Some thoughts about the price action, or lack thereof, in the foreign exchange market.
World's Largest Pork Supplier Pulls Asia's Biggest IPO For 2014 Due To "Deteriorating Market Conditions"Submitted by Tyler Durden on 04/29/2014 09:16 -0500
“In light of deteriorating market conditions and recent excessive market volatility, the company, having consulted the joint sponsors, has decided that the global offering will not proceed at this time.”
Just a few brief days ago, Weibo IPO'd "successfully" at the bottom-end of its range ($17) and exploded higher - "proving" that Candy Crush (or take your pick of recent IPO failures) were all one-offs and that 'quality' companies were still in demand. Fast forward 6 days and Weibo just entered a bear-market - down dramatically from its highs over $24 and is nearing its IPO price. There's no data, no news - just selling, in size. Investors stashing cash away for another pop in Alibaba's forthcoming IPO perhaps? Not if market conditions continue to look like this...
Investors take note. One of the primary market props of the last five years is being removed. What happens when the markets finally catch on?
Having the trade record of Bernie Madoff and the braggadocio of a WWF wrestler was just too much for New York Attorney General Eric Schneiderman to ignore. Rigged Market HFT Poster-child, and recent-delayed IPO, Virtu Financial has received a letter of inquiry from the AG's office requesting information about its business. As Bloomberg reports, a person with knowledge of the matter said this week that six high-frequency trading firms have received subpoenas as part of Schneiderman’s investigation and Virtu was asked for similar information in a letter of inquiry which could be escalated to a subpoena if the company doesn’t comply voluntarily.
Here’s something you don’t see very often: For a day and a half this week, the Japanese government’s benchmark 10-year bonds attracted not a single successful private sector bid. At today’s artificially-depressed yields, no one wants this paper — except of course the Bank of Japan, which is buying up the bonds with newly-created yen. In a world of markets rather than manipulations, this kind of imbalance would be an automatic short candidate. Actually, this kind of imbalance would never occur and as one trader noted "I know this could end badly."
The Philly Fed Business Outlook survey surged to 16.6, beating expectations by the most since September and rising to 7-month highs. Most subindices rose with shipments surging and new orders rising but prices paid flat. The big worry though is that this six-month forward expectations collapsed to their lowest since April 2013. So the pent-up-weather-demand is being seen as entirely unsustainable by the survey respondents...
While overall the beige book was an absolute snoozer, almost as boring as Yellen's earlier appearance at the economic club of New York, and its core message were quite bullish, namely that:
EIGHT OF 12 FED DISTRICTS SAY GROWTH `MODEST OR MODERATE'
FED SAYS ECONOMIC GROWTH `INCREASED IN MOST REGIONS' OF U.S.
FED SAYS LABOR MARKET CONDITIONS `MIXED BUT GENERALLY POSITIVE'
... confirming that the Beige Book contributors did not get the "ignore the dots" memo, the only "exciting" thing that everyone was looking for: what the Fed thought about the weather. Because with 103 instances of the word "weather" in the report (granted less than the 119 in February), it sure thought a lot.
*YELLEN SAYS FED COMMITTED TO ACCOMMODATION TO SUPPORT RECOVERY
Markets will be hanging on every word of what is likely Janet Yellen's first monetary policy speech and even more so the Q&A afterwards as she suggests that a considerable time is more than 6 months, and the delicate balance she has to play between admitting the economy is ugly while admitting that QE is over no matter what... all the while maintaining some semblance of credibility. One has to wonder if the ripfest rally of the last 24 hours is a buy the rumor ramp ahead of a sell the Yellen news event as once again she is tested...
" The Korean authorities should limit foreign exchange intervention to the exceptional circumstances of disorderly market conditions" - US Treasury
Pension funds over exposure to paper assets and lack of diversification has cost pension holders dearly in recent years. This will continue in the coming years with attendant consequences for pensions ...
- Three dead in shootings at Kansas Jewish centers; man to face charges (WSJ)
- Sanctions Blowback in Russia Targets Burgers to Movies (BBG)
- Deadly Virus's Spread Raises Alarms in Mideast (WSJ)
- China group buys $6bn Glencore Peru copper mine (BBG)
- Iran lodges complaint against United States over U.N. envoy ban (Reuters)
- Russian assets down sharply on Ukraine conflict fears (Reuters)
- ECB comments knock euro, but not much (Reuters)
- World-Leading $25 Hourly Wage Roils Swiss Businesses (BBG)
The market is 4% off its all time highs which means the time to pull IPOs due to "market conditions" has come. Here's why.
Update: As CNBC just reported moments ago, tech fund Coatue is returning $2 billion of $7 billion to investors, citing "difficult market conditions." Just wait until the "difficult market" drops more than just 3% from all time highs...
As a reminder, for those with Bloomberg (and the proper permissions) the easiest way to track the performance of the most popular hedge fund names is using the BBG ticker GSTHHVIP, and especially its performance against the S&P. But for those who don't have access, or are too lazy or depressed to type anything into their terminal today, here it is, straight from Goldman's sales and trading mouth, summarizing yesterday's market poundage:
Our HF VIP basket underperforms the SPX by over 100bps, 3 standard dev move and the worst since June 2012.
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.