The Big Picture |  |
- Wednesday Late PM Reads
- R.E.M. CALLS IT A DAY (UPDATED WITH BAND MEMBERS’ COMMENTS)
- Thoughts on the Fed’s Twist
- FOMC Statement: Side By Side Comparison
- America’s Report Card
- Fed still hoping for a different result
- August Existing Home Prices Fall, Sales Rise
- Nanex Proves HFT Can See the Future (with help from Exchange buddies)!
- Citi Ratings Unchanged
- WFC Downgrades
| Posted: 21 Sep 2011 02:30 PM PDT Here is my train reading for tonight:
What are you reading? >
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| R.E.M. CALLS IT A DAY (UPDATED WITH BAND MEMBERS’ COMMENTS) Posted: 21 Sep 2011 01:30 PM PDT  “To our Fans and Friends: As R.E.M., and as lifelong friends and co-conspirators, we have decided to call it a day as a band. We walk away with a great sense of gratitude, of finality, and of astonishment at all we have accomplished. To anyone who ever felt touched by our music, our deepest thanks for listening.” R.E.M. In their own words: The guys share their thoughts on why now. MIKE “During our last tour, and while making Collapse Into Now and putting together this greatest hits retrospective, we started asking ourselves, ‘what next’? Working through our music and memories from over three decades was a hell of a journey. We realized that these songs seemed to draw a natural line under the last 31 years of our working together. “We have always been a band in the truest sense of the word. Brothers who truly love, and respect, each other. We feel kind of like pioneers in this–there’s no disharmony here, no falling-outs, no lawyers squaring-off. We’ve made this decision together, amicably and with each other’s best interests at heart. The time just feels right.” MICHAEL “A wise man once said–’the skill in attending a party is knowing when it’s time to leave.’ We built something extraordinary together. We did this thing. And now we’re going to walk away from it. “I hope our fans realize this wasn’t an easy decision; but all things must end, and we wanted to do it right, to do it our way. “We have to thank all the people who helped us be R.E.M. for these 31 years; our deepest gratitude to those who allowed us to do this. It’s been amazing.” PETER “One of the things that was always so great about being in R.E.M. was the fact that the records and the songs we wrote meant as much to our fans as they did to us. It was, and still is, important to us to do right by you. Being a part of your lives has been an unbelievable gift. Thank you. “Mike, Michael, Bill, Bertis, and I walk away as great friends. I know I will be seeing them in the future, just as I know I will be seeing everyone who has followed us and supported us through the years. Even if it’s only in the vinyl aisle of your local record store, or standing at the back of the club: watching a group of 19 year olds trying to change the world.”
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| Posted: 21 Sep 2011 01:04 PM PDT Paul Brodsky & Lee Quaintance run QB Partners, a private macro-oriented investment fund based in New York. ~~~ The Twist in essence reduces to a bank subsidy. How?
Is the Fed's solvency at any lesser or greater risk? NO.
So, in the near term, banks win, Fed breaks even, dollar and unlevered bondholders risk of devaluation is escalated. Where from here?
In sum, this is a move to help recapitalize banks under the guise of supporting the housing market and any wealth effect that might flow from that outcome. This is all about the banks income statements. Future and imminent QE will be about their balance sheets (dollar devaluation which then boosts nominal asset/collateral pricing). ~~~ Lee Quaintance & Paul Brodsky
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| FOMC Statement: Side By Side Comparison Posted: 21 Sep 2011 12:09 PM PDT Surprising in this months statement was the downgrade of economic outlook. The Fed hasn’t stated they expect a recession, but that was pretty damned close. Courtesy of The Disciplined Investor: ~~~ Fed Statement – Side By Side Comparison
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| Posted: 21 Sep 2011 11:30 AM PDT |
| Fed still hoping for a different result Posted: 21 Sep 2011 10:56 AM PDT The FOMC again has moved to cheapen the cost of money still waiting and hoping for a different result. If only the cost of money was the impediment to growth. They announced its intent “to purchase, by the end of June 2012, $400b of Treasury securities with remaining maturities of 6 yrs to 30 yrs and to sell an equal amount of Treasury securities with remaining maturities of 3 yrs or less. This program should put downward pressure on longer term interest rates and help make broader financial conditions more accommodative.” They will also continue its reinvestment of MBS principal payments. On the economy they said growth “remains slow” using similar wording as they did in Aug and added “there are significant downside risks to the economic outlook, including strains in global financial markets.” They also remain sanguine on inflation as they always seem to be. Again, Fisher, Kocherlakota and Plosser did not support additional policy accommodation at this time. Bottom line, the FOMC gave the market exactly what was expected still believing in their monetary powers to cure the economic ills that ail us. When you misdiagnose the disease (hangover from too much borrowing/debt) however, you give the wrong treatment (to induce more borrowing/debt) and the Fed continues to perpetuate this and they wonder why the medicine doesn’t work. Refinancing is great but that doesn’t extinguish debt, it just alters its terms. We need to eliminate debt and encourage savings.
