New York Stock Exchange
The stock market has now been up for ten straight days. Many on Wall Street are singing “Happy Days Are Here Again.” For them, that is probably the case. They finally have something to sell that will bring the rubes back into the markets. We are not in Kansas anymore. Fear is ebbing and greed is coming back. Those on the outside looking in are rounding up cash so that they don’t get left behind. The shills assist them with their pictures of economic recovery, new era crap and whatever other nonsense they can peddle successfully. So the cycle goes, as it has since the New York Stock Exchange came into existence. We are in another game of musical chairs where the music is playing joyfully. As in all such events, there are too few chairs to accommodate the participants when the music stops. And it always does!
"Return = Cash + Beta + Alpha": An Inside Look At The World's Biggest And Most Successful "Beta" Hedge FundSubmitted by Tyler Durden on 01/23/2013 22:31 -0400
Some time ago when we looked at the the performance of the world's largest and best returning hedge fund, Ray Dalio's Bridgewater, it had some $138 billion in assets. This number subsequently rose by $4 billion to $142 billion a week ago, however one thing remained the same: on a dollar for dollar basis, it is still the best performing and largest hedge fund of the past 20 years, and one which also has a remarkably low standard deviation of returns to boast. This is known to most people. What is less known, however, is that the two funds that comprise the entity known as "Bridgewater" serve two distinct purposes: while the Pure Alpha fund is, as its name implies, a chaser of alpha, or the 'tactical', active return component of an investment, the All Weather fund has a simple "beta isolate and capture" premise, and seeks to generate a modestly better return than the market using a mixture of equity and bonds investments and leverage. Ironically, as we foretold back in 2009, in the age of ZIRP, virtually every "actively managed" hedge fund would soon become not more than a massively levered beta chaser however charging an "alpha" fund's 2 and 20 fee structure. At least Ray Dalio is honest about where the return comes from without hiding behind meaningless concepts and lugubrious econospeak drollery. Courtesy of "The All Weather Story: How Bridgewater created the All Weather investment strategy, the foundation of the "risk parity" movement" everyone else can learn that answer too.
Mussolini Would Call It Fascism
- IMF Demands Partial Default for Cyprus (Spiegel)
- Boehner's 'Plan B' Gets Pushback (WSJ)
- Beijing criticises US ‘political checks’ (FT)
- White House Said to Tell Business Groups Talks Stall (BBG)
- NYSE tries to get hitched again: IntercontinentalExchange in talks to buy NYSE (Reuters) -> N-Ice coming?
- Greece faces ‘make or break’ year (FT)
- Fed rejects idea of consensus forecasts, "maybe forever": Fisher (Reuters)
- Rajoy Drives Spanish Revolution With Low-Cost Manufacture (BBG)
- Italian Senate Set for Budget Vote Before Monti Resigns (BBG)
- BOJ Loosens With Pledge to Review Inflation Objectives (BBG)
- Bowing To Abe, BOJ To Review Price Goal (WSJ)
- Millions still lack power (WSJ); New York Region Transit Tracker (WSJ), Blackouts Remain for 6.1 Million as Power Repairs Begin (Bloomberg)
- U.S. regulator seeks $470 million from Barclays (Reuters)
- J.P. Morgan Sues Whale's Ex-Boss (WSJ)
- London Frets Future as Financial Hub Outside Bank Union (Bloomberg)
- SNB now selling EUR: Swiss Central Bank Pulls Off Euro Sleight of Hand (WSJ)
- United Said to Study Biggest Airbus A350 to Replace Jumbos (Bloomberg)
- Draghi expands role in fight to save euro (FT)
- Panasonic Plunges by Daily Limit on Loss Forecast, CDS Soars (BusinessWeek)
- Italy risks economic ‘vicious circle’ (FT)
- Starbucks's European tax bill disappears down $100 million hole (Reuters)
- Bernanke Depression Guru Seeks Roosevelt Well-Being (Bloomberg)
It didn't take long for mainstream economists to provide us with some inane commentary regarding the latest natural catastrophe. Allegedly, the massive destruction of wealth hurricane 'Sandy' will leave behind has a 'silver lining'. We believe the main reason behind this stance is the unquestioned acceptance of one of Keynes' great fallacies: namely the idea that all economic activity – even unproductive activity – is somehow 'good'. Naturally, if it were really true that we could create economic progress by breaking windows or digging ditches (we will admit that pyramids at least render what one might term 'monument services', even if the expense seems hardly justified by this), then the government should pay half the population for digging ditches and hire the other half to wreak wanton destruction. The loss of wealth the hurricane has inflicted is very real; the wealth destroyed by it is most definitely gone.
UPDATE: *CBOE TO CLOSE EXCHANGES OCT. 29 BECAUSE OF HURRICANE SANDY
Late Updates - after a day of consultation and realization that if the algos were left alone to play then things could go a little pear-shaped - NYSE and NASDAQ will now be totally closed tomorrow:
*U.S. EQUITY MARKETS TO CLOSE ON OCT. 29 FOR STORM, SEC SAYS
The NYSE has just released a statement clarifying its hours tomorrow - due to the storm:
*NYSE TRADING FLOOR TO CLOSE TOMORROW; ALL TRADING TO BE ON ARCA
So, hold tight as all those low-lying humans will have left the building in the calm thoughtful hands of Johnny-5 and his friends.
