Jon Stewart On HFT: "It's Not American; It's Not Even Capitalism. It's Cheating"

John Stewart is stunned by the world of HFT (where "stock exchanges sell the right to advance information to high frequency traders [by locating their computers closest to the exchange]") and the mainstream media's immediate jump to defend it "as good for us", but as Michael Lewis explains "anyone whose livelihood is dependent on Wall Street [from CNBC, FOX and even the SEC] is invested in this... it sounds like a conspiracy." As Lewis explains, HFTs "function on volume and volatility" alone and "they know the prices before you do... which is illegal if it's a person, but as a computer, meh?"

The Fed Goes Hunting For "Asset Price Bubbles"

As the world's investors wait anxiously for the next piece of bad news from Japan, China, Europe, or US as a signal to buy, buy, buy on the back of a renewed "stimulus" of freshly printed money that has comforted them for 5 years, it seems the Fed is turning its attention elsewhere:

  • BULLARD SAYS MONITORING FOR ASSET BUBBLES `IMPORTANT CONCERN'
  • BULLARD SAYS ASSET PRICE BUBBLES MAY BECOME `BIG CONCERN'

For now though, of course, the Fed's Bubble-o-meter has no batteries. Pointing out the irony that the Fed creates the bubbles... and then when it becomes a "big concern" it promises to do something about it if it every sees one.  Finally, we are delighted that the schizhophrenia of the central planners continues to be exhibited for all to see: first Yellen tells everyone to buy stocks on Tuesday with an uber-dovish retracement of her "6 month" flub, and now Bullard is saying to watch out for bubbles. What can one say but... economists.

Double Whammy Shocker From Goldman Which Is Also Waving Goodbye To The NYSE

In what is a true double whammy of market structure stunners from Goldman over the past week, not only has the firm done an about face on HFT (we eagerly await Goldman's pardon of "HFT market manipulator" and former Goldman employee Sergey Aleynikov) and is now actively bashing the high freaks (much to the chagrin of Virtu and its pulled IPO, whose lead underwriter Goldman just happened to be), overnight it was reported that Goldman is also in the process of selling its "designated market-maker" unit to Dutch firm IMC Financial Markets to sell the trading business.

 

Goldman's 2014 S&P Target Is Just 10 Points Away

As we entered the year, Goldman Sachs set out a target of 1,900 for the S&P 500 by the end of 2014. Thanks to the plethora of bad news (which, obviously, is great news) and the promise of more money printing if things get worse, with the mini-melt-up of the last few days (ahead of the ECB hope tomorrow and traders desire for a dismal print at Friday's NFP), the S&P 500 is now within 10 points of Goldman's year-end target (it seems 104.50 USDJPY will do it). The Dow is also about to go green year-to-date for the first time in 2014.

What Happens After The Low-Hanging Fruit Has Been Picked?

One way to understand why the global financial meltdown occurred in 2008 and not in 2012 is all the oxygen in the room had been consumed. In the U.S. housing market, there was nobody left to buy an overpriced house with a no-document liar loan because everyone who was qualified to buy a McMansion in the middle of nowhere had already bought three and everyone who wasn't qualified had purchased a McMansion to flip with a liar loan. Once the pool of credulous buyers evaporated, the dominoes fell, eventually circling the globe. Right now China is at the top of the S-Curve, and the problems of stagnation are still ahead.

Factory Orders Beat Expectations Thanks To Major Seasonal Adjustments

Non-Seasonally adjusted New Orders dropped 0.6% YoY - the biggest drop in 11 months (and Capital Goods New Orders plunged 10.2%) but of course, in the current weather-related slowdown-reality, despite a notable mark-down in last month's seasonal data, the headline "common knowledge"-defining data will be the Factory Orders beat expectations (off a lower base).