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| August Existing Home Prices Fall, Sales Rise Posted: 21 Sep 2011 10:40 AM PDT
> Above you will find our favorite housing chart — Existing Home Sales, but raw non seasonally-adjusted data. As you can see, the August 2011 is an improvement from 2010, but about onm par with ’08 and ’09. Here is the usual NAR happy talk:
Hurricane Irene? Really? Let’s skip the babbling nonsense, and go to the data:
My best guess is we are about halfway through the process of working off the housing excesses. > Source: http://www.realtor.org/press_room/news_releases/2011/09/ehs_aug
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| Nanex Proves HFT Can See the Future (with help from Exchange buddies)! Posted: 21 Sep 2011 10:15 AM PDT Joseph Saluzzi (jsaluzzi-at-ThemisTrading.com) and Sal L. Arnuk (sarnuk-at-ThemisTrading.com) are co-heads of the equity trading desk at Themis Trading LLC (www.themistrading.com), an independent, no conflict agency brokerage firm specializing in trading listed and OTC equities for institutions. Prior to founding Themis, Sal and Joe worked for more than 10 years at Instinet Corporation, pioneers in the field of electronic trading, and at Morgan Stanley. ~~~ > Courtesy of our colleagues at Nanex: HFT Breaks Speed-of-Light Barrier, Sets Trading Speed World Record. Back to Main Research Page On September 15, 2011, beginning at 12:48:54.600, there was a time warp in the trading of Yahoo! (YHOO) stock. HFT has reached speeds faster than the speed of light itself. Up to 190 milliseconds into the future, or 0.19 fantaseconds is the record so far. It all happened in just over one second of trading, the evidence buried under an avalanche of about 19,000 quotations and 3,000 individual trade executions. The facts of the matter are indisputable. Based on official exchange timestamps, there is unmistakable proof that YHOO trades were executed on quotes that didn't exist until 190 milliseconds later! Millions of traders depend on the accuracy of exchange timestamps — especially after bad timestamps were found to be a key factor in the disastrous market crash known as the flash crash of May 2010. We are confident the exchange timestamp problem has been completely addressed by now: the SEC would have made sure of it. Adding accurate timestamps is not exactly rocket science; it's not even considered to be a difficult problem. Based on recent marketing materials, the exchanges are practically experts on measuring time. And with hundreds of millions in annual data feed subscriptions paid by the same subscribers expecting quotes with accurate timestamps, there is no shortage of funds to make it happen. So we can be certain the exchange timestamps were accurate, which means that HFT has truly entered the era of the fantasecond. But let us suppose for a moment that in reality, quotes became queued (delayed) and were timestamped after leaving this queue. After detailed analysis of the UQDF data feed (see chart below) that transmits this information to traders, we find that the traffic rate for all output lines and specifically multicast line #6 which carries YHOO, were well below peak rates. So it doesn't appear there were any capacity problems which have always been an excellent indication of feed delay. This raises a few thorny questions. Does this mean there are far more delays than previously thought? Is there a delay every time we see an explosion of quotes in one stock? Because that sort of thing happens. All the time. Regulation NMS is pretty clear that direct exchange feeds are prohibited from having a speed advantage over the UQDF data feed. UQDF computes the NBBO after all. So how does one ensure trade-through price protection if the price being protected hasn't even occurred yet? The NBBO lies at the heart of Regulation NMS (Reg. NMS) and is the key concept that assures investors are getting the best price when buying or selling stocks. Maybe it would be better to just fantasize about fantaseconds after all.
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| Posted: 21 Sep 2011 10:06 AM PDT *CITIGROUP L-T SR RATINGS CONFIRMED BY MOODY’S
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| Posted: 21 Sep 2011 10:02 AM PDT *WELLS FARGO & CO L-T SR DEBT RATINGS CUT A2 FROM A1 BY MOODY’S
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