Archive - Nov 29, 2012 - Blog entry

Dominoes are lined up. Next in line: one of the world’s largest (but dying) shipyards.

Got me thinking about hedge fund cheaters and too-good-to-be-true results.

Imagine scanning lines and lines of code looking for a specific error which was causing a constant hemorrhage of money through bad trading executions.  Now imagine having a cocktail at a party and discovering through the aid of a napkin drawing exactly what type of order was causing your firm to destroy its Alpha over a consistent 6 month period.  That's the reason we're hammering the table, because it's not merely about reading the information wrong, its about inside connections to the exchanges.  These connections have helped many firms skirt the REG-NMS rules and Rule 610 as exchanges cater to the HFT in effort to garner the most fee's possible. 

Generally bullish, sitting back and enjoying the show while it lasts.

In other words, if they announce today what we already know –that some sort of compromise is forthcoming –then the market wouldn’t have any reason to go higher.

Looks like yesterday put into practice: Let’s thank everyone to turn around markets, when they sink. Nothing to break the barn stomp in Periphery bonds (but themselves). Italy brilliantly stuffed its primary dealer at a 2-year low. Core EGBs holding quite steady, given ROn in Risk and Periphery. Strong US GDP revision – but, as expected anyway. Given the actual level in Risk, good numbers are seen as given. Nothing weak, no more, never. Swimming in a Sea of (Risk) Love. Watch the Event / Headline risk on FC (& Greece. The math still seems quite odd…). Hard Periphery (especially Spain) slap-back in the afternoon, though.

"Sea Of Love" (Bunds 1,37% unch; Spain 5,32% +1; Stoxx 2579 +1,3%; EUR 1,298 +50)

Things are so bad that the ECB has put the entire Spanish banking system on life support to the tune of over €400 billion Euros. To put this number into perspective, the entire equity base for every bank in Spain is only a little over €100 billion.

"We all know what to do, we just don't know how to get re-elected after we have done it."--Jean Claude [Banzai7: And precisely who elects Mr Euro?]

I’m looking for a big fight over this money, and I think it has to be part of the Fiscal Cliff discussions.

Sometimes the truth is a tough pill to swallow, particularly if that pill is low (and getting lower) margined hardward-based.

Rand Hated Libertarians ... and Many Libertarians Despise Rand