Archive - Jul 2009

One for Wall Street, One for us. Two for Wall Street, Zero for us... Wait, what?

Treasury has a load of paper for sale in August. The market is not set up for the big supply. Could we have another test of the 4% 10 year?

Market forecast from John Bougearel of Structural Logic

• Must read: Fast-on-the-draw trades need spot of marshalling (FT, h/t Joe)
• Roubini Op-Ed on Bernanke: The Great Preventer (NYT)
• Lennar signals fleeting buildling rally as buyers flee (Bloomberg)
• JP Morgan to raise banker salaries (FT)
• The man spreading false rumors about Harman and Textron takeovers (that fooled fast-money's Najarian) found dead in suicide (Bloomberg)
• Chinese steel executive beaten to death,  (FT)

Monday the Obama administration and China begin talks- namely on currency tensions, the US budget deficit and the massively huge trade gap with China.

China, in addition to the hundreds of billions of low-cost, high-labor manufactured goods they’ve come to be known for; are importing 150 Chinese economic officials, in one of the largest visits ever to the United States.

The Treasury Secretary comes to his senses and realizes that when it comes to basic government oversight and industry accountability, if less is more, then none is most.

"if you look at what's happened recently in the credit markets, it hasn't opened
our eyes to liquidity risk, but liquidity cost and liquidity risk is perhaps a different
animal. It's not just about price volatility. It's about volume volatility. It's about timing of
that volume volatility. It may be there today, and when you want to get out of your
position, it may not be there tomorrow. And how do you reflect that into your own
trading and into, not just your alpha generation, but on the risk side of the alpha
generation? Most risk models don't really take into consideration the kinds of anomalies
that we may see on a yearly basis."

A very informative series of presentations by Warren Pollock. As Warren says, a comprehensive political, economic and social forecast.

A piece by John Mauldin covers much of what we have been discussing regarding the macro picture over the past few months.

Zero Hedge will attempt to categorize all the relevant players in FlashTradingGate. This is the initial focus of Senator Charles Schumer's recent campaign for market equality and transparency. As we will undoubtedly miss critical connections between these and other pertinent industry players, we solicit readers' insight as we develop this org chart: we invite readers to send emails to: flashtrading@zerohedge.com with any input.

HFT creates systemic instability and makes market manipulation much easier.

Great recap piece in the New York Times on whether or not Wall Street is picking the pockets of "non-club" investors (read - the guys who do not generate 80% returns with a Sharpe > 5.0 - can someone explain how risk/return works again). The consensus sure looks good for class action lawsuit lawyers.

The piece also recognizes the tremendous contribution that Zero Hedge's readership has had in this ongoing debate, once more highlighting the interactive nature of new media and how crowdsourcing is the new dominant paradigm for Media 2.0. 

Here is the link.

Additionally, should it be odd that Direct Edge, the company in the eye of the Flash hurricane with its ELP program, has the following reported ownership structure:

Yes. Direct Edge is an independent broker-dealer owned by a consortium that includes the International Securities Exchange (“ISE"), Knight Capital Group, Inc., Citadel Derivatives Group, The Goldman Sachs Group, and J.P. Morgan. Knight Capital Group was originally the sole owner of Direct Edge and the firm was spun off in the third quarter of 2007 when Citadel and Goldman made investments. With a 31.54% stake, the ISE is currently the largest shareholder of Direct Edge, followed by Knight, Citadel, and Goldman, each with 19.9%.

And here are the latest ruminations out of Max Keiser, who takes on a curious angle in his most recent Goldman Sachs attack

What a week! Time to kick back with your favorite content. Here, let me serve it up for you. Radio Zero, live. 11:30 Eastern. URL 15 minutes before. Marla 15 minutes late. As per usual.
Listen in: http://cdo.zerohedge.com:8000/listen.pls
Chat up the DJ: aim:radiozh

It seems 1-2's and Marla's post earlier could not have come at a more opportune time. In a presentation by Andrew Gluck of Advisor Products, the author touches on some starkly comparable points (and, usefully, those with acute ADHD may find this presentation a tad more palatable, hehe, just kidding Marla) in the context of the epic paradigm shift occurring in the media world. Zero Hedge explicitly agrees that while the course of new media is still very much uncharted, the inherent conflicts of interest at the nexus of mainstream media and its providers of funding (not to mention bloated leverage and CDS levels in the 20pts upfront even in these artificially tight times), will make the survival of legacy media products increasingly more impossible.

Zero Hedge recently had some choice words against a subset of HFT, namely Flash Trading, and as even Irene Aldridge confirmed earlier, there is something very wrong with that subset of program trading. It seems our admonitions have fallen on the right ears. In a startling development of anti-establishmentarian activism, Senator Charles Schumer has asked the SEC to ban Flash Trading in its entirety, as it "gives high-speed traders an unfair advantage over other investors."