"We have to rethink our world just about from scratch. Or else. We’ve lived chasing the recovery carrot for years now, but the economy won’t recover; it can’t. There hasn’t been any real growth since at least the 1980s, the only thing there’s been is increasing debt levels that we mistook for growth." We need to do a lot more thinking, and take a far more critical look at ourselves, than we do at present. We’re not even playing it safe, we’re only playing it easy. And that’s just not enough.
That markets are rigged, at both the macro level, through central banks, and micro, through HFTs, dark pools and purposeful market fragmentation, should be painfully obvious to everyone by now. But when even the regulators engage in "jury rigging", or in this case blocking prominent HFT-critic Joseph Stiglitz, a Nobel prize winning economist (a prize which doesn't count for much on these pages but should - at least on paper - impress such statist cronies as the SEC), has been blocked from a government panel that will advise regulators on issues facing U.S. equity markets, it becomes clear as day that the rigging is not just in the markets: worse, it is openly involves the market's "regulator" and "enforcer."
Despite the authorities' best efforts to keep everything orderly, we know how this global Game of Geopolitical Tetris ends: "Players lose a typical game of Tetris when they can no longer keep up with the increasing speed, and the Tetriminos stack up to the top of the playing field. This is commonly referred to as topping out."
"I’m tired of being outraged!"
Every year, David Collum writes a detailed "Year in Review" synopsis full of keen perspective and plenty of wit. This year's is no exception. "I have not seen a year in which so many risks - some truly existential - piled up so quickly. Each risk has its own, often unknown, probability of morphing into a destructive force. It feels like we’re in the final throes of a geopolitical Game of Tetris as financial and political authorities race to place the pieces correctly. But the acceleration is palpable. The proximate trigger for pain and ultimately a collapse can be small, as anyone who’s ever stepped barefoot on a Lego knows..."
It's a wonderful life on Wall Street, yet here is a holiday wish list to make it even better...
Oil Slumps To 4 Year Low Ahead Of OPEC, Eurozone Yields New Record Lows: Summary Of Overnight EventsSubmitted by Tyler Durden on 11/27/2014 06:46 -0500
While the US takes the day off after another near-record low volume surge to a new all time high in the S&P500, a level which is now just 125 points away from Goldman's year end target for 2016, the rest of the world will be patiently awaiting to see if oil's next step, as a result of today's OPEC meeting will be to $60 or to $100. For now at least the answer is the former (see more here from the WSJ), with Brent recently touching a fresh 4 year low in the mid-$75s, as WTI doesn't fare much better and was down 2% at last check to $72.20 after touching a low of $71.89. It appears the prepared remarks by the OPEC president to the 166th conference have not eased fears that despite all the rhetoric OPEC will be unable to get all sides on the same story, even though the speech notes "ample supply, moderate demand and warns that "if falling price trend continues, “long-term sustainability of capacity expansion plans and investment projects may be put at risk."
While there has been no global economic outlook cut today, or no further pre-revision hints of "decoupling" by the appartchiks at the US Bureau of Economic Analysis, both European and US equities are pointing at a higher open, because - you guessed it - there were more "suggestions" of "imminent" QE by a central bank, in this case it was again ECB's Constancio dropping further hints over a potential ECB QE programme, something the ECB has become the undisputed world champion in. The constant ECB jawboning, and relentless central bank interventions over the past 6 years, led to this:
- GERMANY SELLS 10-YEAR BUNDS AT RECORD-LOW YIELD OF 0.74%
The punchline: this was another technically "failed" auction as it was uncovered, the 10th of the year, as there was not enough investor demand at this low yield, and so the Buba had to retain a whopping 18.8% - the most since May - with just €3.250Bn of the €4Bn target sold, after receiving €3.67Bn in bids.
Looking for answers to both financial safety as well as financial freedom in the same light or viewpoint where it seems one only needs to “think like a billionaire” or “tweak” or “slightly modify” perceptions on how one approaches these financial markets today – will hurt more than it will help. The Wall Street everyone believes they are dealing with today is just in name and memory. What made sense just 6 years ago not only doesn’t but rather if you try to apply any sense that resembles “common sense” you might as well be asking the Cheshire cat for a more straight answer. "How exactly are you handling the stresses and strains having to basically push sound fundamental theories or market underpinnings aside and now trade and position money at risk based solely on what some Central Bank will do next?" This is the avenue I wish Tony had driven or sought.
