Repeat after me, “HFT provides liquidity”. If you are very very fast, but you must be faster than it is possible to trade at times. Another animation of quote stuffing by our friends at Nanex.
The bottom box (SIP) shows the National Best Bid and Offer. Watch how much it changes in a second.
Watch High Frequency Traders (HFT) at the millisecond level jam thousands of quotes in CEO Stock through our financial networks on May 29, 2012. Video shows about 3 seconds of time. If any of the connections are not running perfectly, High Frequency Traders can profit from the price discrepancies that result. There is no economic justification for this abusive behavior.
Must see video below with quote stuffing and the FB IPO.
Quick chart update of Gold and Silver.
With everybody bullish on metals, things could get ugly if prices start breaking down, as many novice experts now all call gold to go higher. First test will probably hold, but after that, let’s see how the gold bugs behave.
The Greek people are frustrated and rather angry with the treatment of their ”friends” in the Eurozone. What if Greece tells the Troika & Co to stuff it, and turn to “new” friends in the East. Maybe it would be the entrance via the backdoor for the wise guys in East. From Golem.
For whom might it make sense to help Greece, as impasse with Germany hardens and Greece approaches default? And what sort of offer of help would make sense for Greece?
Europe and in particular the Germans have painted themselves into a Teutonic corner. It will make no more nor less sense for Germany to blink in two or three weeks time than now. Of course as the reality nears, of their own banks and those in France having to come clean before their own populace about the bad loans they made to Greece, they may lose their nerve. I strongly recommend Mr Tsipras reiterate his determination to set up a Debt Commission. The prospect of Europe’s and America’s banks having all their grubby and quite possibly fraudulent dealings with Greece’s oligarch families when they were in government, paraded in public will leave many powerful people wondering if an unfortunate helicopter accident couldn’t be arranged by some friendly…. no, no no. What am I saying! Or perhaps a fire inside a sealed room? Only joking.
John Hussman is still bearish. With the massive expansion of central bank’s balance sheets, this could get nasty going forward. Thanks god they don’t need to use those mark to market models at the Fed…
For nearly two years, the massive interventions of central banks have repeatedly pulled a fundamentally weak and debt-burdened global economy from the brink of resumed recession. The Federal Reserve’s balance sheet is now leveraged 52-to-1, with assets having an average duration of over 5 years, suggesting that if those assets were marked-to-market, an interest rate increase of less than 50 basis points would wipe out the Fed’s entire capital base. Of course, the Fed takes no marks on its assets when it reports its balance sheet, though it does occasionally take down the value of the securities in the Maiden Lane shell companies that it illegally set up to bail out Bear Stearns and other entities (in violation of Section 13(3) of the Federal Reserve Act, which Congress had to amend and spell out like a See-Spot-Run book as a result).
At a 10-year Treasury yield of 1.7%, interest on reserves of 0.25%, and a monetary base now at about 18 cents per dollar of nominal GDP (see Run, Don’t Walk), further purchases of long-term Treasury securities by the Fed would produce net losses for the Fed in any scenario where yields rise more than about 20 basis points a year, or the Fed ever has to unwind any portion of its already massive positions. So further QE by the Fed would effectively amount to fiscal policy. Moreover, the benefits of central bank interventions are becoming progressively smaller and short-lived (nearly log-periodic in fact, to borrow a term from crash dynamics). None of this restricts the Fed from embarking on further interventions. It just emphasizes how far the Fed has already descended into the deep.
To the extent that our measures of market action improve on some possible future intervention, and until the point where the market reestablishes an overvalued, overbought, overbullish profile, we might have some latitude to take some speculative exposure in the event of another round of QE. But without substantially greater improvement in valuations here, there would be noinvestment basis for that exposure, so our latitude wouldn’t be very broad (we estimate the prospective 10-year total nominal return for the S&P 500 to be back down to about 5% on the basis of our standard methodology).
Some reads regrding Spain, Bankia and the future of the Euro.
Let’s not feel sorry for Bankia’s director leaving with 13.8 million Euros. That should be enough for a small casa by sea.
In case you missed it over the US long holidays, here is the FT Wolf’s interview with Krugman.
