CHICAGO—U.S. cattle futures rebounded Wednesday from the panicked selling of Tuesday, when traders learned of a new case of mad-cow disease in the U.S.
Wednesday, April 25, 2012
Cattle Futures Recover From Mad-Cow Case
CHICAGO—U.S. cattle futures rebounded Wednesday from the panicked selling of Tuesday, when traders learned of a new case of mad-cow disease in the U.S.
Dalio takes hedge crown from Soros
Ray Dalio has overtaken George Soros as the world’s most successful hedge fund manager after his Bridgewater Pure Alpha fund made $13.8bn for investors last year.
Trading Alpha - Where Does Alpha Come From?
There was a time not too long ago when, if you posed the question “Where does alpha come from?” to a roomful of academic financial economists, most of them would complain: “It’s a trick question! There is no alpha! Markets are strong-form efficient and you are a heathen!” Those complaints are rarer now, even among economists. Two of their own, Sanford Grossman and Joseph Stiglitz, crystallized the contradiction of strongly efficient markets in their eponymous paradox. It is summarized in Stiglitz’s 2001 Nobel Prize citation: If a market were informationally efficient, i.e., all relevant information is reflected in market prices, then no single agent would have sufficient incentive to acquire the information on which prices are based.(1)
Hedge Funds Review - Jobs act rewrites hedge fund marketing rules
The Jobs Act will allow hedge funds to advertise their services and directly solicit investors for the first time but regulators have concerns about the change. The SEC has 90 days to amend its rules.
6 Degrees Of Louis Bacon And Kevin Bacon
How hard is it really, to connect Kevin Bacon to other actors? Many have been asked to accomplish the task while playing “Six Degrees Of Kevin Bacon,” a game designed to pass the time on long subway rides and awkward road trips. IMDB lists 73 titles under the ubiquitous actor’s name. And what, you get six moves to connect him to Diane Keaton?
Falling coffee prices on ICE trigger breaker for first time
(Reuters) - A sharp, swift drop in coffee prices on Wednesday triggered IntercontinentalExchange Inc's new circuit breaker for the first time since the new system was launched just over two weeks ago to prevent extreme price volatility. The breaker, which was only introduced in the soft contracts on April 9, was activated as Arabica prices on ICE Futures U.S. sank 4 cents, equivalent to 2.2 percent, in just 15 seconds at 11:18 a.m. EDT (1515 GMT).
US GAS: Futures Surge At Close As Traders Lock In Profits
NEW YORK (Dow Jones)--Natural gas futures rose Wednesday, surging in the hour before trading closed as investors rushed to lock in profits after prices crossed back above $2. Natural gas for May delivery settled 9.3 cents, or 4.7%, higher at $2.068 a million British thermal units on the New York Mercantile Exchange, the highest settlement since April 9.
'Plenty of Reasons' to Buy Australian Dollar: Video
'Plenty of Reasons' to Buy Australian Dollar: Video - Bloomberg
April 26 (Bloomberg) -- Mitul Kotecha, head of global currency strategy at Credit Agricole CIB in Hong Kong, talks about the outlook for global currencies and his trading strategy. He speaks with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)
April 26 (Bloomberg) -- Mitul Kotecha, head of global currency strategy at Credit Agricole CIB in Hong Kong, talks about the outlook for global currencies and his trading strategy. He speaks with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)
Lloyds Says U.K. Recession Not Underlying Trend: Video
Lloyds Says U.K. Recession Not Underlying Trend: Video - Bloomberg
April 25 (Bloomberg) -- David Page, an economist at Lloyds Bank Wholesale Banking and Markets, discusses U.K. first-quarter gross domestic product which contracted 0.2 percent from the fourth-quarter of 2011. He speaks with Maryam Nemazee on Bloomberg Television's "The Pulse." (Source: Bloomberg)
April 25 (Bloomberg) -- David Page, an economist at Lloyds Bank Wholesale Banking and Markets, discusses U.K. first-quarter gross domestic product which contracted 0.2 percent from the fourth-quarter of 2011. He speaks with Maryam Nemazee on Bloomberg Television's "The Pulse." (Source: Bloomberg)
U.K. Succumbs to First Double-Dip Recession Since 1970s
The U.K. economy shrank in the first quarter as Britain slid into its first double-dip recession since the 1970s, forcing Prime Minister David Cameron to defend his spending cuts in Parliament. Gross domestic product fell 0.2 percent from the fourth quarter of 2011, when it declined 0.3 percent, the Office for National Statistics said today in London. The median of 40 estimates in a Bloomberg News survey was for an increase of 0.1 percent. A technical recession is defined as two straight quarters of contraction.
