In 1987, Aviva France started offering The Fixed Price Arbitrage Life Insurance Contract for wealthy clients. The Financial Times called it "the worst contract in the world". It allows the contract holder to invest with hindsight. Did you see a stock go up this week? Now you can buy it at last week's price. Did your stock plummet? Sell it at last week's price. It is the ultimate form of insider trading: time travel.
A wicked web of deceit, with just a good measure of theft and forgery thrown in for old time’s sake!
There is a much larger structural risk for markets and investors than HFT and the whole Flash Boys brouhaha, it’s just totally under the radar and hasn’t surfaced yet. Investors may not know better yet, but they will soon, one way or another. Tomorrow a handful of governments will influence aggregate political behaviors by triggering small communications that Big Data tells them will be voluntarily magnified by individual citizens, snowballing into outsized, long-lasting, and untraceable “popular” actions. Tomorrow a handful of hedge funds will influence aggregate market behaviors by triggering small trades that Big Data tells them will be voluntarily magnified by individual traders, snowballing into outsized, long-lasting, and untraceable “market” actions. Tomorrow Big Data will be primarily an instrument of social control, with a powerful and ubiquitous impact on all citizens and all investors.
- As reported here first: The U.S. Has Too Much Oil and Nowhere to Put It (BBG)
- Dollar Drops From 12-Year High as S&P Futures, Bonds Gain (BBG); Dollar Bulls Retreat From 12-Year High to Euro With Fed in View (BBG)
- Clinton Private Email Plan Drew Concerns Early On (WSJ)
- ECB Bond Buying Not Needed With Economy Improving, Weidmann Says (BBG)
- China Feb new yuan loans well above forecast (Reuters)
- U.S. probing report Secret Service agents drove car into White House barrier (Reuters)
- Kerry tells Republicans: you cannot modify Iran-U.S. nuclear deal (Reuters)
- PBOC Pledges to Press on With Rate Liberalization Amid Slowdown (BBG)
- China Prepares Mergers for Big State-Owned Enterprises (WSJ)
It’s not that long ago, in 2001, that Jim O’Neill, then still with Goldman Sachs, coined the term BRICs, for the fast emerging markets of Brazil, Russia, India and China. O’Neill saw a global power shift from the west to these four nations happening. Fast forward to today, and we see Russia under multiple attacks, including economic ones, from the west, as India just announced the second rate cut this year and China is attempting controlled demolition of the possibly biggest financial bubble in the history of the world. And Brazil? If anything, it’s falling even faster off its pedestal than the other three nations.
- Central Banks With Negative Rates Spur Question of How Low to Go (BBG)
- DHS to keep running: Congress edges toward domestic security funding patch (Reuters)
- Setbacks for Tsipras Stir Discord in Greek Ruling Party (BBG)
- Greece’s Challenge: Appeasing Its Creditors and Its Population (WSJ)
- Buffett, a cheerleader for America, takes his checkbook abroad (Reuters)
- Oil’s Big Swings Are the New Normal: Market has rarely been more volatile (WSJ)
- Ukraine Left Behind as Russian Stock Gains Are Unmatched (BBG)
- Brent rises to $61, set for first monthly gain since July (Reuters)
- Greece Should Not Give In to Germany’s Bullying (FP)
- Greece Can Pay Its Debts in Full, but It Won’t (WSJ)
- Early Friday humor: Euro Region Economy Strengthens Amid Wrangling on Greece (BBG)
- Euro zone may need extra summit to clinch Greek deal (Reuters)
- Oil-Drop Pain Spreads to Saudi Arabia’s Energy Behemoth (WSJ)
- Yellen Confronts Economists’ Ignorance (BBG) - where does one even start with this one
- ECB Plans to Push Greek Banks to Shed State Debt If Talks Fail (BBG)
- RadioShack files for bankruptcy; Sprint to take over some stores (Reuters)
- Kansas To Issue Bonds and Invest Proceeds to Boost Pension Returns (WSJ)
- Merkel to Make Last Push With Putin as Pessimism Prevails (BBG)
- Islamic State in Syria seen under strain but far from collapse (Reuters)
- Texas Swagger Fades Fast as Oil Town Squeezed Hard by OPEC (BBG)
- SEC probes Blackberry options trading ahead of Reuters report about Samsung talks (Reuters)
- Spanish Bonds Underperform Italy’s as Podemos Gains Popularity (BBG)
- Steelworkers Union Rejects Offer From Refiners (WSJ)
- Brazil January Inflation at Fastest Pace in Nearly 12 Years (BBG)
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- Falling Prices Spread Pain Far Across The Oil Patch (WSJ)
- ISIS Group Claims Responsibility for Attacks That Killed 27 in Egypt (NBC)
- Russia Unexpectedly Cuts Key Rate as Economy Eclipses Ruble (BBG)
- Greece’s Feisty Finance Minister Tries a More Moderate Message (NYT)
- U.S. homeownership hits 20-year low, but new households growing (Reuters)
- Indian Banks’ Shares Plunge as Bad-Loan Provisions Surge (BBG)
- Underground Terror Network Said to Benefit Would-Be Jihadists in Europe (WSJ)
- Russia warns West support for Kiev could lead to 'catastrophe' (Reuters)
- Alexis Tsipras: the Syriza leader about to take charge in Greece (Guardian)
- Tsipras to form anti-bailout Greek government after big victory (Reuters)
- Tsipras Forges Anti-Austerity Coalition in EU Challenge (BBG)
- East Coast braces, flights canceled as 'historic' blizzard bears down (Reuters)
- Rebels press Ukraine offensive, Obama promises steps against Russian-backed 'aggression (Reuters)
- Syriza Victory Brings Hope for Immigrants of EU Access (BBG)
- For Saudis, Falling Demand for Oil Is the Biggest Concern (BBG)
- Oil prices fall on market relief over Saudi policy (Reuters)
Day after day, mainstream media proclaimed December the month to be in stocks: seasonals, Santa Claus rally, and performance-chasing funds would 'guarantee' upside. For Owen Li, former Raj Rajaratnam's Galleon Group trader, and the clients of his Canarsie Capital hedge fund, December 2014 will never be forgotten. According to CNBC, from around $100 million in AUM in March 2014, Li told investors in a letter, the fund had lost all but $200,000 and he was "truly sorry," for "acting overzealously" in the last 3 weeks.
- Obama to focus on middle class in State of Union address (Reuters) - all 4 of them?
- European Stocks Buoyed by ECB Hopes (WSJ)
- China's 2014 economic growth misses target, hits 24-year low (Reuters)
- Federer on Swiss Franc Shock: "Does It Mean I've Got to Win Now?" (BBG)
- First-time buyers help Christie’s reach record sales (FT)
- So it was the NSA? U.S. Spies Tapped North Korean Computers Prior to Sony Hack (BBG)
- Why Chinese Developer Kaisa's Default Risk Has Money Managers Spooked (BBG)
- Morgan Stanley Misses Estimates on Drop in Bond-Trading Revenue (BBG)
- Earnings Pessimism Jumps as Oil Threatens S&P 500 Growth (BBG)
- It’s Amateur Hour in the Booming Chinese Stock Market (BBG)
- France mobilizes 10,000 troops at home after Paris shootings (Reuters)
- European Stocks Gain With S&P 500 Futures While Oil Drops (BBG)
- Nasdaq Looks to Operate Dark Pools for Banks (WSJ)
- This Guy Called Bonds in ’14. You Listening This Time? (BBG)
- Paris attacks boost support for Dutch anti-Islam populist Wilders (Reuters)
- OPEC price war in Asia intensifies as oil falls below $50 (Reuters)