So, I ask, will the argument of the column be that “it’s all over” for the eurozone?
“No. I don’t think they can save Greece but they can still save the rest if they’re willing to offer open-ended financing and macroeconomic expansion.” But this would mean persuading the Germans to change their philosophy of economic life. “Well, the prospect of hanging concentrates the mind; the prospect of a collapse of the euro might concentrate their minds.”
I change the subject to ask how he has coped with the shift from being predominently an academic economist to being the leading spokesman for the liberal cause. How did this happen? “Well, it was funny,” he responds. “I was doing a column for Slate and then a bit for Fortune, towards the end, and then the [New York] Times came along with this offer. It was 1999. We thought I’d be writing about the follies of dotcoms and stuff like that and then it turns out that it’s a much more awesome and ominous responsibility. It was nothing I ever planned.
“Really, the rough period was the first [George W] Bush term when it seemed like the whole world was mad, save me, or vice-versa, and it’s gotten easier.
“I have to say, though, that the economic crisis has played into the things that I was worrying about 15 years ago. It’s been almost alarmingly easy to figure out what to say. But it’s a very strange thing: it’s not at all what I was imagining I was going to be doing with my life.” (Full link here).
The Trader wrote about the Spanish upcoming problems before the mainstream media discovered the country as we all got fed by news out of Greece back then. The Spanish inverse inquisition is now truly becoming the elephant in Europe’s room. Having denied the state of the economy for such a long time, the Spaniards are facing truly difficult times as the last summer of hope approaches. It is time to start preparing for the big fire sales of Spanish assets hitting mainly the property market. On zombie banks and more via Bloomberg.
Spanish banks are masking their full exposure to soured property loans while they continue to prop up insolvent “zombie” developers, leading to credit-rating downgrades and plummeting share prices.
Spain is trying to clean up its banks, requiring lenders to set aside more for possible losses on loans deemed performing to developers like Metrovacesa SA (MVC), which hasn’t completed a project in more than a year and has none under way. While that represents about 30 billion euros ($38 billion) of increased provisions, it’s not enough because many of the loans said to be performing aren’t, said Mikel Echavarren, chairman of Irea, a Madrid-based finance companyspecializing in real estate.
“Spain has engaged in a policy of delay and pray,” Echavarren said in an interview. “The problem hasn’t been quantified by anyone because there is huge pressure not to tell the truth.”
Russian billionaire Mikhail Fridman has resigned as chief executive of BP’s Russian joint venture TNK-BP, plunging relations between the UK oil group and its local partners into fresh turmoil. A person close to Alfa-Access-Renova (AAR), the consortium of Russian shareholders that owns 50 per cent of the company, said Mr Fridman quit due to a “breakdown in governance at TNK-BP”. “The Russian shareholders have lost faith in BP as a partner,” the person close to AAR said. “This partnership appears to have run its course and we are most likely heading towards some kind of disengagement.” http://www.ft.com/intl/cms/s/0/f334b2e4-a8aa-11e1-a747-00144feabdc0.html#axzz1w8XyzKzt
Spain’s prime minister has insisted his country will not need an international rescue for its banks as investors recoiled at a €19bn rescue of Bankia, sending the country’s borrowing costs over Germany’s to the highest level since the start of the euro. Bankia, Spain’s second-biggest bank by local deposits, would have collapsed if Madrid had not agreed to the rescue last week, Mariano Rajoy warned, adding that this would have risked bringing down Spain itself. http://www.ft.com/intl/cms/s/0/27f29710-a8a3-11e1-a747-00144feabdc0.html#axzz1w8XyzKzt
Steep declines in the euro symbolise the woes of Europe’s monetary union but could have a silver lining: the boost to exporters may offer some much-needed support to economic growth across the 17-country region. Last year, even as the euro crisis escalated, the currency’s value remained remarkably steady. In recent weeks, however, financial market sentiment towards the euro has turned decisively for the worse. http://www.ft.com/intl/cms/s/0/269aa5b8-a7dd-11e1-b8a9-00144feabdc0.html#axzz1w8XyzKzt