Front Running

Tyler Durden's picture

Fundamentally Flawed Markets & The Grey Area Between Cheating And Edge





HFT critics are crowing over the ITG confession. You see! HFT is front running, plain and simple! Told you! And HFT defenders are largely silent because... well, you can’t defend the indefensible. However, if history is any guide at all, the existence of a clearly identifiable small-v villain will forestall the unmasking of what we believe is a Big Bad... the subterranean influence, bordering on control, of human investment behaviors by firms controlling advanced inference machines.

 
Tyler Durden's picture

What Is The Reason For Today's Stunning Plunge In 2 Year Repo Rates?





What is going on here: is it just more seller than buyers, who are frontrunning an epic curve flattening or even inversion as may well happen once the Fed launches its rate hiking cycle? Or is something else happening behind the scenes. We ask because in addition to the normal selloff in cash and derivative products, something far more dramatic took place in the repo market where the repo rate on the 2Y just suddenly plunged out of nowhere.

 
Tyler Durden's picture

Suddenly The "Experts" Are Dumbfounded





Over the course of the last few years one thing that has been prevalent more than nearly any other time we can recall is just how many so-called "experts" have lined up to proclaim how their prognostications "were surely sound." The rationale? They must be correct in all their assumptions for – "Just look at these markets!" Well suddenly when one looks at these markets – it's not for the reasons the "experts" wanted. Now it's: "What in the world is going on in these markets!?"

 
Tyler Durden's picture

Quantifying The Global Sovereign Bond "Carnage": $625 Billion Lost Since March, And Counting





The world’s financial system is saturated with speculations fostered by nearly two-decades of central bank credit inflation. Just since 2006, the footings of central bank balance sheets have expanded from $6 trillion to upwards of $22 trillion. That’s all combustible monetary fuel that cannot be recalled; it can only be liquidated in the course of a monumental meltdown in the casino. So, yes, after the carnage of the past few days the global sovereign bond index has lost $625 billion since the bond bubble peak in late March. Call that spring training.

 
Tyler Durden's picture

If Numbers Don’t Lie Then...





There’s an old saying that “numbers don’t lie.” However, when we apply simple common sense to the way we hear numbers spun across the financial media what doesn’t add up is precisely that: the numbers.

 
EconMatters's picture

2010 Flash Crash Arrest Motivated By Greed





If the DOJ and CFTC is going to be consistent, then they have to indict the entire financial community from the CME, Exchanges, Brokers, Institutions, Investment Banks, Hedge Funds, Management Funds and High Frequency Trading Firms.

 
Tyler Durden's picture

What Deadly Summers, Sandy Koufax And Lucky Golfers Can Tell Us About Bonds





A five sigma event signifies extreme conditions, or an extremely rare occurrence. To bring this discussion from sports and weather to the financial world, we can relate a 5 sigma event to the stock market. Since 1975 the largest annual S&P 500 gain and loss were 34% and -38% respectively. A 5 sigma move would equate to an annual gain or loss of 91%. With a grasp of the rarity of a 5 sigma occurrence, let us now consider the yield spread, or difference, in bond yields between Germany and The United States. As shown in graph #1 below German ten year bunds yield 0.19% (19 one-hundredths of one percent) and the U.S. ten year note yields 1.92%, resulting in a 1.73% yield spread. This is the widest that spread has been in 30 years.

 
EconMatters's picture

The ECB Should End QE Next Month





I am not sure how long Mario Draghi can carry on this QE Charade, but it is quite obvious that there is nothing more to be gained from the program.

 
EconMatters's picture

Rate Hikes Already Priced into the US Dollar Index





Not just one 25 basis point rate hike, taking a look at that chart, several rate hikes have already been priced into the US Dollar Index.

 
Tyler Durden's picture

"Taper Tantrum" Talk Starts In Europe Two Days Into Q€





"The ECB could move to cutting the depo rate further to maintain loose financial conditions and especially to prevent a taper tantram forcing EURUSD higher," Citi says, commenting on steps the central bank may be forced to take in the event some core countries (i.e. Germany) are unable to source enough eligible assets to meet purchase targets under PSPP. Just two days in, speculation is growing about the viability of the program. 

 
Tyler Durden's picture

"Size Matters" For ECB Which Runs Into Unexpected Monetization Problem





Mario Draghi is forced to buy "small" amounts of EGBs on first day of QE, casting further doubt on the viability of PSPP. If the ECB is unable to meet its monthly asset purchase targets expect chaos, as the market has spent the last several months front running the program and would be absolutely horrified if DOMO has to be downsized.

 
Tyler Durden's picture

The Global War On Pensioners





Pensioners are under attack. With yields depressed across asset classes, public pension funds in the U.S. are diving into risky investments in order to justify clinging to unrealistic investment rate assumptions. In Europe, low rates are causing corporations to adopt lower discount rates to determine the present value of their pension liabilities, dramatically increasing EU pension deficits. While in Greece, the government is robbing the public purse to make good on its commitments to the IMF.

 
Tyler Durden's picture

History In The Balance: Why Greece Must Repudiate Its "Banker Bailout" Debts And Exit The Euro





Greece has been borrowing its way to disaster long enough. For its part, Greece stands at a fork in the road. Syriza can move aggressively to recover Greece’s democratic sovereignty or it can desperately cling to the faltering currency and financial machinery of the Euro zone. But it can’t do both. Now and again history reaches an inflection point. Statesman and mere politicians, as the case may be, find themselves confronted with fraught circumstances and stark choices. February 2015 is one such moment.

 
Tyler Durden's picture

Another Keynesian Debt Boondoggle: How Brussels Plans To Turn $26 Billion Into $390 Billion





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.

 
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