Corn Climbs on Signs of Increased China Demand; Soybeans Drop
Corn rebounded from two days of declines on signs of increased Chinese demand for U.S. supplies. Soybeans dropped as a rally to the highest price since 2008 may spur investor sales. Corn for July delivery gained as much as 0.7 percent to $6.05 a bushel on the Chicago Board of Trade and was at $6.03 at 11:06 a.m. in Singapore. Futures fell yesterday and on April 24 after the U.S. reported the first case of mad-cow disease in six years, prompting speculation that feed use may drop.
Former UBS Executives to Start London Commodities Hedge Fund
Neal Shear, who spent 25 years at Morgan Stanley, and Jean Bourlot, former commodities head at UBS AG (UBSN), are starting Higgs Capital Management LLP, a commodities hedge fund in London.
The fund will cover energy, agriculture and metals, Bourlot said by phone from London today. Shear will be chief executive officer and Bourlot will be chief investment officer, he said. Neville Atha, who joins from Jabre Capital Partners, will be chief operating officer.
Validus, Paulson team up on new reinsurer
(Reuters) - Add John Paulson to the list of hedge fund managers sticking a toe into the reinsurance business, in his case via a deal with reinsurer Validus Holdings. Validus said on Wednesday a new company, PaCRe Ltd, had been formed with an initial capitalization of $500 million to write reinsurance, which insurance companies use to backstop portions of their risk.
Kathy Ireland: Swimsuit Cover Girl Turned $2 Billion Business Model
If you’re anything like me, you were probably surprised to see Kathy Ireland on the cover of Forbes—and not just because she’s traded in her tousled ‘80s locks for an immaculate, Lady Bird Johnson-esque bouffant. Ireland is perhaps best known for her supermodel status, landing a feature for 13 consecutive years in Sports Illustrated’s annual Swimsuit Issue, on newsstands today. To this day, it remains the most profitable single edition of any magazine in the world, transforming bikini-clad models into sexy cash cows for Sports Illustrated.
13 Supermodels Who Have A Thing For Wall Street Guys
As if having millions or billions of dollars isn't enough, Wall Street moguls tend to win on another front: beautiful women. We picked out the lucky financiers who have dated major professional models. In fact, one man even managed two model girlfriends.
Japanese Yen Trust Experiences Big Outflow
Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the Japanese Yen Trust (AMEX: FXY) where we have detected an approximate $24.3 million dollar outflow — that’s a 11.4% decrease week over week (from 1,750,000 to 1,550,000).
Video - Jim Rogers Weighs in on Markets, Economy and China
Video - Jim Rogers Weighs in on Markets, Economy and China - WSJ.com
Famed investor Jim Rogers, co-founder of the Quantum fund with George Soros and chairman of Rogers Holdings and Beeland Interests, joins The News Hub to discuss his outlook for the financial markets, China and the U.S. economy. Photo: Reuters.
Famed investor Jim Rogers, co-founder of the Quantum fund with George Soros and chairman of Rogers Holdings and Beeland Interests, joins The News Hub to discuss his outlook for the financial markets, China and the U.S. economy. Photo: Reuters.
Heard on the Street: Bond Investors May Not Let Fed Wait and See
The Federal Reserve wants to keep interest rates ultralow until it is clear the slack in the economy has been taken up. That sounds sensible. The trouble is knowing when that moment comes—and making sure the bond market plays along meanwhile. Even with the economy picking up steam over the past half year, the core of the Fed's rate-setting committee holds that there is plenty of slack in the economy that will help keep a lid on inflation. Gross domestic product is far below its potential, factories still have machines sitting idle and the unemployment rate is far too high.
Real-Time Billionaires
Track the biggest gains and losses of the day for the major public holdings of a select group of billionaires. Full Methodology »
Palladium Investors Hit Gas
LONDON—The palladium market is revving up. After lagging behind other precious metals for much of the year, prices for the white metal—a key element in cars' catalytic converters—are pulling ahead. Since the beginning of the month, palladium has risen almost 2%, hitting a one-month high on Friday.
Hedge Fund Donors to Give $1 Million or More to Super-PACs
The first 25 conservative donors to give $1 million or more to super-PACs this cycle, either on their own, with their families, or with companies that they or their families control. Others have likely given millions more to 501(c)(4)s, “social welfare” groups that are not required to disclose their donors. (Based on filings through February 29.)
