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Guest Post: "As Implied Correlations Approach 100%, Energy = Healthcare = Technology = A Rat’s Ass, Etc. "
From John Lohman
A hedge fund manager/friend of mine recently described forces driving the market as “barely manned scrip cannons.” Unfortunately, I believe it’s a fairly accurate description of the HFT-ETF-Algo driven cluster that used to be a market for financial assets. Individual investors have lost confidence, voted with their feet, and left us with a single asset. It comes with a put option underwritten by the federal government and its value fluctuates in response to barely manned scrip cannons.
For perspective on how this is impacting macro markets, consider the chart below. It plots the average one year rolling correlation of various markets with the S&P 500 Index. In short, a currency = a yield = a commodity index = a unicorn, etc. Completely different assets with completely different cash flow streams and terminal values are apparently fungible.
This phenomenon can also be seen within the equity market. Zero Hedge has pointed out the absurdity of the level of implied correlations several times. This chart from Barclays provides some context. As shown, the trailing one month cross-sectional correlation for the largest 1,000 stocks averaged roughly 20% for the last half of the 20th century. The remaining variance in prices would be explained by the fundamental factors within each sector, industry, and firm.
But in today’s environment, idiosyncratic risk doesn’t exist. As implied correlations asymptotically approach 100%, energy = healthcare = technology = a rat’s ass, etc.
This is the unfortunate result of markets where governments and central banks try to truncate risk and algos determine marginal prices based on short-term patterns. In the real economy, price signals have become distorted, thus causing capital to be inefficiently allocated. In the financial economy, the environment has become riskier than ever. The farther prices are pushed away from their true underlying value, the greater the adjustment will be. And one thing the algos don’t do - adjust slowly.
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Very nice and interesting info. Cudos to ZH
+1
This is an interesting look at the data: Look at that increasing correlation, approaching the peak during the 2008 freakout.
I'm sure it's not a problem, though. Look at that cute little correlation. It's so *cute*! It's like a cute little coiled spring. You can even hold it in your hand. Sure, he's got a smart mouth, but he's just so darned *cute*!
I tend to think of it as a front coil spring in coil bind from a 1969 chevy chevelle, but they are all dangerous when loaded.
It's actually a Ford 427 SCJ I think...
...let's be realistic, a coiled main spring from a Ruger No.i, which unfortunately goes into a harmonic reinforcement of the barrel oscillation.
"... just like the Market."
You forgot that part.
...I was thinking of such a system, but got distracted by my dog.
Frankly I am amazed that the market hasn't gone into a feedback loop yet again...all the soldiers appear to be marching right in step across the suspension bridge...
That will cause a failure of the bridge. The soldiers are not supposed to be in step.
It would be insightful to see a 10 yr. chart or longer to confirm that this correlation has actually evolved post crisis .
The Barclays chart (in the middle) is realized correlation from 1950 through June 2010.
Thanks. Wasn't paying attention.
Is there any chance the rise in correlation could be explained by the early stages of a "run from money", and Mises would call it?
Peak complexity, bitches:
peakcomplexity.blogspot.com
we must have new record vol lows
spy jan 5 - 111ish; today working on 103ish
volume use to matter, but today it simply represents the number of HFT's frontrunning each other for subpennies. It's no longer relevant to the underlying interest in the equity.
its further confirmation (for me) as to who is in the market and who is not.
Not to worry. Big brother has the wheel...
...as the HFT's collect pico cents in front of the steam roller....to 'coin' a phrase from Taleb....
Was absolutely ridiculous.
I think the real question is this :
Will the algos adjust "quickly" (as said in the end of the article) when economic reality appears in earnings ? Or will the PPT supported market can keep trading one single share all day at an artificially inflated price and thereby maintaining an illusion of stable stock prices to the masses ?
The answer to this question is, "yes." The reason is because of the following implied correlation:
Stock market=economy=job security=willingness to borrow=ability to spend=velocity of money=re-flation=re-election
See? It's easy, and I can't even spell PhD!
We have a winner!!
Ah the famous limited liability corporation egocentricity equation.
You can expect chaos from the borg boxes when SHTF. It's hard to test out complicated software throughly, and the impression that I have from the behaviour is that they are doing minimal testing, if any. Mind you, proper software testing is straightforward, thorough, exhaustive and time consuming. It's the latter part which usually is a hinderance. And it is also rarely done.