- China May Forgo Easing as Economy Rebounds, Survey Shows (Bloomberg)... or as food and house inflation has never gone away
- China Edges Out U.S. as Top Foreign-Investment Draw Amid World Decline (WSJ)
- Fed to keep buying bonds despite firmer U.S. growth (Reuters)
- Bernanke Seen Attacking Jobless Rate With QE Until His Term Ends (Bloomberg)
- Mortgage applications plunge 12%, down for third week in a row (Dow Jones)
- Exchanges Retreat on Trading Tools - Fund Managers, Regulators Say Certain Orders Are Risky, Aid High-Speed Firms (WSJ)
- Europe Bank Chief to Defend Bond-Buying Plan (WSJ)
- Japan, China Envoys Met Last Week for Talks on Island Feud (Bloomberg)
- Goldman’s Pill Says ‘Guerrilla’ ECB to Impose Losses on Skeptics (BBG)
- Chance rise of an Obama defeat (FT)
- King Says BOE Is Ready to Add to QE If U.K. Recovery Fades (Bloomberg)
- Rajoy Sees Case for Slowing Spain’s Austerity as Economy Shrinks (BusinessWeek)
- Hong Kong Intervenes to Defend Peg as Upper Limit Tested (Bloomberg)
Full FBI Statement On Arrest Of Fed-a-Bomber Suspect Quazi Nafis, Who Worked "On Behalf Of al Qaeda"Submitted by Tyler Durden on 10/17/2012 16:22 -0400
Quazi Mohammad Rezwanul Ahsan Nafis (Nafis), 21, was arrested this morning in downtown Manhattan after he allegedly attempted to detonate what he believed to be a 1,000-pound bomb at the New York Federal Reserve Bank on Liberty Street in lower Manhattan’s financial district. The defendant faces charges of attempting to use a weapon of mass destruction and attempting to provide material support to al Qaeda. The arrest of Nafis was the culmination of an undercover operation during which he was closely monitored by the FBI New York Field Office’s Joint Terrorism Task Force (JTTF). The explosives that he allegedly sought and attempted to use had been rendered inoperable by law enforcement and posed no threat to the public. The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; Lisa Monaco, Assistant Attorney General for National Security; Mary E. Galligan, Acting Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office (FBI); and Raymond W. Kelly, Commissioner, New York City Police Department (NYPD).
Update: we now have the suspect's name: Quazi Mohammad Rezwanul Ahsan Nafis, who in addition to Plan A had Plan B: "If Nafis felt his attack was about to be thwarted by cops, he would invoke the back-up plan, which involved a suicide bombing operation"
NBC 4 New York has learned that federal authorities have arrested a man they say was plotting to attack the Federal Reserve in New York City. The man is in custody in New York. Sources tell NBC 4 New York that he lives on Long Island. Law enforcement officials stress that the plot was a sting operation monitored by the FBI and NYPD and the public was never at risk. "According to the report, the suspect drove a van he believed to be loaded with explosives from Long Island to Lower Manhattan. He then placed the van near the Federal Reserve and was then arrested by the FBI and NYPD. The suspect, whom sources said is from the Jamaica Queens section of New York City, is currently in custody in New York. Sources say he was acting alone." And "New York terror suspect is a 21-year-old Bangladeshi citizen who traveled to the U.S. in January to carry out terror attack." At least all that tungsten gold lying on the Manhattan bedrock is safe and sound and John McClane will not be called out of retirement just yet.
A rare glimpse inside "probably the world's biggest" 'market-maker' GETCO as it provides estimates of over 20% of 'liquidity' to the daly trading volume on US stocks. Meet the people that stand ready to feed the machines (oh wait) that stand ready at all times (except when most needed) to bid or ask...
Chinese local governments are facing the prospect of major unemployment problems should the swathe of solar panel makers, that have been subsidized from birth to now-near-death, continue to suffer from US and European tariffs (as well as simple gross mis-allocation of capital amid massive over-capacity). However, as is the way of the mal-investing world today, no barrier to rational economic theory is too low for government status-quo maintenance as it would appear that local banks have been strong-armed into extending loans to keep them alive. As Reuters reports, debt-laden (NYSE-traded) SunTech Power Holdings - which is close to removal from the exchange due to its dismal equity price - has just received new 'bailout' loans. First, it was a race to debase. Now, we have the race to bailout the world's most worthless companies (especially in channel-stuffed industries) as the New Normal trade wars continue.
With tomorrow's CDS roll (when indices change composition and on-the-run maturities are extended) and Friday's major equity option expiration and S&P index reweightings, it would appear, as UBS' Art Cashin notes, that the action of the last few days (and even last week) will be largely driven by the creation of complex strategies to "milk out every ounce of profit that might be available in such huge [technical] shifts." Combine this technical factor with the Autumnal Equinox, of W.D.Gann infamy, and the stage is set for fireworks as we approach Friday.
I just finished reading Octopus by Guy Lawson, and it's one of those that fit the "I Couldn't Put It Down" category, much like Den of Thieves, published in 1992. It is the tale of Sam Israel, whom you may remember in 2006 was on the lam from his failed hedge fund/Ponzi scheme. He faked his suicide, was captured, and is now hanging out for the next couple of decades (with none other than Bernie Madoff) in a state prison named, of all things, Valhalla.