 

The Real Reason(s) Why Steve Cohen Is Much, Much Richer Than You (In Steve Cohen's Own Words)

The types of “research” SAC may acquire include, but are not limited to, the following:

  • reports on or other information about particular companies or industries;
  • economic surveys and analyses;
  • consulting services regarding products, technologies, issuers or industries;
  • non-mass-marketed financial publications (delivered in hard copy or electronically);
  • computerized pricing and market data services;
  • pre-trade and post-trade analytics, software and other products that generate market research, including research on optimal execution venues and trading strategies;
  • advice from brokers-dealers on order execution, including advice on execution strategies, market color and the availability of buyers and sellers (and software that provides such market research);

Russian Retaliation #1: Russia Largest Bank Halts Foreign Currency Loans

It didn't take long for Russia to launch the first retaliatory salvo against the unexpected JPMorgan "act of aggression." Moments ago Bloomberg just reported that Sberbank,  the largest bank in Russia and all of Eastern Europe, just halted the issuance of consumer loans in foreign currency. Bloomberg adds that "Sberbank, Russia’s biggest lender, holds 43.3% of nation’s consumer deposits, 32.7% of consumer loans and 32.1% of corporate loans."

35% Surge In Sales Smashes New York Apartment Prices To Record High

"We're seeing basic Econ 101 coming into play," says one New York realtor, "when you have this much demand and so little inventory, prices will have to rise. And they have." And, as Bloomberg reports, that is definitely the case as Manhattan apartment sales surged 35% in the busiest start to a year since 2007, setting price records with the average price per square foot rose 24% to $1,363, the highest in 25 years of record-keeping. As a large broker noted, "we're finally at a point where you're seeing the chronic lack of supply push prices higher," adding "the market really isn’t fun for the buyer." But that freshly printed money from the world's central banks to the world's oligarchs has to go somewhere...

ADP Jobs Miss For 4th Month In A Row; Job Market "Emerging From Deep Winter Slumber" Says Mark Zandi

ADP employment change missed for the 4th month in a row, printing at 191k vs 195k expected. 191k is the average level of the last two years so the trend is not improving and we suggest that this is not enough to move the scale of the taper or un-taper decision for anyone ahead of NFP. On a side note none other than Deutsche's Joe Lavorgna was the highest estimate economist at a remarkable 275k - missing by a confidence-shattering 4 standard deviations.

Gold Surges: Putin Retaliation Fears?

It's that time of day again... when the precious metal mice will play as the broad market cat is still away but this time it's different. Instead of the smack-down that we have seen around the 8amET time each of the last 10 days, today gold and silver are spiking. It is unclear what the catalyst is - just as it is never clear what the catalyst for the monkey-hammerings are - but the timing with Putin's retaliation threats (specifically against a major bank with a mysteriously active gold vault) suggest some causation.

Furious Russia Will Retaliate Over "Illegal And Absurd" Payment Block By "Hostile" JPMorgan

While everyone was gushing over the spectacle on TV of a pro-HFT guy and anti-HFT guy go at it, yesterday afternoon we reported what was by far the most important news of the day, one which was lost on virtually everyone if only until this morning, when we reported that "Monetary Blockade Of Russia Begins: JPMorgan Blocks Russian Money Transfer "Under Pretext" Of Sanctions." This morning the story has finally blown up to front page status, which it deserves, where it currently graces the FT with "Russian threat to retaliate over JPMorgan block." And unlike previous responses to Russian sanctions by the West, which were largely taken as a joke by the Russian establishment, this time Russia is furious: according to Bloomberg, the Russian foreign ministry described the JPM decision as "illegal and absurd."  And as Ukraine found out last month, you don't want Russia angry.

