Archive - Aug 2009 - Story

Pump up the (trading) Volume!

Chat up the DJ/Send Tunes: via AIM here.

Pull our bits off the interweb: http://cdo.zerohedge.com:8000/listen.pls

Dear Senator Kaufman, we at Zero Hedge applaud your effort to bring transparency to, and evaluate the various new forces that, for better or worse, determine the modern market landscape. However, we would like to bring to your attention a fact which renders your entire approach of seeking fair and unbiased commentary from the SEC irrevocably moot. The reason is that the SEC, in alignment with many of the very industry players who may be abusing market structure for their own tiered benefit, stands to benefit significantly from an increased amount of daytrading volume across all markets, and, in fact, based on actions as recent as 4 months ago by the SEC, the regulator is well aware of the monetary benefits that ever-increasing churn creates for the commission and is fully intent on capitalizing on them. We thus suggest you bypass any protocol that has an SEC intermediation and go directly to penning a Bill which, we trust, will prove to be more fair and objective than anything the SEC would ever provide you with. The reason for the SEC's insurmountable conflict of interest is the so-called Section 31.

Judge Loretta Preska, who earlier this week ruled against the Fed in its long running FOIA lawsuit with Bloomberg, and demanded it disclose firms benefiting from and loan amounts handed out under various emergency order, has filed a stay on the original order and has awarded the Fed with a September 30 deadline to appeal the order.

Credit underperformed equities this week as single-name tighteners edged wideners by four-to-three leaving indices (especially HY) underperforming intrinsics in general. CONSumer and ENRG names underperformed as TMT and FINLs were best with INDUstrials mixed. Financials outperformed non-financials but the strength in the former was more at the tails of the distribution while the weakness in the latter was more broad-based.

The Delaware Senator highlights his key concerns in the ongoing crusade for fixing a broken market where the shares of a bankrupt ward of the state determine the overall direction of a $14 trillion stock market.

Bloomberg's chart of the day comes courtesy of proud "TARP 4eva" badgeholder Bank Of America. Basically it says to expect another 40% rally in the markets (yes on top of the 50% witnessed already) simply because America is now the same basket case economy that Japan was in the 1990s (and continues to be today), even though as everyone will attest the connection between economic reality and market stupidity ended long ago.

Despite his erudication and spellingtude, the chairman of Cerberus Int'l was unable to save the three headed titanic. Farewell Steve Feinberg, we won't miss you and your crappy second liens.

Sure, the Fed has printed a lot. But is that enough for inflation? Money velocity is nil, and that's because the money is trapped in excess reserves, which the Fed is paying interest on until it's done with the bailouts and ready for the next inflation-fueled upsurge.

You want to earn your $1 billion budget? Start by explaning why a bankrupt company is the proxy for the S&P500!

As a reminder, The SEC's budget is nearly $913 million dollars, spread over 3,600 people, or over $250,000 per person. Judging by the SEC's phenomenal historical performance of achieving absolutely nothing aside from catching one plane-jumping self-admitted ponzier, and allowing the Bank of America bonus lawsuit to take a few too many turns for the surreal, it is a practical certainty that Wall Street will make sure D.C. allocates a few extra billion to keep the SEC happily efficient in its track record of catching exactly zero notable Wall Street based criminals. After all, that's what shareholder/taxpayer subsidized fines are for.

Also the below interview with the head of the SEC has exactly zero mention of instituting the downtick rule for buying stocks, or the fact that 4 stocks now account for 30% of the NYSE volume: a perfectly normal occurrence in the eyes of former FINRA head

"American International Group Inc.’s equity is currently worth zero, whatever manic depressive Mr. Market may say today. It is likely to remain zero based on AIG’s own analysis of its future over the next few years. In fact, its obligations to the U.S. Treasury would trade at a discount today. The only reason AIG’s stock should trade above zero today is if you believe crony capitalism will fund the birth of an AIG clone—in other words if you believe AIG’s future will be a rigged game."

All you need to demonstrate that the market moves over the past decade have been driven by nothing besides excess liquidity.

No major commentary needed... Ironically support now at yesterday's VWAP...for now - wait for the breach. Thank god for liquidity providing algos.

A new page in the fight between HFTs and everyone else was turned recently, after Adair Turner, Chairman of Britain's Financial Services Authority, said that he would consider the implementation of a "Tobin tax" on banking transactions. As a reminder, James Tobin introduced the idea of the Tobin tax in 1971, as a tax on cross-border currency trade, which at its core was meant to moderate short-term speculation in currency trading. Its latest incarnation, however, would strike at the heart of the speculative bubble that has gripped global markets.

The failure by HSKAX and HFRXEMN indices to generate any profits YTD indicates that traditional market neutral players are in peril of being markedly redeemed, or are currently in process. Who steps in to fill in the void is anybody's guess although some assumptions can be made.