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Market Neutral Deleveraging Pain Acute Again
On May 3 we noted that the HSKAX has posted a massive drop and that this was indicative of substantial deleveraging within the market neutral population, noting that "Market Neutral players are getting carted out feet first as liquidity
is now totally gone and 100k SPY blocks move the market. M/Ns are deleveraging massively as the index hits lows not seen
since mid-2008." Some took this observation very personally and said this is indicative of nothing. Three days later the Dow dropped 1,000 points. It is time to point out the HSKAX chart once again, which has just dropped to a fresh two year low. The traditional liquidity provider deleveraging continues, and only the 2 man crews with 2 i920 CPUs are left to add limit orders. Until, of course, they decide to not do that anymore, just like they did a month ago.
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Goldman sold BP stock before spill
http://rawstory.com/rs/2010/0602/month-oil-spill-goldman-sachs-sold-250-million-bp-stock/
Now that is some impressive front running. Computers now so fast, they see into the future.
+2012 for the hopeful future date GS is seized.
haha. Best comment of the day.
No need to see into the future...
From: http://www.chron.com/disp/story.mpl/business/deepwaterhorizon/7028728.html
"The documents show that in March, after several weeks of problems on the rig, BP was struggling with a loss of “well control.” And as far back as 11 months ago, the company was concerned about the well casing and the blowout preventer."
but they said "WTF" and went for it anyway. These are competent risk assessors?
I'm guessing they decided to make a quick buck by shorting their own stock and then forcing a disaster.
Whoops, I'm being paranoid again, aren't I?
Ominous
Just like on May 3, HSKAX is still not an index nor is it replicating one. It is simply one (1) single market neutral mutual fund out of dozens.
http://www.zerohedge.com/article/market-neutral-wipe-out-likely-next-bail-out-bandwagon-liquidity-disappears-again#comment-329020
+100
+100+100
That's the real problem with Zero Hedge. :>) Your comments are saved and easily accessed. So you can't hide from yourself. I always remind myself that I'd better be consistent. Or at least logical, otherwise someone might just throw my own words in my face.
Otherwise it's "Ouch, that's gonna leave a scar."
+1 TD
There are 'black' readers out there set to put ZH to doubt
do you realize how ridiculous your comment is? the above poster highlighted a valid point, that this is a single PUBLIC mutual fund, and cannot be safely assumed to represent market-neutral hedge funds in any way shape or form, or broader trends in deleveraging. Thats like saying, a healthcare mutual fund having a -5% return is indicative of "massive deleveraging" in the healthcare space. Its plain foolhardy.
Dude, he did it so you did not have to scroll down. He put cherry on top.
A lot of the market neutral funds and perhaps this one though i don't know, work off 'value' propositions. From this standpoint energy was the great value play coming into this year as it was the biggest laggard coming out of the 09 lows. So now you have a bundle of funds long the energy markets and the liquidity tightening in EM comes in and puts a wrench into the hypothesis. All the discretionary guys see this and hit the road. The pure quant plays still don't see it but they have some stop mechanism that kicks in anyway. Then BP happens and all hell breaks loose and there is no one to sell this stuff to until you get the buffett type value players that always have cash and wait for serious dislocation to make a lowball bid.
The flip side to this is airlines. Balance sheets suck. Profitability sucks (up until very very recently) and the stocks are going vertical (LCC my fav !!!)
Hell of a game going on here. More thematic down is going to require a complete wipeout of the oil patch. Does not seem like a high probability bet.
I run a market neutral quant strategy but it is fairly short term, is purely about market structure, flows, and generally likes vol. May was the best month we had since Mar 2009.
Speaking of interesting charts, TD, did you see this?
http://stockcharts.com/h-sc/ui?s=$SPXA200R&p=D&st=2008-03-01&en=(today)&id=p22925654631&a=192583580
Cannot remember where I picked it up, now.
Thanks for the new lead.
Whether this means anything or not, baby... the real question is why funds like this exist. Mr. Dick has never made any real money for anyone over 5 years, while extracting a cool 2% = $60 million/year. And the Industry positively gouges with a 5.25% front load velvet stiletto.
