As if picking on oil speculators wasn’t enough, now high-speed traders are under the spotlight. The rumor is so called “flash” orders get preference to everyone else. Well Joe Ratterman, chairman and CEO of Bats Trading wasn’t having any of that and posted an e-letter explaining his company’s position. In it he throws down the gauntlet: if everyone else eliminates flash trades, his company would also. Let’s see how many bites he gets.
Archive for July, 2009
Flash flood?
Thursday, July 30th, 2009Housing recovery: myth or reality?
Wednesday, July 29th, 2009Are there really ”green shoots” of economic recovery? Some economists are wondering if the reports of housing market recovery by Wall Street and the Administration are real or imaginary. John Williams of Shadow Government Statistics argues that the 11% gain for new houses sold in June (following May’s 2.4% gain) was not statistically meaningful. He says that what we’re experiencing is a case of bottom bouncing, with the average rate of homes sold in the last eight months 70% less than 2004 and 2005 levels. He adds that “current year-to-year contractions reflect only a plateauing of housing activity at historic lows, not an upturn or turnaround in economic activity.” The economists we spoke to for our Mid-Year Economic Outlook said that the housing outlook was still very anemic and cited the huge amount of unsold homes and inadequate stimulus plans as a drag on the housing market. For now, it seems, talk of recovery in the housing sector doesn’t have a very solid foundation.
Always be prepared
Friday, July 24th, 2009That is the motto of the Boy Scouts and ELX Futures CEO Neal Wolkoff — in town to host the LaSalle Street Dinner Dance, which benefits the Chicago Area Council of Boy Scouts of America— was prepared to tout the performance of his exchange two weeks after it began trading.
“We have been increasing volume every day. I want to get to the point where [CME Group is] asking us for fungibility,” Wolkoff joked.
Are you a real bona fide hedger?
Tuesday, July 21st, 2009The Dow Jones Indexes’ mid-year economic outlook broke down into a discussion over the hedge exemption afforded swap dealers and index traders who hedge their cash positions in the futures markets.
Despite a Commodity Futures Trading Commission (CFTC) study released last September that disputed consistent and relentless arguments that speculators caused last year’s spike in crude oil, several members of Congress have persisted in pinning the blame on the large index funds that track various commodity indexes. There are several efforts to take away the hedge exemption that allows index traders hedging their cash exposure to commodity markets with futures to trade beyond speculation limits.
Those blaming speculators for price volatility would like to limit hedge exemptions to the traditional commercial participants who actually make or take delivery of a commodity.
Today's laugh….
Thursday, July 16th, 2009Perhaps it’s satiric humor, but today’s Borowitz Report’s lead story seems close to the truth. The headline is, “Goldman Sachs in talks to acquire Treasury Department.” The tongue-in-cheek story discusses why Goldman, which in reality hit record profits during its period of receiving U.S. TARP money, was looking to purchase the U.S. Treasury Department. One person in the “story” noted:
Mr. Hestron said the only challenge facing Goldman in completing the merger “is trying to figure out which parts of the Treasury Dept. we don’t already own.”
Maybe it isn’t real news, but seems very close to Goldman’s very cozy relationship to the U.S. government.
It’s the debt, stupid
Tuesday, July 14th, 2009Nassim Taleb, the author who gave us the Black Swan, has written an editorial along with Mark Spitznagel, in Tuesday’s Financial Times that told us more — quite economically — about our current economic troubles then dozens of hundred plus-page economic white papers, voluminous government studies or the 89-page blue print for regulatory reform recently released by the Obama Administration ever could have.
He told us something we already knew but consistently try to ignore: We have too much debt. That goes for government business and individuals.
Perhaps we liked the piece so much because it echoed a lot of things we have written here. Particularly the folly of entrusting our economy to the people who either could not recognize the risk in the first place or were directly responsible for it. Taleb wrote, “It is sad to see that those who failed to spot the problem (or helped to cause it) are now in charge of the remedy.”
Don’t drink and trade!
Friday, July 10th, 2009A popular watering hole adjacent to the Chicago Board of Trade called the Cactus Club that was populated by young bond futures traders and trading clerks used to sell a t-shirt cautioning, “Don’t drink and trade.”
It was put out in jest and probably not always adhered to but the underlying theme made a lot of sense. Trading is an emotional exercise—especially for those in the heat of the action inside the now antiquated trading pits—where judgment is extremely important. It is easy to let those emotions overcome you in the heat of the action as it is, let alone if your judgment is impaired by alcohol or drugs.