But I doubt that the H1-B's which Tyler has been promoting give a crap about that, nor have they even heard of the ANSI/IEEE testing standards. Those standards are outstanding, and would result in a higher probability of proper behavior if they were strictly followed.
In otherwords, you know there are bugs in the code, which haven't been hit. But these will break down in situations that people really haven't gotten much (if any) air time on.
Kind of like how the flight simulators behave totally wrong in catastrophic flight situations. The code model is so inadequate, it has caused pilots to crash real planes from their faulty training.
Please, give one example where inadequate simulator code was determined to be the primary cause of a plane crash.
HH--it was in McNews, so it must be true. Maybe more the design, validation, rudder control authority in the simulation exceeds stress levels of the actuator chain. I was on an airplane, headed cross-country, right after the 9/11 airline suspension was lifted when the plane went into the neighborhood in Queens. Never heard like 100 cell phones go off within the space of 30 seconds before.
http://travel.usatoday.com/flights/2010-08-31-1Acockpits31_ST_N.htm
- Ned
dp
The cause is always noted as pilot error. However, according to some news story you can google, some study found that some errors were caused by pilots doing things that the sims told them to, when in reality they shouldn't. The plane where the pilot stripped a bolt on a tail rudder that crashed a few years ago was listed as an example.
I'm no expert though, just tellin' you what I saw.
Also, I'm told that the reason why a greater disaster at Three Mile Island was averted is because of one person who did something completely different than what they were trained for. Their training, the book, and the "simulations" they had done would've required him to do the exact wrong thing. IIRC, it was flooding the reactor chamber, but that's from a fuzzy memory from long ago.
His procedure is apparently now a part of the training program. So yes, simulations can be incomplete, and lead to disasters.
ES, yes, they were following the deterministic (thanks Hyman) emergency operating procedures at TMI-2. Down the line. Then from several perspectives (s/h steam at core exit t/c, sump level rising, przr hi-hi level) they figured out that the accident that they were "doing" wasn't what was happening. Then corrected, lots of banging around when putting water into s/h situation.
Not so many "simulations" pre-'79--all required now. Validation of the simulation is, well, anal-retentive.
So my point about control authority in simulation exceeding equipment capability in the physical plant.
viz. Kemeny Report (Prez. Dartmouth, inventor of Basic, Feynman protege, and Rogovin Report on threemileisland.org site e.g.)
- Ned
That is called a Scram. Flood the reactor and kill it.
I have been through that area and if I understand it correctly, it is the outer containment structure that is still doing it's job preventing the entire northeast from being uninhabitable for the next 10,000 years.
Just a few things I have heard and I have no way of saying.
I remember TMI, we waited for about three days to see how it will turn out. There was a real possbility that we would have fled west for good, never to see home ever again.
Your "primary cause" caveat cannot be satisfied because simulators and actual planes are not the same thing. Anyway, good example is AA 587. The co-pilot thought he could manage wake turbulance from a leading 747 by wagging the rudder of his A300B back and forth. Works fine in a simulator. In real life the shoddy Airbus tail pops right off and everybody dies.
shoddy Airbus tail pops right off
Ssssh. Euroweenies like to spend Fridays at ZH.
You can tell the truth about socialist ignorance on Saturdays.
The primary cause caveat cannot be satisfied because there is rarely one single primary cause for any aircraft accident. Like economic crashes, aviation accidents are most often the result of a series of unchecked errors that occur without appropriate or timely intervention.
While I appreciate the attempted analogies here, it's gross oversimplification to point to simulator training, and therefore software, as the root cause of any accident. Your reference to AA 587 is a good example. The problem wasn't the simulator code, it was insufficient training in high-AOA rudder effectiveness in swept-wing aircraft, and a lack of understanding of some rather esoteric aerodynamic principles.
Again, just as in finance, all the software testing in the world won't make up for shortfalls in knowledge. That's one of the reasons I don't fly in regional airliners, and it's one of many reasons I never placed investments with a 20-something right out of college.