This is an example of a "skimming operation". That is, in fact, the Business Model. There is no pretense of making money. And the only people that don't know it's a scam are the "Customers". There may be a scale problem, but they chose the scale. This form of "business as usual" takes a far greater toll on society than Goldman, baby, but lets pretend they are the Good Guys.
And I'm speaking as an owner of a trading firm that posts real profits year after year since 1994. I have nothing but contempt for "skimming rackets" posing as mutual funds or hedge funds.
Mid day slump/dump that leads to mini flash crashes. Move along!
Only 1:40 left in the day. Crude is back to unch and the Dow is only up 80.
Wouldn't it be interesting if, for the third day in a row, the market were to shitcan after 3:00? Especially interesting given the reversal it would imply for today...
I'd be surprised if the market doesn't creep down til close. For the life of me, I don't know what's holding this wretched boat up.
It's called the Federal Reserve Bank.
If one of those 2 guys their mom calls in telling him to come home early, the market is screwed...
From the 5/3 post, this is kinda fun:
by HarryWanger
on Mon, 05/03/2010 - 08:59
#329000
Been long for several months. I am "betting the farm" on the strength of the numbers and following the momentum. Pretty simple if you just step back and look at it.
And here's another, from later in the day:
by HarryWanger
on Mon, 05/03/2010 - 11:27
#329190
Back over 1200 just like that. I believe we now have confirmation that this market will continue to power higher after hanging around 1200 so long. The next leg up is confirmed by today's action on a technical level.
good for a laugh! Now Harry is short, so, you know, its all good!
Funny (not ha, ha funny) thing is, at that time when I stepped back to look at it, I saw despair, bankruptcies, friends' businesses going under, entire work crews paid via IOU's, non-existent business credit, and dismal sales.
These government produced "numbers" are an illusion.
Market Neutral Deleveraging Pain Acute Again
Ya it hurts so good.
"2 i920 CPUs"
Not even the i7-980 gulftowns are needed to do this algo math... depressing.
Ah, I see the jackals are at work again. If the Greek people knew what was good for them they would evict the IMF from their country, and hang anyone left from that wretched institution left on their soil past the eviction date.
Greece to Sell Stakes in Railwayj, Water Companies to Reduce Budget Deficit
per Bloomie
Greece plans to sell stakes in railway and water companies and the postal service to raise 3 billion euros ($3.7 billion) and help reduce a budget deficit that sparked the debt crisis across southern Europe. “We decided to accelerate the privatizations process,” Greek Finance Minister George Papaconstantinou told reporters in Athens today.
funny before the crisis I belive TD and others ran articles suggesting the Russians and the Chinese had offered to purchase some of these assets and assuage the liquidity concerns immediatly.
After reading many of your posts, I just wanted to let you know that you are not alone - I, too (among others), share your pain.............
This is what the IMF is all about, raping and pillaging the countries they move into. These are assets that belong to all Greek people but will be sold at a great discount to French and German banks so that the money can go towards bailing out the very same French and German banks as well as rich Greeks. What a scam. Papandreou and every other Greek politician should be executed for treason and crimes against the Greek people. That day is coming sooner than you think.
Your line of reasoning is what has caused Greece to reach the point of default. It is the union controlled government owned comapnies who have been pillaging and raping the population for years. No work product and poor service for high pay and benefits negotiated with politicians who believe they are in control. The day of reckoning for that system is now. You may have an opportunity to buy into the IPO if you believe it is such a good deal. I would not take the chance. Anyone putting money into these now will only get screwed when they are forced to continue the subsidies these operations require to pay the workers for their low quality output.
Read that article again. Jackals don't buy crown corporations that lose money unless they have purchase a controlling interest. A portion of these Greek assets are being sold but the control remains with the government and the unions.
Ask those Greek bond holders to stepped up early and took one for the team, er I mean ream...
Why on Heaven should someone want to own a minority chunk of Greece's railways and post offices?
Do they think there is no bettter use of capital than chucking it down a sinkhole?
And they now training for a "sell low buy back high" sort of exercise??
Go figure....
This just in from Seeking Alpha:
"...2:15 PM Stocks need to rise in a hurry, Concept Capital says, noting that just 8.6% of all S&P 500 stocks currently reside above their 50-day moving average - well below the 20% level at which a bull market is called into question. The current streak below 20% stands at 8 days - just three days short of the longest ever streak for a bull market."