In a dramatic example of the unprecedented collusion between predatory (HFT) client and predator-enabling (and HFT-pandering) exchange, in which the prey is any naive, witless order block that makes its way onto the exchange only to be frontrun with impunity and assure Virtu even more flawless trading days, we now see just who calls the shots for America's exchanges. "Virtu Financial LLC executive Chris Concannon will be appointed as president of BATS Global Trading Inc., an upstart Kansas City, Mo., firm that has grown into one of the country’s top stock-exchange operators, BATS said."
As Monday Looms, Experts Warn Japan's Half-Trillion Dollar Fat-Finger-Trade "Could Absolutely Happen" In The USSubmitted by Tyler Durden on 10/11/2014 13:46 -0500
Just over a week ago, the Japanese stock market participants were stunned when stock orders amounting to a whopping $617 billion (yes Billion with a B) - more than the size of Sweden’s economy - were canceled for reasons still unknown in what was one of the biggest 'fat finger' trading errors of all time. Since then, US equity markets have suddenly become notably more volatile - and fallen significantly, VIX has seen odd intraday 'spikes', S&P futures saw the very odd 'satan signal', and USDJPY has suffered its worst losses in 3 years. This raises the question of whether US market microstructure is any better than Michael Lewis' Flash Boys' book describes.. (as we head into a bond market holiday, dismal liquidity, and a potential Black Monday), “That could absolutely happen here,” Tabb Group's Larry Tabb warns Bloomberg.
I don't want to spoil the revelations of "This American Life": It's far better to hear the actual sounds on the radio, as so much of the meaning of the piece is in the tones of the voices -- and, especially, in the breathtaking wussiness of the people at the Fed charged with regulating Goldman Sachs. But once you have listened to it -- as when you were faced with the newly unignorable truth of what actually happened to that NFL running back's fiancee in that elevator -- consider the following:
- You sort of knew that the regulators were more or less controlled by the banks. Now you know.
- The only reason you know is that one woman, Carmen Segarra, has been brave enough to fight the system. She has paid a great price to inform us all of the obvious. She has lost her job, undermined her career, and will no doubt also endure a lifetime of lawsuits and slander.
So what are you going to do about it? At this moment the Fed is probably telling itself that, like the financial crisis, this, too, will blow over. It shouldn't.
The image below is a screen capture of the Google Earth map file which will be released officially tomorrow on his blog, with public documents linking each tower to its owner. The creator of the map thinks that it "should make some noise," although considering the vast financial resources and power over politicians the HFT lobby has, we wouldn't be surprised if, quite quickly, this latest story is promptly disappeared. After all, the last thing retail investors need to be reminder of every day, is that there is a rigged market for frontrunning, predator HFTs, and then a market for everyone else, i.e., the prey.
On July 7, Bart Chilton, a former commissioner of the Commodity Futures Trading Commission, wrote an article about high-frequency trading for the New York Times's DealBook. He argued, in effect, that because high-frequency trading has become so central to the stock market, it must be serving some necessary purpose. This is false...
Michael Lewis probably said it best when he told 60 minutes that the stock market is rigged. To the fantastic claims made by HFT that they provide liquidity, perhaps we should ask, what kind of liquidity? To the now obviously ludicrous claim that "everyone's order uses the same tools that HFT uses", we'll just say, the data shows otherwise. ... What is shown here is as close to automatic pilfering as one can get. It probably results in a few firms showing spectacularly perfect trading records; it definitely results in people believing the market is unfair and corrupt.
The last six months have not run according to anyone’s plan. Who would have thought that equity market structure would yield a best-selling book, after all? As ConvergEx's Nick Colas notes, on the fundamental side of things, interest rates across the developed world are lower, not higher – counter to the consensus view just 180 days ago. Mutual fund investors first bought U.S. equities earlier in the year, then in the last 6 weeks have begun to liquidate in earnest. Exchange Traded Fund investors are buying more fixed income products than those dedicated to U.S. stocks. Large cap stocks are trouncing small caps in terms of performance. And as for volatility – well, Elvis has clearly left the building on that one. So which of these surprises has staying power into the back half of 2014?