Also the Air Chance Airbus headed from Rio to Paris. Plowed (unnecessarily) right through cluster of thunderstorms in the ITC (InterTropical Convergence Zone). Lost control in turbulence, then lost carbon fiber (composite) vertical fin. (Found later 70 miles south west of remainder of crash debris). Simulator testing subsequently showed that after crew switched off autopilot to fly manually; it later would re-engage, unbidden. Slight software error. A No! No! Vertical fin assembly is carbon fiber on airbusses. Problem: It is easy to prove by testing that a metal assembly will suffer X number of stress cycles prior to failure. It is impossible to determine how many stress cycles a composite structure will absorb prior to total failure. Ask Boeing when the (Carbon fiber composite) 787 will get certified and delivered... 3 years late now...
AA, bitches!!!!!!!!!
You should see the little Embraer Aircraft in use today. Those things are rocketships capable of 45,000 feet in a very short time. Gets you to Chicago in what? 40 minutes?
I flew to the UK once in a honest by gawd Lockheed L-1011 and WHADDA Plane it was. All Iron. The pilots were tired on our return trip via Bermuda and took a nap before completing our return trip home on the same plane.
If there is a accident to remember, I think there was one where planes that hit wind shear and lost airflow over the wings or were simply driven brute force straight into the ground.
If anyone knows how to build a plane, it's going to be either Boeing or one of the Russian Factories. Some of the planes they make are monsters that laugh at anything Nature can throw at em.
Aluminum, bitchez!
your so cute mr panda bear, favorite of mine.
panda, bitches†
ES, I've been thinking that some of those pretty fraudulent patterns we've been watching are kinda' live testing/live system characterizer inputs. To your point, the a) range of inputs is limited, b) the market "internals" are competing, and c) the system is not time invariant.
But I don't know what a bug in the code would be. They don't have specs like we'd be used to using (OK, just a guess).
5/6/2010 live test case? Complex adaptive system coming unglued? (or is the unglue anything like the massive puts on AA and UAL 9 years ago?)
Watching with interest,
- Ned
It could well be. One would think that they'd have better protocols in place during such testing, if it were true. E.g. giving a "heads up" that the market might get screwed up. Or a read-only pipe for initial testing. But knowing how half-a**ed tech managers and developers do things, I'd be surprised if they had an even remotely adequate QA program in place. Like I said, I'm certain they've never even heard of ANSI/IEEE testing standards.
My money is on a bug, pure and simple. But I admit, I could well be wrong.
lol--"get it done, what do you mean that we have to put together a test program that will take six weeks? GET OUTTA HERE AND MAKE THINGS HAPPEN!!!"
dontcha know.
- Ned
Your Market software executed a general protection fault:
Abort, Ignore or Retry??
Some how when the Market goes down it screws the program up somehow. That is why we saw the flash crash. The programs seem only to know how to buy and not to sell. When the market goes down they just shut down. They were not programed for a declining Market.
...bingo...that is the real question.
Perhaps it shall be like Krup, towards the end of WWII, their factories leveled, but their headquarters still humming along on paperwork....reality denied.
rosie-yes, C.N. Parkinson pushed this point (lmao as he presented it, and I used to be of your view). But, of course, with that small fractured organizational kernel, they came roaring back in many ways. So they kept the essence of their organization intact.
Current MBAs (and criticism not limited to them alone) can not conceive of retaining long term organizational capability vs. QoQ measures.
- Ned
...good point...I agree totally that this managing for the 1/4 is such bs...having 'beat by a penny'....and yet the market rewards it and the company's option holders make money doing it while the long term shareholders are hurt.
Interesting that the S&P implied correlation is now at levels last seen in the autumn of 2008. Hmmm. Chew on that all weekend.
On a lighter note, Mmmmandy is looking absolutely stunning this afternoon. Boner City.
She's sitting in for Maria after the close. It's a toss-up to me, but I understand that tomorrow is Maria's birthday. Let's see, 1967 -- she's 43.
So, the Turd likes the slutty looking bleached blonde type. Are those rare in your foreign country? Or just the boobs?
No, the slutty blonde look gets me every time.
Take a closer look then:
http://www.cantorblog.net/wp-content/uploads/maria_bartiromo_cnbc.jpg
http://www.gunaxin.com/wp-content/gallery/maria-bartiromo/mariabartiromo...
http://img256.imageshack.us/img256/4885/mariabartiromothetonightf3.jpg
Not interested in "Headiromo" because 43 isn't just her age, its the circumference of her ass.
