Archive - Oct 4, 2009

Something truly memorable to consider on a late Sunday night.

Zero Hedge is starting a multi-part overview of Goldman Sachs' Electronic Trading client-focused product suite, to demonstrate just how extensively embedded in modern market architecture are Goldman's various DMA and "liquidity" facilitation schemes, and the depths of dark pool domination via Goldman's global order router, and other specific topical offerings.

Senators Schumer and Cornyn made it clear they support a big tax credit for home buyers. There is no stopping this train with these two on board. What might it mean?

Brazilian stocks rallied, along with the nation's currency, as investment prospects brighten on the news that Rio de Janeiro will host the 2016 Summer Olympics, making the Bovespa the world's best-performing major index last Friday.
Rising commodity prices this year have led investors to buy emerging market assets where the economies tend to be more commodity-dependent. Both emerging markets and industrial metals group are outperforming U.S. equities so far this year.

A recurring theme on Zero Hedge over the past few months has been the inordinate (and seemingly inexplicable if one takes at face value the arguments for an improving economy) amount of insider selling of corporate shares, which has reached a staggering ratio of 30-1 of sales to buys (if not much more). A back of the envelope calculation indicates that insiders may have sold well over $10 billion worth of their own company's shares in the last quarter alone. Aside from what implications this activity has for claims of the recession being over, as those best familiar with their businesses can not wait to offload their holdings, a larger question is one of propriety, and whether insiders are abusing inside information loopholes, particularly if they are aware of material, non-public information when selling their stock. In this environment of unprecedented insider selling, it makes sense to refamiliarize readers with JP Morgan's confidential presentation, "Hedging and Monetization" from February 2007, first presented by Wikileaks, which focuses exclusively on providing company insiders with mechanisms to circumvent not just regulatory curbs on insider selling, but to obfuscate market signals typically associated (but definitely not in this market environment) with an insider dumping boatloads of his or her own stock.

The news hasn't changed, but maybe the reaction to the news has. In the end, it is the same story as "the trend is your friend until it ends".

• All you ever wanted to know about Paolo Pellegrini, and didn't realize you should ask (Bloomberg)
• Nakagawa, Japan's former finance minister, who resigned after drunk incident at G7, found dead (FT)
• Simon Johnson: A short question for senior officials of the New York Fed (Baseline Scenario, h/t Pete)
• Is the mortgage REIT IPO/follow on bubble finally over? (Bloomberg)
• Roubini says stocks have risen "too much, too soon, too fast" (Bloomberg and RGE)
• Stiglitz deflation threat pushes Fed to stay at zero (Bloomberg)
• From Black Scholes to Black Holes (Dharma Joint)

Keep an eye on what is going on in modern Greece, because I can assure you that it's a reflection of what is going on across the world. The level of angst is unprecedented and politicians better quit the rhetoric and start putting citizens first.

It's Sunday, and time to diversify. Have a read about the all-new four-door Porsche, the Panamera. Times are getting good again, right? We haven't seen something this exciting from Porsche since the 928. Will history repeat itself? You be the judge. It's Porsche's second, ever, sports sedan.

Experts say that the economy will not recover until trust is restored.

So how do we restore trust?

Declining long Tsy yields, credit market disruptions, drying up monetization POMO liquidity, worsening consumer credit and unemployment, and the dreaded fall season mean this correction in equities is the beginning of a reversal, not a pullback. And the reversal won't be pretty.