We are still waiting for “The Deal” that never reaches the final stage. Meanwhile, this is how Greece got into this mess. Presented almost a year ago on The Trader, here is Debtocracy. Video below.
Meanwhile the quote stuffing continues. Did “they” try stuffing the market prior to the Flash Crash? From Nanex;
The charts below shows message traffic for each of the 12 multicast lines plus the total for CQS. Each multicast line carries quotes for a certain range of symbols alphabetically. For example, symbols beginning with letters A and B are transmitted on line1, C and D on line 2 and so forth.
On April 26, 2010, quote message rates shot up to capacity at 9:29:10. That means other legitimate quotes would incur queuing delays. Between 250 and 500 quote updates per symbol were blasted per second. Symbols were chosen in a way that each multicast line filled to capacity. This was not some random fluke, but a well timed sophisticated algorithm involving a precise count of quotes from multiple exchanges. We think this might be one of the earliest examples of a full feed quote stuffing algorithm either running in production or undergoing a test. Note that the Flash Crash occurs the following week.
It will be a long weekend. …Guest Post by Macro Story.
Good Morning. As we head into a three day weekend (US bond and equity markets are closed on Monday) were the fate of Greece as a member of the EU may possibly be decided I wanted to offer a less technical, more macro Morning Brief today.
But first a few technical points and securities to watch on option expiration day. This is a long post by the way but there is a lot going on this weekend in Europe.
That feisty AUD/USD currency pair is back at it again turning what looked like a bearish reversal into possibly another head fake. As of this post it stands only 50 pips from prior highs of 1.0845.
HYG (high yield debt) was weak yet again on Friday and putting in another lower low. This excellent market timer topped on January 26 in a rather bearish high volume double top pattern. Watch HYG to see if it continues to underperform equity. Also watch HYG relative to LQD (investment grade debt). HYG has been underperforming LQD as investor risk aversion has been growing.
Dow Transports topped on February 3 and has been putting in a series of lower highs and lower lows. Thursday the transports did outperform the dow for a change but from a technical perspective it was a simple inside day after selling off 2% on Wednesday.
EMD (mid cap futures) took out another resistance level on Thursday. The next resistance level comes in at approximately 990. EMD is still about 3% below the July highs versus the SPX which is slightly above.
Guest post by John Redwood.
Greece has around one sixth the population of the UK, yet is has about the same number of military personnel on the payroll. The Greek military comprises around 170,000 active personnel paid by the state, with a further 280,000 in the reserve forces. Maybe instead of heaping ever more misery on the Greek private sector in an effort to pay for the very high Greek public spending the government should take a look at this cost.
The Greek navy has around 80 warships. The army has more than 1200 tanks. The airforce has around 1000 planes and helicopters. (these are figures taken from public websites). The question is, who should pay for all this?
If Greece had armed forces proportionate to her size of country she would have far fewer military personnel and military vehicles, ships and planes. She would save a lot of money , bringing her budget deficit under better control.
Italian rates have soared, and now fallen back to some. The same applies to other debt burdened countries of Europe. WHat are the implications though, and what is driving the response to the European debt crisis? According to Mr Uhlig, there are three main myths driving the process. From Bloomberg;
Myth No. 1: Italy’s interest burden was unmanageable.
Let’s do some math. On Nov. 25, the yield on 10-year Italian debt was 7.2 percent; it’s around 5.7 percent now. Suppose Italy had to pay that difference of 1.5 percentage points on debt it issues over the next two years that probably amounts to less than half of gross domestic product. That payment would be an additional interest burden of less than 1 percent of GDP, in a country where the government share accounts for half of output.
In December, the Bank for International Settlements conducted a more detailed calculation than mine and estimated that the interest burden would be about 2 percent of GDP; still less than 5 percent of total government spending.