ROTFL++
The mile high tub packs a braciole.
nipple alert, on aisle 2 in the red dress.
Was worried about you. Thought you might have got run out by wildfires. No this doesn't mean we'll be taking warm showers together. :P
i was worried about me 2.
Wear lots of lotion shave and cut your hair short. Harder to catch on fire that way.
Glad your ok.
ZH your website is screwing with me again.
got a triple†
got a double i am that good i guess.
death by grease fire, no thanks.
but i will take you up on the warm shower, you putting out my flames.
right and your unicorn horn flies.
But you wouldn't want to marry her though. Right?
Oh! wait, maybe you want to marry her for a week or so and have an annulment.
Right?
Turd, did you get out of TBT on this rip? Great Ten Gallon...or is it twenty..
All hat, no cattle...as they say.
Actually, I do not have a position in TBT. A good friend of mine has ridden that fucker down from 50, however. He's not giving up. Selling puts against it so as to make it back a little at a time.
What's most interesting is that the S&P didn't take a dump today as predicted by the "smartest trader on ZH."
being, johnny B G O O D .
It's like in Titanic where the ship is halfway underwater and the enormous weight of the protruding half causes the steel to groan. You know it's about to snap, and there's nothing you can do to stop it.
...now I understand what Obama was talking about today...rearranging the deck chairs on the Titanic....
rosie-
please ex plain your un der stand ing of Our Dear President's talk ing about to day. It see med that the TOTUS was kin da jitt ery in the pres entat ion.
- Ned
...well, here's my take:
1). Everything was really shitty when I got elected.
2). Now everything is back on track, provided the Republicans do not screw it up again.
"My administration is dedicated to piling up more tinder and brush, now that we've put out the fire!"
"And one thing the algos don’t do - adjust slowly"
No they don't, as may 6 proved. However, they can just go back and cancel the trades they don't like.
No blood, no foul, right?
Yeah, about that...I have some trades from the tech boom in the late 90s I'd like to annul.
Who do I see about that?
I am eagerly awating BestBuys abysmal miss next week. Thanks ~100% correlation.
That is because I might buy one bargin bin video game a year at best Buy and maybe pounce onto a sale with so much discount on deck it's irresistable.
Forget the computers in that store, I build my own from Newegg thank you.
I used to trade in the past, capitulated more than 1 year ago. Why ? When you see a nice short pattern, you cant short coz you know Liberty 33 street will buy thousands of ES to support the market. It's all manipulated, no fun anymore. Even this idiot of Bob Piss-ani had to admit today that volume tumbled 30 %, but Erin said it's because people are still in holidays.
The CNBC broads have sold their souls (and perhaps their bodies) to the devil for a cosmic moment on TV.
But Erin is right. The people are still on vacation from market participation. And for the benefit of the remaining few CNBC viewers who must be mentally challenged this was a metaphor.
My apologies to those who still watch CNBC once in a while for statistical purposes and re-affirmation of the maliciously fraudulent gross misrepresentation of what "is" is.
But Erin is right. The people are still on vacation
NO, the people are still o u t 2 lunch†
Barely manned scrip cannons? Best metaphor award to ZH! Excellent image.
Just think of the 21st Century style ticker-tape parade they could generate!
So what do ya do when gold, energy, equities, and everything else under the sun is correlated? It's easy to say "go to cash" but then you are fully exposed to the ravages of inflation. If you look back at the tankage in 2007-2009, however, you find there were profound correlations, but precious metals did better. As the singer Melanie once sung, "Look what they've done to my markets, Marla. Look what they've done to my markets. They've rolled them up with some HFT algos and turned them all top shit, Marla. Look what they've done to my markets."
Buy something that doesn't require you to read a prospectus, that is an asset, that isn't also someone else's liability.
Physical gold and silver, my friend
50% of my entire wealth is tied up in precious metals. I am Gold Man!
Show us your sacks!
100% of the actual family weath is in either silver or gold. By weight, heavily silver to gold. The rest is in a self-financed short-term real estate sale that is currently 2 months slooowwww. And when those payments finally show up, they too go into silver and occasionally gold.