"Need" to rise"?! Cause why? Nervous are we?! To quote a now classic: "I recommend you start to panic" Hehehe, it just never gets old!
and now this!
Obama says the Gulf oil spill should send an urgent signal to Congress to complete work on energy legislation encouraging investment in clean energy fuels, rolling back “billions of dollars in tax breaks” for oil companies and launching a cap-and-trade system that would place a ceiling on carbon emissions.
never let a crisis go to waste
Oil companies are taxed like every other large corporation. Obama does not like it that they are able to deduct wage costs I suppose. I'd like to know exactly what tax breaks everyone seems to believe are special for the large oil companies.
Seeking Alpha is for nothing but smiley-faced, 200% long buffoons.
Figure is now 14.6% according to finviz.
73 issues from sp500
http://finviz.com/screener.ashx?v=111&f=idx_sp500,ta_sma50_pa
32 of which crossed today.
http://finviz.com/screener.ashx?v=111&f=idx_sp500,ta_sma50_pc&ft=3
You got to be a bit crazy to think this is a strong market
Hehehe, had forgotten that one!!!
A+
Go stockbots GO!!
'Stocks need to rise in a hurry'...I love how the D- journalism students who found employment in the financial media sector give stocks and markets 'animal spirits' animation. They say if stocks are down theyre 'fighting their way back', 'stocks trade 'mixed', while shrugging off news', whatever the hell that means...all hillarious to me.
"Ramp job!" Summers screamed as he walked into Centcomm. "I want ramp jobs!" Timmah Geithner ran over to him to offer some coffee. "I don't drink coffee Tim, just Coke. Get me a damn Coke." He stopped in the middle of the floor. "I want ramp jobs in all sectors. I want ramp jobs coming out my ears." Timmah ran up to him with a Coke and a phone. "Bennie is on the line, he is wondering if now is the right time for a ramp job." "Give me the phone. Hello? BS, of course now is the right time to do a ramp job. We need full uptick now! My rationale? Because we are sinking! We have to get the hell out of this slump." He handed the phone back to Timmah.
Timmah put the phone back to his ear. "I know Bennie, I know that we wanted to wait until the Hollywood Futures cleared the first Congressional meeting, but Lawrench is on the war path. Ok good bye." By now Summers was screaming at the receptionist on the other side of the room. "I come in hereonly once a month and you can not have one cold coke waiting for me? Do you know who I am?!" The woman ran off crying. Summers turned to the approaching Timmah. "Timmah I want ramp jobs and by god I will get them! I also want a COLD Coke, so go get me one. I'll be waiting right here." Geithner hurried to the vending machine that was outside Barry's Oval office, before he got out the door he heard Larry shout, "More ramp jobs people, more ramp jobs! Give me what you got!"
So I take it tomorrow we test the 200DMA again, before a sharp precipitous drop?
Exactly the way I intend to play it.
TIMMAAAAAAAYY!!!
right on!
And the regulator keeps piling on the restrictions on trading so that none of the market makers can make a tight market. The whole idea of loading on so many trading restrictions that you need market makers who are exempt to re-inject liquidity is ludicrous.
What's the point of then taking away exemptions from market makers to suck liquidity back out? The stupidity of regulators is astounding - until you consider that the regulator is really a political body.
In the end, liquidity becomes much more risky (read: expensive) to provide and custormers will have to pay for it and pay for it dearly. Regulatory costs are always paid by the customers - in every industry.
Back on March 3, 2009 Obama shocked the Media by sounding like a stock analyst. If you google words like [ obama buy stocks ] you'll get to see and read those Headlines.
I think he just slipped, got caught off guard, and let the cat out of the bag. It was an off the wall question. Anyhow, he may have done so again with NatGas today and maybe this time with intent.
Benji giving his spin on the Aid ship raid thingy:
http://www.youtube.com/watch?v=rGx3HkZ9Fp8&playnext_from=TL&videos=TgS074v-G8k&feature=sub
Is something looking bullish ?
http://stockmarket618.wordpress.com
http://www.zerohedge.com/forum/latest-market-outlook-1
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PHONY RESERVE PRIVATE BANKS
What a difference a day (or two) makes!