Guest post by Azizonomics. Priorities are a bitch.
The United States won’t prosecute Corzine for raiding segregated customer accounts,but will happily convene a Grand Jury in preparation for prosecuting Julian Assange forexposing the truth about war crimes.
From the New York Times:
A criminal investigation into the collapse of the brokerage firm MF Global and the disappearance of about $1 billion in customer money is now heading into its final stage without charges expected against any top executives. After 10 months of stitching together evidence on the firm’s demise, criminal investigators are concluding that chaos and porous risk controls at the firm, rather than fraud, allowed the money to disappear, according to people involved in the case.
Corzine is considering opening a new hedge fund, though the notion that anyone —even a slack-jawed muppet happy to buy whatever Goldman ‘s prop traders want to sell— would seed Corzine money so he can trade or steal it away seems absurd.
Europe’s Iron Lady is getting tired of the Greek situation. Spiegel on what we can expect from Merkel going forward.
Antonis Samaras’ trip to Germany next week will be a complicated one. The Greek prime minister is expected to ask Angela Merkel for his country to be given two more years to adhere to the austerity conditions attached to the country’s EU-IMF bailout program. With political resistance growing in Berlin, the chancellor has little leeway for compromise.
The German guest on Greek public television had pleasant words. He said he was very consciously taking his vacation in Greece, a country of “hardworking people who support their families by working.” He said he hoped the “Greece-bashing” would finally come to an end back in Germany. Athens, he added, needs to be given additional time for its reform efforts because an exit from the euro isn’t up for debate. “I am pretty certain,” he said. “I hope and I expect that Greece will remain (a part of the euro zone).”
Guest post by Peter Tchir.
What Are Investors Thinking About Coming Into the Home Stretch?
Whether it is right or wrong, many still think of investing on a calendar year basis. So as we crawl through this period of incredibly low volatility and low volume it is time to start thinking about the home stretch. Coming into year end there are some striking numbers that investors and money managers must be thinking of and are likely to influence their decisions for here on out.
The S&P 500 is up 11.8% for the year. The Nasdaq is up 16.3%. Had you been lazy and just bought AAPL (which is allegedly the most owned stock by hedge funds), you would be up 55.8%. Had you “tried to lose client money” by buying banks, you would have failed there too. XLF is up 16.4% and even JPM, with the whale trade and LIBOR is still up 11.5% this year (remember how bearish everyone was on banks at the start of the year?).
Okay, what about Europe? Well an investment in the STOX 50 would be down 1% in USD, but still up 4.9% in Euro. The Nikkei is up 7.5% in Yen terms and 4% in dollars.
Taleb’s latest on banking, luck and fat tails.
The idea is well known (see Taleb 2001), that as a population of operators in a profession marked by a high degrees of randomness increases,the number of stellar results, and stellar for completely random reasons, gets larger. The “spurious tail” is therefore the number of persons whorise to the top for no reasons other than mere luck, with subsequent rationalizations, analyses, explanations, and attributions. The performancein the “spurious tail” is only a matter of number of participants, the base population of those who tried. Assuming a symmetric market, if onehas for base population 1 million persons with zero skills and ability to predict starting Year 1, there should be 500K spurious winners Year 2,250K Year 3, 125K Year 4, etc. One can easily see that the size of the winning population in, say, Year 10 depends on the size of the basepopulation Year 1; doubling the initial population would double the straight winners. Injecting skills in the form of better-than-random abilitiesto predict does not change the story by much.
Full paper here.
Biderman on growth, the Bernanke put and the markets.
The Bernanke put is keeping stocks priced levitated these days, at least in my opinion. Specifically, the Bernanke put exists because the stock market believes that the Federal Reserve can and will do “something” that saves the day, whatever saving the day is. Ultimately that belief falls into the same category as a superstition, like the evil eye or the tooth fairy. The reality is that the Fed cannot do anything to solve the fundamental flaw at the heart of the US economy.
Update of the “big four” indicators. Courtesy Doug Short.
The weight of these four in the decision process is sufficient rationale for the St. Louis FRED repository to feature a chart four-pack of these indicators along with the statement that “the charts plot four main economic indicators tracked by the NBER dating committee.” In his July 10thBloomberg TV interview, ECRI’s Lakshman Achuthan cites these four at about the 2:05 minute point in his remarks. He says, and I quote “When you look at those four measures, they are rolling over.”
Are they really rolling over? First, here are the four as identified in the Federal Reserve Economic Data repository. See the data specifics in the linked PDF file with details on the calculation of two of the indicators.
Greece has disappointed its creditors yet again. Now its government plans to ask for more time — and needs billions more in aid. But Greece’s euro-zone partners are unwilling to provide any more help, meaning that the only hope now is to admit defeat and let the country make a fresh start.
Officially, at least, everything is going according to plan. In September, officials with the troika — made up of the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF) — are planning to travel to Athens to check on the progress that Greece has made with its cost-cutting program.