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Humiliation: Bank Of America Plunges From Trading Perfection To Just 81% Profitable Trading Days
In an advance look at how the Q2 trading season turned out for Bank Holding Hedge Funds, some of which even accept your deposits to fund their 100x leveraged steepener trades, we have the first detailed 10-Q report out of Bank of America. Granted, the bank has a bunch of chimps running its trading operation and is thus not nearly indicative of the crack prop trading gurus at firms like Goldman and MS, due to not quite streamlining the whole prop-flow synergy bit while it had time (incidentally BofA is now looking for a seller for its prop operation) but the Fed and the government (or the Goved JV as it is known by those who suckle on its discount window teat) have made it so even a room full of chimps with Bloomberg terminals will pretty much generate trading perfection no matter what they do. So it comes as a shock that in the quarter following BofA's trading perfection days (which would be completely normal from a statistical point of view in a hyperbolic Universe, where superstrings don't need 10 dimensions, and where particle physicists are actually not superfluous), the bank has reported just 81% profitable trading days. Even scarier, the bank actually reported a day in which it lost $102 million, an event that has not occurred in over 60 days.
Here is how the bank explains it:
During the three months ended June 30, 2010, positive trading-related revenue was recorded for 81 percent of the trading days of which 59 percent were daily trading gains of over $25 million, eight percent of the trading days had losses greater than $25 million and the largest loss was $102 million. This compares to the three months ended March 31, 2010, where positive trading-related revenue was recorded for 100 percent of the trading days of which 95 percent were daily trading gains of over $25 million. The decrease in daily trading gains of over $25 million during the three months ended June 30, 2010 compared to the three months ended March 31, 2010 was driven by less favorable market conditions.
So reality, an HFT-sponsored market collapse, a massive curve flattening, and the Fed's less than constant market intervention now has a name: "less favorable market conditions." We'll be sure to remember that for the quarter in which it reports first 19% winning trading days, then zero.
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..... still sitting here waiting for that collapse to happen ... ... i got my gun, got my foodstuffs, got my gold, got my dog ......... got NO CONFIDENCE !
All you people hoping for a collapse are going to be in for a rude awakening. Having lived on the gulf coast all my life, I've been through several hurricanes. It's all fun and games for a day or two, then you're begging for electricity to be restored, so your life can get back to normal.
Good luck with your fantasies and dreams of grandeur. You'll need them to combat the boredom.
You make a good point, and while I can't speak for anyone else, I don't pray for a collapse but simply a free market which is allowed to collapse when it should rather than endless manipulation and propping by our government.
You cannot rebuild until the collapse has happened and we do evermore damage to our country in the meantime.
There is nothing natural about today's economy, failure is rewarded, let the weak die and the strong move into their places or be replaced by new and better upstarts. Until then nothing will get better. Temporarily maybe it will appear better as it does now, but only in a matter where the end result of failure is guaranteed to happen but delayed by policy which will only make the final result worse.
+1^10
1^10 = 1
10^10
I've been through a blizzard or two in NE-you betcha for a while, then, well ... - Ned
I will wholeheartedly agree with you, in that there are very few people who can fully appreciate what it would be like to actually suffer the loss of basic social services, especially the utilities that we rather subconsciously take for granted. The funny part is that it would be less about losing those particular services than it would be about the far-reaching implications in the form of the multitude of things that would have to be relearned...when anarchy rules, and the water doesn't run from the tap anymore, then what? I doubt that many of the popular pro-collapse crowd has any appreciation for what it will take to break away from such a pervasive teat. However...don't knock it for being a less than genuine sentiment, especially when the nightmare of such ridiculous manipulation has been made real by these shysters. If and when it comes, I doubt that it'll be anything less than agony, but that will be far less suffering in the long run than watching generation after generation succumb to nothing else than legalized slavery, with the nifty addendum that the slaves must make for themselves within a system that guarantees that they can never win, ever. Maybe real freedom is worth a pound of that flesh, since nothing worth having ever came easily.
"less favorable market conditions." (read - less carbon based life forms.)
Algos v. algos from here on out?
(which would be completely normal from a statistical point of view in a hyperbolic Universe, where superstrings don't need 10 dimensions, and where particle physicists are actually not superfluous)
absolutely priceless.
Please forgive the off-topic nature of this submission, but... last week One Of Us (I can't remember who) was suggesting a sort of fraternal (no offence, Lizzie, Ms Creant, Lynnybee et. al.) bumper-sticker to kind of ID Zero-ers. To Each Other...
Also, there is another One Of Us who goes by the brilliant screen name of FXRXEXEXDXOXM.
So I made a bumper sticker. For me. To identify myself as an avid ZH-er. But it's sort of like inventing the first telephone in the world: who can you call?
The sticker is yellow on black. The top line says FXRXEXEXDXOXM and the bottom line says Be Careful. Then there's a little Zero Hedge logo off to the right. (O.K. Tyler?)
Maybe should we make these? Y'think? Feedback?
ALSO: is it me, or are the captcha questions getting easier?
Please don't junk me for this... I humbly beg of you...
It was the Village Idiot.
I have heard no final decision but John King submitted that the logo be two zeros, which appear as ever-watching eyes. I took the liberty of giving the symbol and movement a name: the Double-ought Patriots (or just double-oughts...). I also recommended that the symbol be grafittied everywhere there is a flat, upright surface. That way, the elitists know we are on to their schemes. As the double-oughts get more and more ubiquitous, I would foresee many overseas flights of entire families. It could get very interesting.
Zero to Zero, as in five to one and one in five, no one here gets out alive.
