On Systemic Risk - Black Swans Or Market Innovations?
Submitted by Tyler Durden on 08/18/2009 - 18:19"If the recent financial crises were truly highly infrequent random events, then any set of policies that can continuously prevent their reoccurrence seemingly will be very expensive in terms of idle capital and presumably less efficient markets required to avoid them. If, on the other hand, the crisis was the result of financial innovation and the ability to get leveraged cheaply, then society need not continuously bare all the costs associated with preventing market events like the bursting of asset bubbles"
Taylor Rule Estimate Suggests Fed Fund Rate Differential At Whopping 6.8%
Submitted by Tyler Durden on 08/18/2009 - 16:48
When Zero Hedge initially looked at the Taylor Rule Estimate for the Federal Fund Rate back in January, the prevailing consensus was that, even then, the Taylor-to-Fed Fund Differential was a whopping 6%. Eight months later we evaluated the Taylor Estimate again, and found a surprising result.
A Weak Outlook On Crude Oil Going Forward
Submitted by Cornelius on 08/18/2009 - 15:58Crude supplies continue to accumulate as the demand picture continues to deteriorate.
Guest Posts: King Nebuchadnezzar Or The Lesser Of Two Evils
Submitted by Tyler Durden on 08/18/2009 - 15:50We present two provocative perspectives
(Lack Of) Hedge Fund Motivations In Bankruptcy
Submitted by Tyler Durden on 08/18/2009 - 14:42Eric Fisher discussing the role of hedge funds in bankruptcy. Alas, for Eric and his firm Butzel Long, after the creditor-adverse GM and Chrysler fiascoes, hedge funds (and thus potential clients) will be loathe to touch anything with either a UAW representation or a firm that has any chance of going through the judicial system, after the Second Circuit's and the Supreme Court's recent "equitable" performance in Chrysler. Furthermore, after the NWA precedent where hedge funds have to disclose their cost basis in a bankruptcy, the days of aggressive "pump and dumping" of distressed securities are long gone.
Hey IWM, What Was That?
Submitted by Tyler Durden on 08/18/2009 - 13:56
Quiet, quiet, quiet... Boom.
Lots of odd trading in the SPY-IWM pair all day today.
Schaeffler Financing Complete, Next On Deck: Continental Merger And Lots Of Pain For RBS
Submitted by Tyler Durden on 08/18/2009 - 13:37New developments in that "other" German automotive soap opera. Reuters is reporting that the most insanely leveraged behemoth of an auto-supplier, Continental-Schaeffler has finally managed to close on the terms of a critical $17 billion deal, a critical step which will make the biggest M&A blunder in the last decade (tiny ball-bearing maker Schaeffler's purchase of much, much larger and much more indebted auto supplier conglomerate Continental).
Monetary Trimming
Submitted by Tyler Durden on 08/18/2009 - 13:07
An idea for a Ben Bernanke career alternative post the inevitable Larry Summary orchestrated Night of Long Knaves (sic).
Q2 Hedge Fund Asset Flow Summary
Submitted by Tyler Durden on 08/18/2009 - 12:33HedgeFund.Net has compiled Q2 asset flow trends in the hedge fund industry. Surprisingly, in Q2 the bulk of the increase in AUM (a 5.9% increase to $1.8 trillion) was primarily performance driven rater than coming from investor flows. The trend of outgoing investor flows seems to have moderated but as of June was still negative. It is possible that at the market's peak in July, investors finally starting allocating capital to select performing strategies, just as the market was peaking. And as anyone within earshot of a hedge fund in 2008 will attest, money flows out much faster than in. If the same investors are bitten again once the melt up has no more room to grow, it should get quite interesting.
Let's Short Some Dollars
Submitted by Tyler Durden on 08/18/2009 - 11:49
Same short different day. Cross asset alpha is back to SPARC acceptable levels.
Congratulations To Matt Taibbi For Winning Wall St. Cheat Sheet's Best Reporter Award
Submitted by Tyler Durden on 08/18/2009 - 11:37Damien Hoffman could not have picked a better person for his Wall St. Cheat Sheet Best Reporter Award for Outstanding Journalism: Matt Taibbi. Matt, who effuses just the right amount of gonzo, deadpan, fact, fiction and paranoia, embodies perfectly the qualities of what a real reporter of our Kafkaesque reality should exemplify and strive to - namely, through the grotesque (yet grounded in reality) to bring attention to the small details that the establishment has long sought to keep deep in the shade, in perpetuation of a status quo that has persistently and increasingly benefited just a small minority.
Market Volume As Expected For An Upday
Submitted by Tyler Durden on 08/18/2009 - 11:16
Micro block reversion algos enjoying the lack of any human emotion now that yesterday's festivities are long forgotten. In the meantime the "deflation is bad for stocks" switch has been set to Ignore, and "Liquidity Providers" are giddily providing liquidity, much needed by the 5 SPARCs trading with each other.
PIMCO and Zero Hedge?
Submitted by Zero Hedge on 08/18/2009 - 10:21In an article titled "The dumb money is buying equities" dated August 17, 2009, City Wire's Charlie Parker writes:
Please understand me, if you are a buyer of equities at the moment then I am not calling you stupid.
I am just saying that you are acting with the stupid. In fact, it is not really me that is saying this, but Pimco.
The mammoth US fixed income operation, which is most famous for bringing investor Bill Gross to the world, also offers a prolific blogging service from its fund managers. The service, called 'Zero hedge', comes with the rather unnerving catchphrase 'On a long enough timescale the survival rate for everyone drops to zero'. Anyway.
Judicial Watch Files FOIA Lawsuit Against US Treasury, Did Barney Frank Overstep His Authority?
Submitted by Tyler Durden on 08/18/2009 - 10:01Our activist friends over at Judicial Watch are just getting started. Recently, they filed a lawsuit against the US Treasury to "obtain records related to evaluation procedures used by the government to determine which financial institutions received funds from TARP. The focus of the inquiry is a potentially iniquitous $12 million cash injection provided to Boston-based OneUnited Bank, at the urging of Barney Frank.
Levitt, Advisor To Goldman And Getco, Voices For HFT
Submitted by Tyler Durden on 08/18/2009 - 09:02Arthur Levitt, former chairman of the SEC, writes an Op-Ed in the WSJ on HFT, titled "Don't set speed limits on trading" providing the usual justification for the phenomenon, claiming it "contributes significantly to market liquidity, a critical measure of market health and something all investors value." What ensues is a less than objective defense, with no disclosure of his existing substantial conflicts of interest.
