Archive - Jul 2009 - Story

It is now generally understood that high frequency traders (HFTs) are dominating the equity market, generating as much as 70% of the volume.

HFTs are computerized trading programs that make money two ways, in general. They offer bids in such a way so as to make tiny amounts of money from per share liquidity rebates provided by the exchanges. Or they make tiny per share long or short profits. While this might sound like small change, HFTs collectively execute billions of shares a day, making it an extremely profitable business.

Why should institutional or retail investors care? After all, aren’t HFTs adding liquidity? That’s what they and the exchanges, who court their business, say.

There’s a lot to worry about.

Individuals and companies went from paying roughly the same amount in income tax to a roughly 4:1 ratio estimated in 2014

The most recent, presumably correct, data has been released by the NYSE: Goldman total principal program trading has declined by 60% from 1,336 million shares in the prior week to 571 million in the current.

Jonathan Weil takes on Goldman's doomsday machine.

SIFMA's Tim Ryan runs like the plague from answering the question of whether he would invest in PPIP's garbage assets without the government's backstop. However, both he and Marathon's Bruce Richards are dying to use 14x riskless leverage in a wishful effort to restart securitization. David Faber: "Win win for you, no real downside, but you are ultimately going to be paying inflated prices for assets instead of true price discovery, what do you say to that." To which Bruce has a meandering explanation which concludes with: "Taxpayers do benefit, because we believe the returns on these assets are incredibly attractive."

Here it is: http://www.xp-dev.com/

Tonight Karl Denninger tried to have a sensible argument with CNBC, even dressed up for it. Unfortunately, it didn't work as expected (by Karl). The only topic covered was bloggers anonymity, on which issue Karl was surprisingly goaded into agreeing with the amusing and lovable host. Karl, and host, we have pointed out before why certain entities prefer to remain anonymous: I would refer both of you to one version of the explanation here. As for Karl trying to debunk what passes for analysis at CNBC, that did not quite work out either. Maybe finally bloggers will realize that a sensible conversation can not occur within the confines of GE's subsidiary. Ever. Probably would be more realistic to discuss exchange server latency at a Goldman sponsored program trading conference with Sergey Aleynikov as keynote speaker and Misha Malyshev and Kevin Mitnick as moderators.

Thursday isn't Friday, unless you spent the week in Federal Holding and you need to let off some steam before you head to the slamy-slam-slam.

Hence, tonight, starting 9:00 Eastern, Radio Zero will spin just for you.  Slots are limited.  Check back for the URL 15 minutes prior.

Update: http://s4.viastreaming.net:7760/listen.pls for your Radio Zero fix.

Live Tracklist: http://twitter.com/marlasingerzh

Requests: AIM marla@zerohedge.com

"Wow, there are more of you?"

Better make sure your email is correct, people.

Short answer: "Looks like it." But the deeper question is: Why?

The gloves are now completely off in the escalating program trading fiasco that was started by Goldman's former Sergey Aleynikov. Oddly, while Zero Hedge was fully expecting the Teza injunction to come from Goldman, it seems Griffin was more than happy to burden himself with that task. Hopefully Citadel is not faced with a case of reverse discovery and forced to document the 40% returns that it generated compliments of Malyshev when all its other groups on average lost around 50% in 2008.

Results of USD 11bln (Act) 30y note auction
- Yields 4.303% vs. Exp. 4.292%
- B/c 2.36 vs. Avg. 2.54 (Prev. 2.68)
- Indirects 50.2% vs. Avg. 47.73% (Prev. 49.09%)
- Allotted at high 67.88%

House Committee On Financial Services hearing on Regulatory Restructuring: Balancing the Independence of the Federal Reserve in Monetary Policy with Systemic Risk Regulation.

Here is the link with all the prepared testimony.

The lately abnormally notorious Goldman Sachs received a little pat on the back today compliments of Bank Of America and its analyst Guy Moszkowski, who in a report published this morning announced his expectation of an "unexpected" Q2 surprise (quick, someone find the next big counterparty that Goldman shorted and also has several tens of billions in collateral exposure with the 85 Broad oracles) and also anticipates forecasts to rise. Maybe now that Goldman's fate allegedly is in the hands of a few good hackers, Guy may want to redo his hypothesis. But I digress.