dow was up over 230 points, and Nasdaq had gained almost 2%, up 50 points.

The short seller issued a sheepish mea culpa that morning. "I apologize to my partners, and to my friends, and especially to the SEC, for whom I have the greatest possible respect. I never intended markets to be manipulated in this manner. I was only trying to make some traders, who have been having a tough year, break a smile . . .

One part of the hoax turned out to have a surprising result. As part of the April fool's joke, Kass announced he would host a new CNBC show, called "The Mad Bull," at 4:30 p.m. EDT daily and after "The Closing Bell." CNBC program director Bill McChesney said that the station had already test marketed the idea, and the show had a very enthusiastic response.  The program "The Mad Bull" will begin airing in June.



>



Sources:
Time to Buy the Bull?
Doug Kass
Real Money  Silver, 4/1/2008 7:44 AM EDT
http://www.thestreet.com/b/dps/te/theedge1.html#entryId10410074

Alternate URL:
http://www.seabreezepartners.net/newsArticle.asp?id=213

Short Seller Starts Stock Rampage
Dave Callaway
Marketwatch, April 1, 2008
http://tinyurl.com/32vt5p

Longtime Bear Tosses in the Towel; Says New Bull Market is Upon Us
Alan Abelson
Barron's, April 1, 2008
http://online.barrons.com/article/SB120674503851173099.html

Bear Flips Bullish!
David Gaffen
WSJ, April 1, 2008
http://blogs.wsj.com/marketbeat/

Tuesday, April 01, 2008 | 10:00 AM | Permalink | Comments (56) | TrackBack (3)
de.li.cious add to de.li.cious | digg digg this! | technorati add to technorati | email email this post

bn-image

TrackBack

TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d8341c52a953ef00e551a2784f8834

Listed below are links to weblogs that reference Internet Hoax Gooses Stock Market:

» Una broma como posible causa de la subida de las Bolsas. [EN] from meneame.net
Una pequeña broma puede ser la causante de la vertiginosa subida (+3,19%) de la bolsas estadounidenses del 1 de abril. El desencadenante han sido unos informes favorables al banco Bear publicados en el servicio de 'News alert' de Bloomberg ... [Read More]

Tracked on Apr 1, 2008 6:51:53 PM

» Meta April Fool's from The Big Picture
Okay, this is now getting downright silly. Let's clear this up, before it gets further out of hand: Last night, I set to post my April Fool's gag -- about Google's new search engine that allows you to search one day into the future. It was cute, but ta... [Read More]

Tracked on Apr 2, 2008 6:16:00 AM

» Meta Recursive April Fool's from The Big Picture
Okay, this is now getting downright silly. Let's clear this up, before it gets further out of hand: Last night, I set to post my April Fool's gag -- about Google's new search engine that allows you to search one day into the future. It was cute, but ta... [Read More]

Tracked on Apr 2, 2008 4:23:21 PM

Comments

You're a funny fellow.

Posted by: yoganmahew | Apr 1, 2008 10:24:12 AM

The comments to this entry are closed.



Recent Posts

December 2008
Sun Mon Tue Wed Thu Fri Sat
  1 2 3 4 5 6
7 8 9 10 11 12 13
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28 29 30 31      

Archives

Complete Archives List

Blogroll

Blogroll

Category Cloud

On the Nightstand

On the Nightstand

 Subscribe in a reader

Get The Big Picture!
Enter your email address:


Read our privacy policy

Essays & Effluvia

The Apprenticed Investor

Apprenticed Investor

About Me

About Me
email me

Favorite Posts

Tools and Feeds

AddThis Social Bookmark Button

Add to Google Reader or Homepage

Subscribe to The Big Picture

Powered by FeedBurner

Add to Technorati Favorites

FeedBurner


My Wishlist

Worth Perusing

Worth Perusing

mp3s Spinning

MP3s Spinning

My Photo

Disclaimer

Disclaimer

Odds & Ends

Site by Moxie Design Studios™

FeedBurner