They got the guns, we got the numbers...*
Perhaps you can license the website name "doubleought.com" or something like that. You can sell your bumper stickers from there. That is basically how Alex Joes got started. Design your shirts, stickers, buttons, pins, etc. and sell them on the site, all the while proposing freedom for all in truth, justice and the American Way. It sounds so corny but if you think about it, that is the one thing that may save us all and put these sheisters in prison before they can skip out.
:)
Olexsandra
* Thanks to Jim Morrison and The Doors (especially to Robbie Kreiger- the single-most underrated guitarist of all time...)
The thing about "ought" is Americans don't use it to refer to zero. So ironically "ought" would be percieved as elitist, kind of like saying shedule instead of schedule, that type of thing.
I like the two zero's 0-0 looking at you, that's cool.
You should tell that to my "double-ought" six, then...
Kinda the whole point of using the word. That way, when the mental connection is made, the two eyes may morph into the business end of a shotgun.
:D
Village not an ... there you go starting another firestorm. Russia, well, they need some peace. Wheat crops are important.
Really ...
- Ned
If you can be any more moronic, please let me know...
I'll wait.
I would rock a ZH bumper sticker definetely! Come up with something I'm anxious and yes, do it just for me.
and now, ... how to get it to you?
When a financial institution is declared TBTF, the RICO statute is automatically waived. A 100% win rate is therefore a product of chance, perfect timing and good judgement.
Their HFT/Algo machine was down for maintenance.
Shee-it. If I could only make money 81% of the time, I would have to slit my wrists in shame. After all, Golden Slacks does it 99 to 100. BAC must hire the reject mutants.
I think you mean BAC must pay for rejected bots.... never leave a human to do a machine's job. (ask Rainman :) )
true dat ;-)
When the reality of the invalidity of mark-to-regular-amortization sets in, they might want to do a name change to Bank of Nothing.
Sounds like they're no longer on the front runner's A-List...
Well, they were gonna give up their prop desk anyway - new rules and stuff....
BoA should be more like Goldman and dupe more of their clients into taking the opposite side of their trades.
Probably the most wonderful aspect of this is that we've finally reached the point at which the system is cannibalizing itself. That's the poetic irony of it all...Timmah, Helicopter Ben, Hank "Mr. Clean" Paulson, and Yoda Greenspan are just the most recent faces that we can attach to a long list of people who have conscientiously manipulated, complicated and essentially raped the idea of a free market for the gain of themselves and their butt-buddies, but...they're still just more hairless monkeys like the rest of us, no matter how sociopathically intelligent or well-connected. I'm going to thoroughly enjoy watching them all fudge numbers and trade paper, even when such things have ceased to have any bearing whatsoever (and we're not far off, so far as I can see) while the rest of us get back to pooling resources and capabilities in local communities in order to get on with living our lives.
"The lunatics are in my hall
The paper holds their folded faces to the floor
And every day the paper boy brings more
And if the dam breaks open many years too soon
And if there is no room upon the hill
And if your head explodes with dark forbodings too
I'll see you on the dark side of the moon"
Well, at least Benny and the Boys can rest assured that they still have a promising future as the cast of a remake of "One Flew Over the Cuckoo's Nest."
Look, I know its Friday and its been a long summer, and I don't mean to be picky, but if BOA is looking for a seller for its prop operation I am amazed that they made money 81% of the time.
Let's make this simple....
Outlook large banks....
1) Debt destruction = losses
Only accounting tricks via the government ok....and funny money from the government has kept the tbtf alive....
Debt destruction will trump all government moves....
..............................
2) The brokerage and asset fee business....
With yields at 0%....who is going to pay some negative rate to get sub indexing type of performance ?
Today...a private trader can trade for 20 cents per hundred shares....Merrill just announced $4.95....When the analyst information is not valuable...and basic information is free....why would anybody do business with a retail broker of any sort....or even a $5.95 to $9.95 discount retail house ?
.......................................................
And as volume of both stocks and fixed income drops as well....where is the lube for the dead business model...?
............................................................
The future ?
Defragmented direct access BATS style model with 2 billion RETAIL accounts worldwide pressing their own computer buttons on their own computers....
Why pay any firm when one can do it better and cheaper themselves ?
ETFs and hedge funds will command what's left....
And of course do not forget about the near term future of relentless deflation which will subtract substantially from current levels .....
Why use a broker or money manager? Because they have real fulltime jobs (or at least some still do) and they don't have the time, expertise, or the inclination to do it for themselves.
Full disclosure - I'm an RIA. The part where we have agreement is that most of the sellside analyst stuff is crap on both eqities and fixed income. And yes, many/most 'advisors' are closet indexers and static portfolio hounds at the end of the day. If someone doesn't have fiduciary responsibilty and they are putting you in 'model' find another advisor.
Cutting trades to $4.95 just encourages more volume for their algos/HFT franchises so people who play that game usually use. Think of the all the day trading shops that setup in the late 90s - how many of them are still around? None, because their business model was to get you to come thru the door with atleast $50k in an account, they would let you burn thru it, and then give your 'seat' to the next guy a few months later.
You see, 'trading', outside of HFT and Principal/prop desks, is fot the vast majority a losing proposition. I was a bond trader at a middle tier firm in the 90s. when I moved off the desk and into strategy we cut most of the prop trading on the desk out and focused on principal trading because even at a firm our size we were at a distinct disadvantage to the big guys.
2 billion retail traders isn't panacea in your environment for the 'individual', it is a home run for the beast. You will be feeding the algos and HFTs a nearly unlimited supply of little trades to feed off of and manipulate stocks higher (or lower, or wahtever they need it to do). The 'new hedge funds', formerly the BD and Bank trading desks (previously the old hedge funds), will eat that flow and the big guys will get ever richer and your 2 billion individual investors will eventually burn out.