Topic: Fund Trading

Speculation arises that the S&P downgrade was leaked prior to the Friday market close, potentially explaining the Thursday market crash. Theories regarding the downgrade include a billion-dollar hedge bet, a setup for a third round of quantitative easing (QE3), or a political maneuver to allow the Bush tax cuts to expire.

Rajat Gupta is facing charges for providing inside information from Goldman Sachs board meetings to the Galleon Fund. The hosts note that Gupta was a frequent guest at White House state dinners. They suggest that while Gupta may go to jail, the "elitist" figures involved in similar activities often escape prosecution.

The transparency of Recovery.gov is questioned, with the hosts describing it as a news blog that redirects users to other agencies. A Mother Jones report is cited, revealing that various California counties are trading and selling their federal stimulus funds to one another at a discount to bypass earmark restrictions.

John C. Dvorak reveals that his entire retirement fund is invested in DTO, an exchange-traded note that bets against the price of oil. As oil prices dropped to $67, Dvorak's investment increased in value, and he predicts oil could fall as low as $40 or $50. They discuss the noticeable drop in gasoline prices at the pump, which have fallen below $3.00 a gallon in many parts of the United States.