The majority of global growth in the next decade will instead be generated by "frontier markets". in fact, over the past five years, 43 of the 47 highest-growth economies have come from the frontier.
We believe Fed’s actions would be more appropriately described as permitted cancerous beliefs to spread throughout the financial system, thereby killing Democratic Capitalism which is the basis of the capital markets.
In what the firm believes will be an improvement over other so-called dark pools because it will be a collaboration among big mutual-fund firms, WSJ reports that the giant fund manager is quietly building a new trading venue designed to let big money managers sidestep many of the problems that they argue lead to unfair or costly trading - i.e. avoid the HFT predation. Fidelity, with $1.95 trillion of assets under management, is in the initial stages of planning the trading venue and has just begun to pitch the idea to other large asset managers. It seems 5 years of vociferous exposure and a Michael Lewis book may be beginning to starve the HFTs of their prey.
"Fear Of Missing Out" - that is the only way one can explain the irrational idiocy with which asset "managers" are scrambling to allocate other people's money into today's "historic" Greek (where unemployment just printed at 26.7%) return to the bond market, and which according to Greek PM Venizelos was eight times oversubscribed, or far more demand than for the Facebook IPO. Ironically, while we joked earlier this week, when the Greek 5Y was trading in the 6% range that the new bond would issue at 3%, we were not too far off on the final terms which were largely expected in the mid-5% range. Instead, Greece shocked everyone when it announced that the avalanche of lemmings had made it possible for Greece to issue debt at a sub-5% yield, and a 4.75% cash coupon! Here is the final term sheet.
I contend that Lewis should have done a lot more to identify the parties involved and tell the full story of latency arbitrage in Sigma X.
Echoing Charlie Munger, Oaktree's Howard Marks warns today's institutional and retail investors that "everything that’s important in investing is counterintuitive, and everything that’s obvious is wrong." These words seem critically important at a time when the world and his pet rabbit is a self-proclaimed stock-picking export. Be "uncomfortably idiosyncratic," Marks advises, noting thaty most great investments begin in discomfort as "non-conformists don’t enjoy the warmth that comes with being at the center of the herd." Dare to be different is his message, "dare to be wrong," or as Charlie Munger told him, "it’s not supposed to be easy. Anyone who finds it easy is stupid." While Marks philosophically adds that "being too far ahead of your time is indistinguishable from being wrong," he warns the lulled masses that "you can’t take the same actions as everyone else and expect to outperform."
- Russia's Gazprom says Ukraine did not pay for gas on time (Reuters)
- Ukraine Moves to Keep Control in East (BBG)
- Banks Set to Report Lower Earnings as Debt Trading Slumps (BBG)
- More DeGeners and Obama selfies needed: Samsung's lower first-quarter estimate highlights smartphone challenges (Reuters)
- Citi Is Bracing to Miss a Profit Target (WSJ)
- Another slam from GM? Safety group calls for U.S. probe of Chevy Impala air bags (Reuters)
- Japan drugmaker Takeda to fight $6 billion damages imposed by U.S. jury (Reuters)
- EU court rules against requirement to keep data of telecom users (Reuters)
- White House may ban selfies with president after Ortiz-Obama photo promotes Samsung (Syracuse)
In the aftermath of Michael Lewis' book "Flash Boys" there has been a renewed surge in interest in High Frequency Trading. Alas, much of it is conflicted, biased, overly technical or simply wrong. And since we can't assume that all those interested have been followed our 5 year of coverage of a topic that finally has earned its day in the public spotlight, below is a simple summary for everyone.
- Nato chief defends eastern advance (FT)
- Russia looks east as it seeks to rebalance trade interests (FT)
- Plane from Guinea briefly quarantined in Paris after Ebola scare (AFP)
- US attacks Japan’s stance on Trans-Pacific Partnership (FT)
- Thank you IMF: Ukraine PM says will stick to austerity despite Moscow pressure (Reuters)
- U.S. Army seeks motive for Fort Hood shooting rampage (Reuters)
- China Slowdown Adds to Emerging-Market Growth Hurdles, IMF Says (BBG)
- Top investors press Allianz to step up oversight of Pimco (Reuters)
- U.S. to Evaluate Role in Mideast Peace Process, John Kerry Says (WSJ)
- Scientists dismiss claims that Yellowstone volcano about to erupt (Reuters)
- Ukraine detains 12 riot police on suspicion of 'mass murder' (Reuters) - on CIA orders?
As the following table also by RealtyTrace confirms, the US still has an abundance of "own-to-rent" cities, where one can generate a return as high as 30% in one year, if one is willing to drive through the downtown area at 65 mph. Places like bankrupt Detroit, where the median sales price is $45K, and somehow the average market rent is $1.1K, meaning one can recoup their investment in just over 3 years! (how Detroit's residents can afford $1K on rent is another of those great mysteries of life). In other words, the housing bubble will still be raging in these 20 cities, at least until such time as the yield drops sufficiently due to soaring prices that the Blackstones of the world are forced to dump other people's money in such undervalued places as Ulan Bator and Almaty.
