HFT Pays: CEO Of Firm That Accounts For 5% Of US Equity Volume Selling His NY Mansion For $114 MillionSubmitted by Tyler Durden on 12/23/2013 19:22 -0400
Everyone knows that the most parasitic form of trading, that would be high frequency trading for those who may not have followed this website since 2009, is very profitable. Well, it is certainly profitable for those who operate the momentum-igniting, quote churning, HFT firms in control of what's left of the "market", if not so much for anyone else. Just how profitable is it? Judging by the house that Vincent Viola, head of Virtu Financial, one of the largest high frequency electronic trading and market making firms, which according to Cifu accounts for more than 5% of US equities volume and over 10% of the of the average daily volume of MSFT, and which tried to expand even more aggressively with a failed bid for Knight Capital last year, has just put on the block.
As students vie for 2014 internships, Bloomberg finds a fraternity-based network whose Wall Street alumni guide resumes to the tops of stacks, reveal interview questions with recommended answers, offer applicants secret mottoes and support chapters facing crackdowns. Despite apparent crackdowns on cronyism, nepotism, and fraternism; it seems nothing has changed as "secret handshakes" and the fraternity pipeline helps undergraduates beat odds three times steeper than Princeton University’s record-low acceptance rate... "People like people who are like themselves," notes one recruiter, seemingly proven by the fact that JPMorgan employs 140 Sigma Phi Epsilon members with BofA and Wells Fargo even more.
"The new year should be very exciting for EURUSD bears," BofAML's Macneil Curry explains. Historically, January is the worst month of the year for the currency pair. Since 1971 (interpolated data pre-1999) it has averaged a return of -1.27% (excluding carry) and fallen 62% of the time. With EURUSD having just confirmed a top and bearish turn in trend, this January should be no exception to the historical norm. EURUSD bears should be salivating for the start of the new year.
Here's a question-- if you're in the Land of the Free, do you think those green pieces of paper in your wallet are dollars?
They're not. A US dollar was defined by the Coinage Act of 1792 as 416 grains of standard silver. No, those green pieces of paper are Federal Reserve notes. "Notes" in this case meaning liabilities to the central bank of the United States. That makes you, me, and anyone else holding those green pieces of paper essentially creditors of the Federal Reserve, whether we signed up for it or not.
While the full impact of CMHC on the Canadian housing and banking sector remains debatable, one thing can be said: next to the Bank of Canada, it is perhaps the most critical entity in preserving the nation's financial stability. And with a key player responsible for the perpetuation of the status quo having departed Canada recently, namely Goldman's Mark Carney leaving the BOC and heading to the Bank of England, some were wondering just who would supervise thing up north if and when things turned sour. Those questions were answered on Friday, when Canada named the next chief executive officer of the government-owned housing agency. His name is Evan Siddall, and, what we assume will came as a surprise to nobody, he was formerly a banker at, drumroll, Goldman Sachs.
While tapering in the US has had only good consequences (so far); in China it has crushed money markets. Of course, some might argue this is merely a coincidence, but since both the US and China appears to have launched their tapering together, the question is what will break to force China to pull back, since for the Fed it is all roses.
"At the end of that live-long day the American people are left in a matrix of lies so thick and sticky that all the de-greasing agents supposedly vested in freedom of the press will not avail to liberate them, and they are suspended like little morsels of winged prey to be sucked dry by the descending spiders of crony capital."
Gross:Part 1of 2: We live not in a new gilded age but a bitcoin age where artificial money (from central banks) creates temporary prosperity
— PIMCO (@PIMCO) December 23, 2013
It was nearly three months ago when we warned that Ackman's latest strategy of converting 40% of his Herbalife short exposure into puts would massively backfire, first because he still have major short squeeze potential left on his books, and second because now he is subject to theta or a time horizon, for his thesis to play out. Ackman's (il)logic was summarized as follows: "The explanation of being forced out of nearly half of his position is amusing: "we minimize the risk of so-called short squeezes or other technical attempts by market manipulators to force us to cover our position." So Ackman is forced out by his Prime Brokers so as not to be forced out by market manipulators? That's an interesting explanation for what is a far simple situation: booking your paper losses." Just under three months later HLF hit its all time highs, and Ackman's puts (not to mention his stock short) have generated material losses. Back then we concluded that "with trades like this, which has now become an ideological obsession and moved beyond and semblance of rational investing (any normal person would have pulled the plug on the nearly half a billion dollar losing trade long ago) and is rapidly morphing into a replica of Pershing Square IV, said career may not be too long." Today, the embattled so-called retail expert pours more fuel in the futre, and provides a 7-page update on what his plans for Herbalife are. In short: it really does seem that Ackman is prepared to take his HLF short until the end of the world... or its LBO. Whichever comes first.
In a world in which the Chief Risk Officer of the formerly free capital markets, Ben Bernanke, has made any downside hedges obsolete (and as a result hedge funds have posted 5 years of returns without outperforming the S&P500), the first casualty has emerged: fund of funds. These parasitic, fee-soaking institutions, which merely collect a fee on top of the fees already charged by hedge funds, are rapidly on their way to extinction as the following charts from Eurekahedge prove conclusively. Naturally, the FOF industry which generates massive fees for its "value adding" managers, will not go down without a fight. And as Pensions and Investment reports, the FOFs have found a way to strike back: convert hedge funds into long only, idiot money, and we do enjoy the irony that in this centrally-planned market the idiot money is outperforming the smart, nimble asset managers by orders of magnitude.
"Twas the days before Christmas, and all across the street, not a human was trading..." but, as tradition demands, UBS' venerable director floor operations - Art Cashin - unleashes his annual poem. Summing up the year in amazing alliteration, Cashin takes on Bitcoins, The Fed, the Volcker Rule, and... Anthony Weiner.
Things are going so well for Obamacare that the administration has decided, at the very last minute, to extend the deadline to sign-up for Jan1st coverage through the end of Christmas Eve. As WSJ reports, this change - which follows weeks of last-minute policy shifts - gives young people and the uninsured 24 more valuable hours to decide but, as we have previously noted, initial sign-up tallies are falling dramatically short of expectations. Of course, with the pitchman-in-chief busy on the links, we wonder how much difference this will make...
It is perhaps ironic that the creator of the AK-47 assault rifle, also known as the Kalashnikov named for its creator Mikhail Kalashnikov, and of which there are between 70 and 100 million in circulation making it the world's most popular weapon, has just passed away from what is essentially old age, at 94. "It is difficult and sad to realize that Mikhail Kalashnikov is no longer with us. We have lost one of the most talented, memorable and committed patriots of Russia, who served his country throughout his life,” said the statement from the press secretary of the Udmurtia administration Viktor Chulkov.
Investors from multi-billion dollar hedge funds to individuals buying as few as 10 properties have acquired more than 1 million homes across the U.S. in the past three years, transforming a mom-and-pop business into one of Wall Street's hottest investments. As we noted here, Blackstone Group LP alone has acquired more than 40,000 properties in 14 cities to become the largest single-family landlord in the country. As Bloomberg notes, the new landlords are transforming the way Americans live and accumulate wealth. But while Wall Street is becoming America's largest residential landlord, it appears China wants to get paid for commercial properties... and Detroit.
While Citi's earnings-yield gap model indicates stocks are over-valued currently, their proprietary panic/euphoria model has now been in "euphoria" mode for six straight weeks. Having risen further into extremes, Tobias Levkovich notes that readings at this level indicate the market may retreat with an 83% historical probability of losses in the next 12 months.