Regulators
TBTF on regulation. Wiliam Black on the “Corzine Rule” and Fisher on the Dodd Frank.
Video below.
Britain Isn’t Working
Guest post by Azizonomics.
George Osborne claims that deficit reduction will produce a recovery.
From the Guardian:
The main test of a budget at this time is what it does for the recovery and growth of the British economy. George Osborne has repeatedly made clear that he wants to be judged by this test. He believes that deficit reduction is a growth policy which will be vindicated by its results. Growth has been postponed but, he insists, it is about to happen. So is he right?
It doesn’t look like it: Charts below.
When the exchange blows itself up
The Trader has covered the HFT subject rather extensively over the past year. The market structure is broken, that shouldn’t be a surprise to investors. But, the latest development, where the exchange blows itself up is not the right forward in order to get the “normal” market back into play. On the latest embarrassing Bats story. From Bloomberg.
The decision by Bats Global Markets Inc (BATS)., the third-largest U.S. equity exchange operator, to cancel its initial public offering emboldened brokerage and fund executives who say the way stocks trade in America doesn’t work.
Bats, founded by a high-frequency trader in 2005 and nurtured by the world’s top securities firms, withdrew the IPO yesterday after errors on its own computers kept the stock from trading and forced a halt in Apple Inc. (AAPL) Pulling the IPO capped a day of embarrassments for the Lenexa, Kansas-based company, which rose to prominence with the electronic trading industry.
Marc Faber Featured in Communist Propaganda Piece
In this communist propaganda piece, Marc Faber gives his take on the near future.
The experiment of the central banks will fail. It may work for a while, much as white paint on a cracked building looks nice for a while.
In the future, 50% of taxes may be used just for payments on the debt.
Then there will be hyperinflation, and the governments will distract the people by going to war. Full video below.
Quant quiz of the Week
Friday humor. Video below.
Short term long while long term scared
On the long hedge funds, the Fed and the market. From Biderman.
To summarize my recent New York City trip, almost all of the hedge fund types I visited with in New York are both long stocks for the short term and really scared for the long term. Why? They are long stocks mostly because buybacks have been fueling gains and now stock prices have climbed to less than 10% below the all time highs.
On the other hand they are really scared because global equity markets are now dependent not only on central bank manipulation but that investors continue to believe in miracles. For it will indeed take a miracle for the markets to survive the mess the central bank manipulators have created. Video below.
iRational
Apple for president? Much can be said about Apple and it’s greatness, but all those parabolic moves usually end the same way. The Economist on Apple.
THE new iPad, which was released on March 16th, is the most popular version of the tablet yet. Apple sold 3m of them in just four days. But some buyers took to discussion forums to report that it has a tendency to heat up. A similar debate exists about Apple’s stock.
The company’s share price has risen by 83% in the past year, and by almost 50% so far in 2012. Apple is now easily the largest company in the world by market capitalisation, at some $565 billion. It looms over Exxon Mobil, which is worth a mere $408 billion. Since the start of this year it has added $187 billion to its valuation, roughly equivalent to the entire market caps of companies like Procter & Gamble, Johnson & Johnson and Wells Fargo. Apple is larger than the American retail sector combined. (Full article here).
The TVIX Chaos- What it means for investors
The TVIX collapsed under heavy trading yesterday. After the close CSFB said it will create new shares, and the TVIX fell even further in after hours trading. From Vix and More.
One month and one day after Credit Suisse (CS) announced the suspension of new creation units in the VelocityShares Daily 2x VIX Short-Term ETN (TVIX), the issuer announced today that it plans to reopen issuance of TVIX “on a limited basis” effective tomorrow.
In a twist, the press release also noted:
“Beginning March 23, 2012, Credit Suisse may from time to time issue the ETNs into inventory of its affiliates to make the ETNs available for lending at or about rates that prevailed prior to the temporary suspension of issuances of the ETNs. Also, beginning as soon as March 28, 2012, Credit Suisse may issue additional ETNs from time to time to be sold solely to authorized market makers. Credit Suisse may condition its acceptance of a market maker’s offer to purchase the ETNs on its agreeing to sell to Credit Suisse specified hedging instruments consistent with Credit Suisse’s hedging strategy, including but not limited to swaps. Any such hedging instruments will be executed on the basis of the indicative value of the ETNs at that time, will not reflect any premium or discount in the trading price of the ETNs over their indicative value and will be on terms acceptable to Credit Suisse, including the counterparty meeting Credit Suisse’s creditworthiness requirements, margin requirements, minimum size and duration requirements and such other terms as Credit Suisse deems appropriate in its sole discretion.” [emphasis added]
News That Matters
All you need to read, and some more below.
Should we worry about German banks now?
Follow up on Golem’s piece from yesterday on that “forgotten” 1 Trillion Euro hidden German problem. From Golem XIV.
More questions about the stability and probity of German banking this morning following on from the rumour of the €1 Trillion hole in German banks.
This from the 21st March Wall Street Journal,
Deutsche Bank AG changed the legal structure of its huge U.S. subsidiary to shield it from new regulations that would have required the German bank to pump new capital into the U.S. arm.
The subsidiary is called Taunus Corp. It is the 8th largest Bank holding company in the US. Being listed not just as a bank but a Bank Holding Corp. has a very special perk, it allows the Holding Company to borrow from the Fed in times of crisis. Which Deutsche did.
Remember, that the only reason Goldman Sachs still exists, is that as the collapse of Lehmans engulfed Wall Street, Goldman was allowed to become a Bank Holding Company. It had never been one till that moment. Till then Goldman had been a Broker Dealer. And it was not alone in suddenly desiring to become a Bank Holding Company. As this article by Edward Harrison points out so did GE Capital hitherto a hedge fund, American Express (a credit card company), GMAC (GM’s car financing arm) and Genworth Financial (an insurance company) all suddenly thought they should be come Bank Holding Companies. Sinners, all of them, they all changed their faith to gain salvation. Full article here.
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