Too big to Fail and Fed’s business
Post by DShort;
If a picture is worth a thousand words, this chart needs little additional explanation — except perhaps for those who are puzzled by the Jackson Hole callout. The reference is to Chairman Bernanke’s speech at the Fed’s 2010 annual symposium in Jackson Hole, Wyoming. Last year Bernanke strongly hinted about the forthcoming Federal Reserve intervention that was subsequently initiated in November of 2011, namely, the second round of quantitative easing, aka QE2. The 2011 August Jackson Hole event gave us less concrete expectations. But time will tell.
Let’s conclude this commemoration of the demise of Lehman Brothers with a couple of third anniversary facts:
The S&P 500 closed at 1228.90 on the day of the bankruptcy filing. Today’s close of 1209.11 is a mere 6.9% below the September 15, 2008 close. Of course, the market has been a spooky roller-coaster ride in between.
The yield on the 10-year note was 3.84% on the day of the bankruptcy. Today the 10-year yield surged to 2.09%, up from the all-time closing low of 1.93% set last Friday.
The past three years have been an exciting time for professional traders and their seasoned amateur counterparts. And it’s been a dream-come-true for institutional HFT (high frequency trading) with computerized algorithms.
On the other hand, savers — those benighted souls looking for income from CDs, Treasury yields, and FDIC insured money markets — have had a rude introduction to the new reality, one that will apparently be with us for a very long time.
Biggs Top?
Did the last bears get onboard the long train? With the markets having rallied for the past days, and the permabulls, like Barton Biggs, out today again, explaining why the World is cheap, we believe a reversal in the market is appropriate. Just to make sure, nobody dares shorting for the real collapse.
HFT-If you believe “To my knowledge there’s been no proof shown that high-frequency trading has been detrimental.” then read this
A topic well covered by The Trader, HFT, is getting increased focus from regulators, both in the US and Europe. The HFT Community is according to us NOT creating liquidity, nor the efficiency of transactions. Yes, they make some money, but the total is an Economic loss to society, as the progress in milliseconds, is not creating anything but speed in intself, and it takes a huge amount of data to process the same amount of money in the system. Ceteris paribus, this is not progress and benefit to the Society, but on the other hand, does it need to benefit anybody else but the HFT Community?
From Nanex;
The chart below shows how many quotes it takes to get $10,000 worth of stock traded in the U.S. for any point in time during the trading day over the last 4.5 years. Higher numbers indicate a less efficient market: it takes more information to transact the same dollar volume of trading.
Quote traffic, like spam, is virtually free for the sender, but not free to the recipient. The cost of storing, transmitting and analyzing data, increases much faster than the rate of growth: that is, doubling the amount of data will result in much more than a doubling of the cost. For example, a gigabit network card costs $100, while a 10 gigabit network card costs over $2,000. A gigabit switch, $200; a 10 gigabit switch, $10,000. This October, anyone processing CQS (stock quotes) will have to upgrade all their equipment from gigabit to 10 gigabit. Which would be fine if this was due to an increase in meaningful data.
We think that a 10-fold increase in costs without any benefits would be considered “detrimental” by most business people.
SPX Channel (still) Intact
With today’s pathetic HFT Only Market, don’t get exited. There is absolutely no “real” flow in the market, as the HFT churn stocks. The Trend Channel we posted few days ago is still intact. Use it for Navigation purposes.
News That Matters
Ft.com
Yahoo, which is weighing a sale of all or parts of its business, has attracted the attention of several buyout shops and strategic investors, including the private equity firm Silver Lake, NYT DealBook reports,http://ftalphaville.ft.com/thecut/2011/09/16/679026/yahoo-attracting-interest-from-potential-buyers/
Research in Motion has suffered a further setback in its attempts to lure customers away from rivals Apple and Google after again missing its earnings targets, the FT reports. Shares in the company plungedhttp://ftalphaville.ft.com/thecut/2011/09/16/678991/rim-shares-slump-20-after-missing-targets/
The WSJ says a Chinese company, Beijing Jingdong Century Trading, is preparing for what could be the biggest internet IPO in the US. The company operates 360buy.com, a fast-growing site that sells a broad range of goods, http://ftalphaville.ft.com/thecut/2011/09/16/678981/chinese-companies-plan-big-listings/
US authorities are scrutinising three of Israel’s largest banks over suspicions their Swiss outposts helped American clients evade taxes, Reuters reports, citing people briefed on the matter. The banks said to be under scrutiny by the US Department of Justice’s criminal tax division are Bank Hapoalim, http://ftalphaville.ft.com/thecut/2011/09/16/678966/us-looks-at-israeli-banks-over-tax-evasion/
US Treasury secretary Timothy Geithner will discuss with European finance ministers the possibility of leveraging the eurozone’s bailout fund, Reuters reports. Mr Geithner will hold talks with EU ministers in Poland on Friday and will propose that the European Financial Stability Fund, http://ftalphaville.ft.com/thecut/2011/09/16/678926/geithner-to-discuss-leveraging-efsf/
Latest comments