Low-Latency High-Frequency Trading is Progress Not Problem
High-frequency
technology has been blamed for sudden instability in the markets, most
recently when the Bats equity exchange canceled its initial public
offering after a computer glitch caused chaotic trading in its own stock
and others.But criticisms of HFT are overblown, and regulating potential abuses isn’t as hard as many believe. In fact, more regulation unless wisely applied is likely to do more harm than good.
Critics are concerned that traders with low-latency technology, who often pay to locate their servers near an exchange’s systems to decrease messaging delays, have the earliest access to market data.
But info timing asymmetries have always existed. Specialists and floor traders have always had price information ahead of the rest of the market. In the mid-1990s, the “SOES bandits” took advantage of human market makers by using Nasdaq (NDAQ)’s Small Order Execution System to place orders before humans could update their bids and offers.
Speed of information and execution is everyone’s objective in the marketplace — and the current trading infrastructure is no more than a logical extension of a long-term trend.
Benefits of HFT
In a study published March 19, Ana Avramovic of Credit Suisse Group AG showed that intraday volatility has actually been steadily decreasing since 2005, even as HFT has increased. In 2008, of course, daily volatility shot to the highest level since 1932, as traders responded to the collapse of Lehman Brothers Holdings Inc. But 2011 ranked only 16th in terms of daily volatility in that period, and was less volatile than 2000 and 2002, years when HFT was less prevalent. Find out about the strategies and algorithms.
Avramovic also found tighter spreads and greater liquidity for the national best bid and offer since 2004. She concluded that, as far as HFTs were concerned, “at a minimum, markets are not worse for their presence.” This has been corroborated by a number of academic and industry sources.
The reason why is that automated market makers (or AMMs), a subset of HFTs, are liquidity providers. Their quote-and-cancel rates may be high, but unless they offer the best price in the market, they won’t get order flow.
Some argue that AMMs are less reliable than traditional market makers and that their liquidity evaporates in a crisis as in the May 6, 2010 “flash crash.” Some AMMs did indeed abandon the market that day, and left the infamous, and now banned, stub quotes (buy at $0.01, sell at $10,000) as evidence. But AMM systems automatically stop trading when market data appear out of normal bounds or when regulatory capital reaches prescribed limits. These are reasonable actions. Had AMMs kept trading, they would have been criticized for not having appropriate risk systems in place.
More to the point, after a few minutes of analysis, managers responded to the flash crash by quickly restarting their systems and driving the market to a recovery within half an hour — as opposed to the year it took to recover from the stock-market crash of 1987. A report on the flash crash by the Securities and Exchange Commission and the Commodity Futures Trading Commission notably did not place the blame with high- frequency traders. Those who question the reliability of AMM liquidity forget that liquidity itself has always been a fleeting and fitful commodity in our markets.
Do esoteric quant models, which also require little human interaction, pose a threat? It depends on the model. Models based on momentum strategies may exacerbate volatility. But quants are most often based on arbitrage strategies, which I believe smooth markets and lower volatility. In examining many of the models, it is clear that they use techniques similar to the technical analysis I learned decades ago — only now exploiting access to real-time data. This is neither illegal nor unexpected. It’s merely a consequence of technological advances.
Some HFT practices do require further scrutiny. Momentum ignition (in which traders take a position and then start rumors or place orders to quickly drive the market up or down) and layering (where traders place orders in the market-order books to imply substantial buying or selling pressure without the intention of executing) could both open the door to market manipulation.
London currency trader who spent nearly $200K on Champagne held in fraud probe
LONDON -- A London currency trader who hit the headlines for spending £125,000 ($198,000) on a single bottle of Champagne was arrested by financial regulators. Alex Hope, 23, who promotes himself as a foreign-exchange expert, was held over a suspected unauthorized foreign-exchange scheme. Hope, who lives in east London's Docklands, gained significant publicity last month after he apparently splashed £200,000 on drinks at a nightclub in Liverpool, northwestern England.
Soybeans Advance on Supply Concern Over Argentina Freeze
Soybeans rose to a three-year high in Chicago and rapeseed reached the highest in 15 months in Paris on mounting concern that a freeze in South America and rain in Europe will curb oilseed supplies.
Areas of Argentina saw “a light to hard freeze” yesterday, leaving soybeans at risk of damage, Telvent DTN said in a report.
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