Word: walls
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Dates: during 1980-1989
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Last week Wall Street seemed to get the message. In rapid-fire announcements made on the eve of congressional hearings on program trading, six major securities firms -- Salomon Brothers, Morgan Stanley, PaineWebber, Bear Stearns, Kidder Peabody and Dean Witter -- announced that they would halt index arbitrage for their own accounts, at least for the time being. With the exception of Bear Stearns, which will stop all index arbitrage, the firms will continue to execute such trades for customers who request them...
...make a profit on the temporary "spread" or price difference between the two. Supporters of this classic kind of arbitrage say it provides a useful and necessary link to equalize prices between the stock markets in New York City and the futures exchanges in Chicago. But recently some Wall Street firms have taken to delaying one or the other leg of the two- part transaction, depending on which way the market is moving. The effect of such "legging," as the practice is called, is to turn a risk-free transaction into a highly speculative one. Critics charge that...
...investment houses choose this moment to scale back index arbitrage? Wall Street insiders cite a variety of reasons, but the clincher seems to have been the threat of one of their biggest clients, Maurice . Greenberg, head of the insurance giant American International Group, to stop doing business with companies that continue to profit from program trading. If the firms hoped their announcement would head off further criticism, they were quickly disappointed. At Senate committee hearings the next day, former Treasury Secretary Donald Regan took time off from promoting his new book to urge suspension of all index futures trades...
That made investors recall the last time the banks raised their prime: Oct. 7, only twelve days before the crash. This time the reaction on Wall Street to rising interest rates was not nearly so violent. On the day the prime went up, the Dow Jones industrial average dropped 37.8 points, to 1965.85, but then it recovered a bit to finish the week...
...things turned out, the Crash of '87 did little to scuttle the best- laid plans of the class of '88. As expected, fewer Wall Street firms turned up on campuses for job interviews, and those that did hired fewer people. But many college placement officers actively solicited the personnel directors of old-line manufacturing companies, which had generated relatively little interest from students in the days when red-suspendered Wall Streeters reigned as the big men on campus. General Motors is hiring 1,064 college graduates this year, twice the number it recruited in 1987. The University of Texas...