Long ago, Keynes himself pointed out, perhaps inadvertently, the profound difference between GDP and wealth. If we merely want a higher GDP print - which measures spending, not wealth - governments should handout spoons so that millions of citizens can dig holes and millions more refill them. It would appear that the statesmen of Brussels are fixing to try the modern day equivalent of just that.
"This last 1900 point Dow Jones push upwards - and the Ebola events leading into it - it was so orchestrated and heightened at critical points but the ascent and push straight up in price, and sideways nonreaction after was completely unlike anything I've seen before. After going up for a record-breaking amount of time the last five or so years, in a nonlinear exponential mania type of ascent, there should normally be tremendous volatility that follows... After this year and especially this last 1900 point Dow run up in October, and post non-reaction, that I am 100 percent confident that that one buyer is our own Federal Reserve or other central banks with a goal to "stimulate" our economy by directly buying stock index futures."
Anti-HFT Revulsion Grows: IEX Ties For Fourth In Dark Pool Trading Thanks To World's Largest Wealth FundSubmitted by Tyler Durden on 11/17/2014 14:56 -0500
While Wall Street is certainly free to broken record that Michael Lewis' hugely popular story about HFT and market rigging did not impact the natural course of events, the reality is it did: the collapse in Barclays' dark pool LX (shown in the bolded red line on the chart below), in the aftermath of the NY AG case against the British bank, has been documented in the past, and is just one example. An even more vivid case study comes from the surge in popularity of upstart dark pool IEX (green dotted line below), the protagonist of Lewis' Flash Boys book, and which out of nowhere, has just tied with Lavaflow's dark pool for fourth spot in ATS trading with just over 200 million shares in the week ended October 27. The catalyst? Norway's sovereign wealth fund just said not to HFT parasites.
Further proof of manipulation of gold and silver prices - if any were needed - came overnight as Switzerland’s financial regulator (FINMA) found “serious misconduct” and a “clear attempt to manipulate precious metals benchmarks” by UBS employees in precious metals trading, particularly with silver.
Maybe overzealous bond investors might want to rethink that Yield Chasing Strategy for 2015.
This seems to be the biggest question in financial markets for me right now because the math just doesn`t add up any way you slice it.
The fundamental mistake is to think in terms of a low yield telling you anything about the economy, as it is price that you should be focusing on.
"If you look at the entire radar screen of things developing both domestically and internationally, we are plunging deep into a perfect storm of policy failure. There is blowback everywhere. First, the wreckage of prior policy mistakes of our intervention with foreign policy is coming home to roost. Second, monetary central planning is now coming to a dead-end. It is inflating the third financial bubble of the century and the Fed is now clueless as to how it will manage to unwind the massive balance sheet expansion it has been undertaken. And third, the fiscal doomsday machine continues to crank on. Washington is ignoring the fact that we are six years into a business cycle expansion and we are still running massive deficits and there is no cushion for the next upset that comes to the economy. Now, why is all of this important? Because I think the foreign policy failures -- the collapse of the American Imperium as I call it -- is at the center of this, and it will push all of these things in the wrong direction."
Scanning the Chinese press, the sense is primarily that problems related to their dysfunctional financial system and the gross lack of personal accountability in its exploitation are being detailed everywhere. Troubles involving mutual guarantee companies in Whenzhou, commodity shippers in Qingdao and elsewhere, Ping An insurance execs, BOC/CITI 'money launderers' in Guangzhou, steel execs, trust fund sellers, stockbrokers front running orders via their personal accounts, real estate developers colluding with their local government buddies - you name it; and the whole superstructure is, of course, intricately interlocking and hence becoming systemically fragile. Every day that goes by, China's "little Dutch boy" needs another finger to plug the new leak he caused by trying to stem the previous one. The risk is, he may soon run out of digits...
As the chart below shows, there’s much the Fed doesn’t understand, while at the same time showing that QE may have little purpose beyond providing a massive gift to wealthy traders and investors. With regard the question of where a dollar of QE goes, the answer is “not far.” Outside of pushing up asset prices and encouraging an occasional luxury purchase, it doesn’t seem to escape the financial sector. Liquidity that might otherwise be offered by private institutions is instead provided by the Fed, and – as Phil Collins might put it – that’s all.
There has been a lot on bond buying in Europe and that enthusiasm has transferred over to the US in anticipation of Draghi's massive bond buying stimulus program similar to that of the U.S. Fed.
When obnoxiously wealthy pricks with the ability to bribe stock exchanges to place their trading computers on the floor of the exchange and financially induce the Wall Street banks to funnel trades through their dark pools in order to know what is happening a nanosecond before everyone else, and use this information to front run unknowing investors to generate risk free profits, it’s wrong. It really is black and white. I don’t care that it is supposedly “legal”. By complying with Regulation NMS the smart order routers of institutional investor firms like Vanguard, Fidelity and Schwab simply funneled naïve investors into various snares laid for them by the unscrupulous high frequency traders. The bad guys always win and the good guys always lose on Wall Street. And no one does anything because they are all on the take. Lewis puts it in terms the average person can understand.
None other than status-quo-hugger Berkshire Hathaway's Charlie Munger took aim at the scourge of HFT this morning; blasting high-frequency traders as "the functional equivalent of letting rats into a granary," and exclaims "it does the rest of civilization no good at all." Buffett reminds that HFT is "not a liquidity provider, " explaining that while it does produce volume, that is not the same as liquidity; and while the Oracle opines (incorrectly) that the small investor has never had it so good, Munger is quick to point out that the money HFT makes does not come from heaven and in fact it is the small investor who is hurt by the fact that large investors (who mostly act on small investors' behalf) are severely impacted. Even the usually abstinent Bill Gates remarks upon HFT as "adding no value.. because when the liquidity is needed, it isn't there." Munger sums it up: "I don't like it."
[J. Bradley Bennett]...compared high frequency trading to buying a first-class ticket on an airline...“Is there anything unfair about that? Doesn’t sound like it to me.”
In a world filled with innuendo, false flags, and more one thing remains constant: What is Goldman Sachs (GS) up to and more importantly – why?