It's a hell of a way to fight depression. But with the current state of equities, I'm not even buying chicken stock. With cooking as with investing; forget stock, stick with bullion.
How about green bananas?
Similar to you, (more weighted to silver) I was probably 50% silver, 20% gold, and 30% cash. The cash just went out the door to purchase a small piece of acreage with an old cabin, surrounded by national forest.
As it is completely off grid, every additional penny I have has been going into improvements and repairs for the last few months. The beginning of the end is in sight however, and then savings will continue to go back into PMs.
-Good Luck
do U need any useful helpers, on that acreage? maybe a hunter gatherer type goddess, she would cut off her right breast in order to throw daggers and swords to protect you and your cabin and precious piles of wood for fuel to heat cooking and wood stoves.
wink wink, glad you cleared up that hemorrhoid problem, bet your feeling quite a bit better now a days.
While my thirteen year old son would probably love to have you around, I think my wife may object.
your funny OBGYN. i get the bullion.
Thorium, bitchez!
....guns & ammo...buying good collectible guns has been a no brainer for close to 30 years now...and unlike real estate, they actually never do go down....
The beauty of the internet today is that one can freely trade them via the GunBroker auction market...no bogus bids, no HFT, no bs....hell, there is even collectible ammo.
I am thinking that there is a good market opportunity for an investor newsletter and seminar biz on these?????
I made a little money in "commodity" guns, was afraid to touch collectable guns.
...I was being a bit facetious, but collectible guns can cover such an immense price range...and you are right some of the ones in the very high range can be dangerous since there are counterfeit ones which are so well done it takes a real master to identify them.
If you are interested one good way to approach it is to select one manufacturer and really get to know which models are worth what so you can identify good buys. For example some folks specialize in the older S&W revolvers...and these are now in very high demand.
I know of a shop that has a Barrett on the floor that can fire BMG .50's and is will be yours for a cool 32,000 dollars.
I cannot handle such a beast. I hae enough weapons to suit my purpose for the moment, but have plans for at least one more.
Ammunition, Reloading supplies, Weaponry and related stuff were very big these last few years and other things related to making preparations for bad times were also big these last few years too. That was where the money went.
50's are so freakin' cool. It is really the last long gun on my want list. Or something belt fed. Neither has a strong probability of occurrence.
So the Feds prop up the market and no one shows up. The "dumb" money leaves to pay expenses and because they might sense that the game is rigged. They see the pain on Main Street. Goobermint thinking at its best - short-term thinking that ends up destroying that which they are trying to save.
TJ, I gotta respectfully disagree with you here. To best understand other perspectives, it helps to mentally place yourself in their 'shoes'. Ok, ready?
Imagine for a moment that you part an elite tribe that has developed a scrip with no underlying intrinsic value other than fear & persuasion. (Or, at least for appearances sake, the full faith & credit of a tax extraction system levied upon a captive slave-class nation.)
Now, with this confetti, you can hire the very best engineers from MIT, CalTech & other leading universities who will willingly work around the clock to develop the most fantastically powerful weapons just for you.
With these weapons (and the men who have been trained to operate & use at your behest also paid with ... you guessed it, the same scrip), you can actually control the world's most valuable resource ever known: oil. And with this oil, you can fuel an empire that utilizes a positive feed-back loop in which to control ... the oil.
Last, but not least, your confetti can be used to entice entire 3rd world countries to basically kill themselves via exhaustion, poisoning & dismemberment in the process of producing baubles & trinkets that keep your very own pet slave nation entertained & distracted.
Given these circumstances, what in the world would make you willingly even consider giving up this type of power? I mean, it's not even an issue - conceding even a micron of power is about as realistic as someone considering cutting off their own pecker.
Government thinking at its best? LOL It's all about retaining access to the best trim, booze & drugs. Again, if you want to thrive, think like the power-elite & shadow tail their moves.
B9K9 - always enjoy your posts. Thanks for your response.
Part of my point reflects my belief that the power-elite are over-playing their hand. Some of the parties are exiting the game. The more sustainable power-grab would have been to keep the market honest (or more so), even if it was at a lower level. Keep the sheeple engaged for longer.