Frontrunning: April 2

  • Why did Yellen use criminals in her employment case studies? Hilsenrath explainz (Hilsenrath)
  • GM avoided defective switch redesign in 2005 to save a dollar each (Reuters)
  • Xuzhou Zhongsen Said to Avert Bond Default on Guarantor Aid  (BBG)
  • France's New Finance Minister Faces Fiscal Challenge (WSJ)
  • The magic is gone: Draghi’s Attempt to Talk Down Euro Lost on Traders (BBG)
  • Another John Kerry smashing success: U.S. Gambit on Mideast Peace Talks Falters (WSJ)
  • Combat-Ready China Military Seen as Xi’s Goal in Graft Battle (BBG)
  • Huge earthquake off Chile's north coast triggers tsunami (Reuters)
  • Pressure rises on Gross as investors pull $3.1 billion from Pimco's flagship fund (Reuters)

Overnight "Rigged" Market Summary

Nikkei 225 (+1.04%) outperformed overnight, buoyed by S&P 500 posting a new all-time high, a dovish BoJ's Tankan inflation survey and reports that the GPIF is to invest in funds specializing in Japanese stocks with high returns. Overall, another quiet session this morning as market participants continued to position for the upcoming ECB meeting, with Bunds under pressure amid further unwind of expectation of more policy easing by the central bank. According to ECB sources, there is no clear consensus at present on policy action, intense debate seen on Thursday after March HICP data, adding that it fears "over-interpretation" by market of QE possibility.

The Housing Bubble Is Still Raging In These 20 "Buy-To-Rent" Cities, And Burst In These 20 Others

As the following table also by RealtyTrace confirms, the US still has an abundance of "own-to-rent" cities, where one can generate a return as high as 30% in one year, if one is willing to drive through the downtown area at 65 mph. Places like bankrupt Detroit, where the median sales price is $45K, and somehow the average market rent is $1.1K, meaning one can recoup their investment in just over 3 years! (how Detroit's residents can afford $1K on rent is another of those great mysteries of life). In other words, the housing bubble will still be raging in these 20 cities, at least until such time as the yield drops sufficiently due to soaring prices that the Blackstones of the world are forced to dump other people's money in such undervalued places as Ulan Bator and Almaty.

Saudi Arabia Passes New Law That Declares Atheists "Terrorists"

Nothing like being close allies with one of the most despotic, Medieval and backwards societies on planet earth. Never forget, the USA brings democracy to the world! With the exception of puppet governments sitting on billions of barrels of oil reserves and disturbing ties to the 9/11 attacks. Those governments we love.

Did Cliff Asness Just Blame Zero Hedge For Starting The Anti-HFT Movement?

Five years ago, we were the first to bring the world's attention to the staggering profitability of several firms that engaged in 'high frequency' trading that presented themselves as 'liquidity providers' and suggested (in our ever so humble way) that mark liquidity was in fact shrinking and this could lead to a 'black swan of black swans' long before the flash crash was even dreamed of. Fast forwarding to today, after hundreds of articles, not only is the mainstream "getting it" but such behemoths as Cliff Asness - who happens to run one of the world's biggest quant funds - are forced to pen a WSJ op-ed to explain it's all a fallacy and blame a lowly blogger (or digital dickweed) for starting all this naysaying five years ago.

Equity Futures Spike On Chile Earthquake, USDJPY Momentum Ignition

If bad news is good news; then devastating earthquakes are awesome... Copper prices popped and dropped on the new of the Chile quake (as it is near a mining region) but it is the price action in JPY (and therefore implicitly US equities) that is just farcical - and no, there's no news, no China stimulus, no Japan stimulus, no data... just this utter insanity...

Things That Make You Go Hmmm... Like Iron Fists And Velvet Gloves

Many commentators point to the potentially devastating effect on Russia’s economy that the sanctions put in place by the EU and the US might have, whilst others emphasise Russia’s moves to strengthen their ties to the East and reduce reliance upon their Western trading partners. But as Grant Wiliams notes in his latest letter, men like Putin understand the ruthlessness required to keep an iron grip on power, and the press is largely an irrelevance to them, while those in the West prefer the velvet glove approach — writing checks to their electorate, taking the softly, softly approach with their foreign policy, and constantly courting the press — desperate for approval (echoes of Sally Field once again). How this plays out is anybody’s guess right now, but this much I know: one should NEVER underestimate the ability of the average Russian to bear hardship, nor should one ever underestimate the West’s lack of fortitude once any situation becomes politically unpalatable.