It is perhaps little wonder that Virtu was in such a hurry to use the cover of the JOBS Act to IPO itself before the whole HFT 'game' was exposed. Just 5 years after we first drew the world's attention to the potential damage that HFT could do; and mere minutes after we posted our article on how HFT is being set up to be the scapegoat for all that is broken with the market and conveniently distracting from the Fed, and god, or perhaps his agent on earth Goldman Sachs, 'completely unexpectedly' sends in the FBI:
- *FBI SAID TO PROBE HIGH-SPEED TRADERS OVER ABUSE OF INFORMATION
- *FBI Working With SEC, CFTC in High-Speed Investigation
- *FBI Investigating Whether High-Speed Firms Trade on Nonpublic Information
Now, the question is: how many HFTs will stop trading for fear that any further trading on 'non-public information' will be deemed criminal from this point... or keep trading and lobby/hope that "a reasonable man" will believe their liquidity-providing lies.
U.S. stocks are like a duck, floating on a quiet pond – calm above the surface, but lots of furious churning invisible to the naked eye. The S&P 500 looks like it will end the first quarter within a hair of the 1848 level where it started the year, but that doesn’t mean everything else is all stasis and light. Today we offer up a quick ‘Top 10’ list of surprises from the last 90 days. Gold, for example, is back from the grave, up 7.3%. So is an imperial Russia, with the biggest land grab since the building of the Berlin Wall. Mutual fund flows are ahead of exchange traded funds by a factor of 5:1. And most of those ETF inflows are into bond funds, not the “Great Rotation” we all expected into stocks. The 10-year U.S. Treasury yields all of 2.67%, and bonds have bested U.S. stocks consistently in 2014. First quarter 2014 may not have been a long trip, but it certainly has been strange.
- How Putin Parried Obama's Overtures on Crimea (WSJ)
- West Readies Tighter Sanctions After Russia Seals Crimea Claim (Bloomberg)
- Putin says U.S. guided by 'the rule of the gun' in foreign policy (Reuters)
- JPMorgan Said to Agree on Commodities Unit Sale to Mercuria (BBG)
- Short Sellers Target Chinese Developers as Rout Deepens (BBG)
- HFT finally under the spotlight: High-Speed Trading Firms Face New U.S. Scrutiny (WSJ)
- Chinese Dollar Bond Investors Demand Higher Yields After Default (BBG)
- According to Joe LaVorgna it's the snow's fault: Deutsche Bank Said to Plan Job Cuts at Investment Bank (BBG)
- Israeli airstrikes kill 1 Syrian soldier, wound 7 (AP)
Bond Trading Grinds To A Halt: Goldman Set To Report Weakest Q1 Since 2005; Revenues Down As Much As 25% ElsewhereSubmitted by Tyler Durden on 03/12/2014 11:47 -0400
Since Wall Street has been explicitly fighting the Fed (remember: the main reason there is no volume is because nobody is selling) Wall Street has once again lost, and despite its appeals, the time to pay the piper has come. Said payment will be taken out of bank Q1 earnings which as everyone knows, will continue the declining trend seen in recent years (so much for that whole Net Interest Margin fable), but to learn just how bad, we go to the FT which reports that fixed income groups across Wall Street "are set for their worst start to the year since before the financial crisis, with revenue declines of up to 25%." The punchline: "Analysts now expect Goldman Sachs to record its weakest first quarter since 2005 and JPMorgan Chase and Bank of America are forecast to see their lowest revenues since they bought Bear Stearns and Merrill Lynch, respectively, in 2008."
- Malaysia Says Stolen Passport User Had No Links to Terror Groups (BBG)
- Malaysia military tracked missing plane to west coast (Reuters)
- Freescale loss in Malaysia tragedy leads to travel policy questions (Reuters)
- Top German body calls for QE blitz to avert deflation trap in Europe (Telegraph)
- Firms Suffer 23% Drop in Asia Fees Amid Search for Cash (BBG)
- Putin Dismisses U.S. Proposal on Ukraine (WSJ)
- Lenovo says China strike an IBM matter, but it won't cut wages (Reuters)
- Congress to Investigate GM Recall (WSJ)
- New hedge funds face life or death battle for funding (FT)
- Muni Bond Costs Hit Investors in Wallet (WSJ)
- BOJ keeps stimulus in place, cuts view on exports in warning sign (Reuters)
- ECB Homes In on Risky Assets as Inspectors Fan Out Across Europe (BBG)
- Snowden: "The Constitution was violated" (Reuters)