But by over-playing their hand, they are tipping themselves. The term "Banksters" is fairly common on the blogosphere. No one likes the banks, record low approval ratings of Congress, etc.
They appear to be getting desperate. Like you said yesterday, a mistake will be made. I think playing too hard is one of those mistakes...
I'd say they are now over-playing their hand because they know that the old game is over, while a new one is beginning.
Even recognizing them as banksters is of little to no value, as long the sheeple believe in the sanctity of the ballot box, which the banksters have full control of.
This is what happens when the apathetic demand that others "Do something!" for them, instead of minding their own business and being a productive member of society.
"Democracy is the theory that the common people know what they want, and deserve to get it good and hard." -- H. L. Mencken
yeah, the invention of viagra comes to my mind. jeeze.
dip stick E D , was invented for profit and fear . taking over the mind set of america. can you just puck when you see the ad with the two claw style bath tubs with man and woman hands engaged, on the beach in front of the shore of water. well, i see it resembling the double twin beds of the 50's, for the husband and wife . they didn't sleep together. WTF, is this conditioning all about, anyway? they are in separate twin beds or tubs or lives or whatever.
Ah shucks, thats easy. You see, they are both in a quasi-horny state, waiting for the "time to be right". Now assuming the old geezer has popped a cialis earlier on, his boner is assured should they both check thier smartphones pda app and discover that they can screw.
cialis and viagra is a conspiracy to dumb down the males in america.
grocery stores, dumb down woman in america. orchestrated by media and big pharma of america.
BO_OM, done. everybody is just plain GOD damn dumb, DOGs.
Yes, but like any good scam you have to change the actors occasionally. Once a segment of the slaves worldwide understand that the scrip is worth the paper it's printed on, and is a game of "Biggest Sucker" you have to change it up. I'm not even saying change the scam but you have to change the face of it to full the common man.
I don't think it's any coincidence that America was fully hollowed out. If they wanted to use America into this century as it's muscle and military arm it would not have de-industrialized us, buried us in black hole level debt, and poisoned out culture. You always foul the supplies you must leave to the enemy. And it's not like the common masses worldwide will look at the schemers running the show they will see America, weak and decadent and place their blame there. And the scam will start up in a new base.
...well, that certainly summarizes things...but are the folks inside the Beltway actually smart enough to have come up with this? No, I'd suggest the goobernit is more of a puppet whose strings are pulled and whose act is scripted by several special interest groups....
yeah, b9k9, good advice to think like the power-elite and shadow-tail their moves. But who specifically did you have in mind as this elusive "power elite"? That's what I want to know. If you go high enough in any structure, syndicate, org'n, etc., at the top, there's just one decision maker. The man. Who's "the man", that's what I want to know.
i might know one of....... the "Don's"
Is it really a Market any more? When the FED controls it? Is it in effect become a Government Contoled Monopoly?
Lets face it the FED ownes AIG (worlds largest insurance company), FED ownes FRE, FNM, over all of the Mortgages written and owned, they also Guarantee all Mortgages thru the FHA, The FED ownes C (one of the worlds largest international Banks), the FED ownes GM (one of the US's largest car manufactures), the FED still has warrants in many of the other Banks. The FED has bought up most of the Mortgage Debt written for the last 2 years. The FED has extended itself into areas that it never should have gone. They should be making Monatary policy not Buying an ownig Companies in the Stock Exchange. I would not be suprised if the FED owned SPY Futures.
So, as I said what Market? Just another Government controled enity. It just gives the illusion of a Market.
....and who owns the Fed? Based on the primary beneficiary of the bailout, it would appear to be GS....just follow the money. I wonder what Timmy's position will be with them in a couple of years?
69
H/T to ya ms, on 911.
H/T to ya ms, on 911.
...they are using the market as a stalking horse...got get it up & keep it up so the serfs will think all is right with the world, at least until the fall elections. Since they are unable to fix the real economy this becomes a surrogate that can be pointed to as a sign that their program is working.
Personally I have nothing against Obama, it is just the creeps he chose to surround himself with that make me wonder just who is in control.
As Obama mentioned in his talk today, both Republicans and Democrats can both agree that infrastructure spending on highways and bridges is a good idea...meaning that elected officials of either stripe can then "bring home the bacon" for hometown projects, whether needed or not....both sides agree pork barrel legislation is good for re-election.
