Secondary Hedge Fund LP Market Turns Negative

HedgeBay reports that after a four-fold increase in hedge fund LP volume, prices of LP interests are starting to fall: the June average price was 90.13, a 2% decline from May. Yet, liquidity is likely negligible and bid ask spreads on HedgeBay are notoriously wide. Yet, HB's summary assesment of the HF LP market is surprisingly astute and could be applied to the broader, much more busted market: "As a result, clients who are not necessarily “in need” of cash are making a present value calculation based on the inherent risks – including market, manager and business – as well as the probability of recovery for any particular asset. Armed with this information they are able to make rational rather than emotional decisions about trading out."

Janet Tavakoli Rips Into Charlie Gasparino

Recently Charlie Gasparino has been seen meandering within the halls of 85 Broad, trying to get scoops in exchange for reports on the phenomenal liquidity services Goldman Sachs provides to the markets (for the opposing view please read some of Themis Trading's recent reports or any other post on Zero Hedge). But aside from the fact that even Goldman's liquidity provisioning could be perceived as anything but an altruistic act, Charlie leaves a lot of questions about Goldman's recent record earnings not only unanswered but untouched. Janet Tavakoli retorts to Charlie's recent 180-degree on being one of the few last reporters who actually would dig in Lucas Van Praag's garbage can instead of sharing a Johnnie Walker Blue poolside with him.

Frontrunning: July 22

• Gallup Poll: More disapprove than approve of Obama's healthcare policy (Gallup)
• PIMCO and Centerbridge charging 13% for the privilege of bleeding CIT dry, before handing off charred remains to GE Capital (Bloomberg)
• The GE - CIT Connection becomes obvious (Bloomberg)
• CIT troubles raise Fed supervision questions (Reuters)
• CNBC parent GE to exit TLGP taxpayer backstop program (AP)
• Goldman Sachs lack of love puts profits at risk (Bloomberg)

S&P Commits Professional Suicide With Ratings Round Trip, Underlying CRE Remains Toxic Garbage

Rare? Medium Rare? Medium? Well Done? S&P? Indeed, as the last peg in the gradation of burnt to a crisp, S&P smells completely done. As in there isn't even left a shadow of a doubt that all S&P does is pander to the solicitations of whatever few remaining clients it may have, or, as the case may be, the U.S. government. Any credibility S&P, which one would be excused for confusing with Sycophantic & Pathetic, may have tried to salvage over the past 6 months has been gutted and left to dry after this most recent fiasco, which is the final straw on theMcGraw-Hill subsidiary's expedited route to the NRSRO utterly discredited trash heap.

T2's Whitney Tilson On Toxic Trading

T2's Whitney Tilson on Themis Trading and Zero Hedge

The Day That Was - HFT's Superdominance

The three HFT horsemen are C, BAC and CIT.  These three stocks traded 860 million shares today which is 10% of all US Equity volume.  Think about that: 3 stocks in a universe of over 5000 U.S. stocks represented 10% of the volume.  How could this be?  Look at the intraday chart of all three of these stocks and you will see a something in common: an early morning move followed by a flatline with a very tight range (around .05).  Meanwhile, while these stocks were flatlining the market was heading higher.  The S&P 500 gained around 10 points in the afternoon (or 1%) but these 3 stocks did not move.  There was a constant bid to these stocks yet anytime they wanted to lift there seemed to be a constant offer just a few pennies higher.  This is what HFT looks like.  The HFT’s made a killing in these 3 names today – in addition to the .01-.02 spread, they collected about .005/share in liquidity rebates.  Not a bad day for a supercomputer.

Is The SLP The NYSE's Answer To Direct Edge's "Advance Look" Enhanced Liquidity Provider Program Or You Trade You Lose, You Trade...

There is a curious article in the latest edition of Traders Magazine. It is curious mostly because it was allowed to be published, as it definitively peels off the cover of what truly happens at the pantheon of stock exchanges, that dominated by a private club of select high frequency traders, who obtain better and faster pricing than everyone else, and where the group of "select few" is seemingly legally allowed and even encouraged to front-run the "every-one else" (you, dear reader, are most likely in the latter camp). If you ever wondered why HFT generates profits of over $20 billion a year, please read this article.