I got into a discussion with Mauldin once over his premise that the future would be hedge funds because amateurs simply couldn't cope with the speed. I asserted that capital would pack its bags (in part thinking that the hedgies weren't up to the task either.)
The antique world moves antiques from dealer to dealer. The system requires, however, a final retail buyer. Without that, it's just farmers selling a pig back and forth to each other.
+1
To add a little to the farming analogy...
Dead Donkey: A man bought a donkey from an old farmer for $100. The farmer agreed to deliver the donkey the next day.Come morning, the farmer drove up and said, "Sorry, but I've got some bad news. The donkey died."
"Well then, just give me my money back."
"Can't do that. I spent it already," replied the farmer.
"OK then, just unload the donkey."
"What're you gonna do with him?" asked the farmer.
"I'm gonna raffle him off."
"Ya can't raffle off a dead donkey!" exclaimed the farmer.
"Sure I can. Watch me. I just won't tell anyone he's dead."
A month later the farmer met up with the guy and asked about what happened with the dead donkey. "I raffled him off. I sold 500 tickets at $2 apiece and made a profit of $898."
"Didn't no one complain?" asked the farmer.
"Just the guy who won. So I gave him his $2 back."
+2
Painfully brilliant
This is simply a Royal Rumble.
In the ring we have: Skynet, Hal, The Fed, Algos, HFT, PPT, TPTB & the TBTF.
And the retail investor is happy to sit in the audience and watch the comedic mayhem unfold.
A criminal farce
that the criminals will crash at the very moment they want to
So it's all the surface of one big bubble. When will it pop? If the Eurozone comes apart, won't that drive the dollar up for awhile? Could we sell California to the Chinese?
When you see the bombs between the minarets.
Who said kaleefornia is worth anything?
(too soon?)
...they could not afford our upkeep....
She didn't look that good when she was a clerk on the AMEX...or at 2am at a bar with a straw up her nose...She's come a long way baby ha ha
I sometimes dream of being the last human investor in the stock market among a sea of algo trading bots. I can never conclude any trades or profit in this imaginary place, but, it’s such a power rush to be able to move the DOW 1000 points each time I place a limit order for a 100 share lot. Then I wake up and realize that, just like CNBC and Cramer keep telling us, you can realize your dreams in the markets.
Bears look like they might get stuffed is this thing keeps going.
Especially if China takes off next week...
And what if the SOX bottomed today?
I can see them trotting out Dan "The Greaseman" Niles to upgrade the chips on Monday.
Robo it's good to see VXX continue to fall but the volume has picked up the last 2 days.
Yeah China is absolutely booming....what with all the relocations to iron out their megahydro dreams....squashing old huts and building high rises...we are talking a never ending economic boom!
Not to mention all the smart factors -
China is self-sufficient in wheat-growing 115m tonnes of the grain last season-and Beijing considers food self-sufficiency a matter of national security. The country also holds more than one-third of the world’s wheat reserves, with some 63m tonnes of stock according the US department of agriculture.
“China’s wheat price, depending where you price it, is a little over US$9 a bushel, so a significant premium to the international markets,” said Brady Sidwell, China analyst at Rabobank “These high prices are necessary to maintain China’s grain self sufficiency.”
http://blogs.ft.com/beyond-brics/2010/08/13/self-sufficient-china-watche...
Now if it wasn't for that pesky lack of freedom control factor....and the fact that a manufactured economy is just that....it would be worth relocation consideration!
Always comes down to force - who's going to win the war? Bankers vs. the people.
Foxconn unvealed...
http://www.businessweek.com/print/magazine/content/10_38/b4195058423479.htm
Here's some pictures of the nets surrounding the factory to catch suicidal employees....
http://images.businessweek.com/ss/10/09/0909_foxconn/10.htm
Looks like the market was grinding up all day, yet the bears kept piling on puts.
Seems like everyone is betting on some big crash coming up.
I doubt many of these puts will survive Options Expiration Racketeering Week..
LOL...
Time Calls Puts Total Calls Puts Total Calls Puts Total Calls Puts Total Ratio 9:00 AM 112942 81971 194913 58941 71768 130709 0 0 0 171883 153739 325622 0.89 9:30 AM 206755 135152 341907 108824 135561 244385 0 0 0 315579 270713 586292 0.86 10:00 AM 285012 181456 466468 172391 221302 393693 0 0 0 457403 402758 860161 0.88 10:30 AM 357456 216190 573646 266772 318652 585424 9 0 9 624237 534842 1159079 0.86 11:00 AM 410738 260241 670979 321556 426973 748529 9 0 9 732303 687214 1419517 0.94 11:30 AM 455418 296658 752076 362944 474289 837233 9 0 9 818371 770947 1589318 0.94 12:00 PM 496356 337339 833695 390269 669747 1060016 9 0 9 886634 1007086 1893720 1.14 12:30 PM 551156 392204 943360 419443 729317 1148760 9 0 9 970608 1121521 2092129 1.16 1:00 PM 595364 420367 1015731 458240 827898 1286138 9 0 9 1053613 1248265 2301878 1.18 1:30 PM 632336 449596 1081932 483680 946792 1430472 9 0 9 1116025 1396388 2512413 1.25 2:00 PM 687493 488026 1175519 552462 1056162 1608624 9 0 9 1239964 1544188 2784152 1.25 2:30 PM 748204 523397 1271601 585579 1105675 1691254 9 0 9 1333792 1629072 2962864 1.22 3:00 PM 831875 588026 1419901 631685 1268094 1899779 9 0 9 1463569 1856120 3319689 1.27That was me buying put spreads on the SPY. Cheap vols. Welcome to the weekends of liquidity crisis type news. And some eco numbers coming out next week to actually move the market. 2-3% down week is my bet...
Good day for yoga stuff from Lululemon and dinner at Applebee's...
Nic Lenoir must be aghast, pulling his hair out.
ROw BOat are you still buying your GF her yoga shit from Lululemon?
No, she actually found some similar yoga outfits at the Nike and Reebok outlet stores last time we went to Vegas.
About 20% of the price of the overpriced crap at LULU.
Don't know who is buying that stuff, other than stupid guys like me who thought that was the only place to buy yoga outfits for their girlfriends.
LOL...
As I understand it, this week has seen big institutional money going back into equities in London, following the return from the summer break. It seems to be buying beta, sectors like Auto and Luxury Goods have been getting bid up again. It doesn't feel like short covering, as a lot of hedgies have reduced gross and net exposure. It certainly isn't retail. Are the institutions now the fool in the market, or are they no longer going to miss out on relative performance into the end of the year, having been topped and tailed since April ?
Never underestimate the desperation of a PM trying to get relative performance back before end of year comp talks. The pain trade, for virtually everyone, remains up. I know, I hate it too...
Yeah, feels that way.
Seems like a lot of beaten down, left for dead stocks are starting to move up, like RIG, DO, etc.
No doubt, some desperate guys trying to "make their year" by buying some junked out names.
On top of that, all that hot money which was chasing bonds is now rotating back into dividend stocks. A good example is MRK, which took off today, pays over 4% yield.
Hey RobotTrader did you get married or sumpthin?
i think he lives with his mother, in a van down by the river.
in a van, down by the river
roger†
If this bullshit doesn't end soon, I'm gonna have to go back to driving the limo on weekends.
Oh I'm pretty sure there was a big portion of short-covering in this week's rally.
Was that sound an eartquake or reality hitting the markets 125.8693421564 on the richter scale.
A question for Tyler Durden
I hate to be a buzz-kill but, who is John Lohman? Why should I give a Frack? References or citations appreciated.
"Fracking debate heats up in New York"
5:56pm: CNN
http://money.cnn.com/
It's just an empirical observation of data. Does it matter?
kinda in my I .
Been looking fore the symbol for 'Rat's Ass'.
Apparently, there ain't one.
But you can find a rat in this, if you dig enough, like 2 Googles.
http://www.fdic.gov/news/news/press/2010/pr10204.html
Is Cohen enough to set off those non-Dims?
And don't even start with that Brink-dude with loser racehorses...
gee, so glad I pay taxes for this shit.
OT
China's UN diplomat in drunken rant against Americans
http://www.telegraph.co.uk/news/worldnews/asia/china/7991414/Chinas-UN-diplomat-in-drunken-rant-against-Americans.html