Posts from Friday Jul 19 2013

“Edge”, SEC v Steve Cohen edition

Friday was a very very hot day on the East Coast. We wonder if they’re staying cool on SAC’s trading floor this afternoon…

Click for the SEC’s order alleging that Steve Cohen “failed reasonably to supervise” two SAC traders involved in trading Elan and Dell stock. It’s not the kind of claim against Cohen which many could really have been expecting in this sprawling, almost absurdly diffident insider-trading investigation. Read more

Does the Fed funds rate even matter?

An interesting point to ponder this weekend courtesy of Barclays’ Joseph Abate:

What is fed funds now measuring? Alternatively, there is a deeper question – does the fed funds rate accurately measure unsecured bank funding costs? After repeat rounds of asset purchases, bank reserves now exceed $2trn and all banks are massively long liquidity. No institution needs to borrow reserves in the market in order to satisfy its reserve requirements. So the only trades going through are originated from a handful of forced sellers who prefer to sell cash into the reserve market rather than leave it un-invested at the Federal Reserve for no return. And the volume of this activity is probably light as proportionally more of this cash is leaking into the repo market. Indeed, although there is no public information on the volume of daily fed funds transactions, based on several recent papers, we estimate that activity has shrunk from about $250bn/d before the financial crisis to probably less than $50bn/d currently. Read more

Markets Live: Friday, 19th July, 2013

Live markets commentary from 

The (early) Lunch Wrap

A record bankruptcy for Detroit || Earnings sand buyback plans boost Morgan Stanley || LVMH China watch sales decline offset by overseas buying || Alexei Navalny freed pending appeal || OECD unveils global crackdown on tax arbitrage by multinationals || Nokia’s turnaround has long way to go || Google’s profit up but search-ad prices drop 6% || Microsoft profit misses estimates amid surface writedown || ECB extends range of collateral it accepts to include more ABS || WTI, Brent spread converges || Markets Read more

Alphachat: those fracking robots edition

It’s another Alphachat. How predictable.

This time Cardiff and Izzy talked robots with Illah Nourbakhsh, Professor of Robotics at The Robotics Institute of Carnegie Mellon University, about why it’s the next decade of robotics, rather than improbable and distant dystopian/ utopian futures, that we need to worry about. Read more

When you’re rattled by collateral, do the Fed taper talk

Tim Duy, professor of practice at the department of economics at the University of Oregon, is confusing Brad DeLong, professor of economics at Berkeley, with his observation that the Fed seems to be striving to change the mix but not the level of outright accommodation. This, at least, seems to be the motivation for taper talk.

We’re less confused, and quite like what Duy is saying.

Note the following (our emphasis): Read more

Further reading

Elsewhere on Friday,

– The 10 greatest white elephants.

– On base erosion and profit shifting

– Tiny lasers will speed up computers. Read more

The 6am Cut London

Asian markets lower || WTI at 16-month record || Morgan Stanley beats, Google and Microsoft miss || Barclays’ rescue sheikh sells stake || UK plans most general shale gas tax rules || Nine insurance ‘GSifis’ may face stricter capital rules || Blackstone eyes shopping centre IPO || Detroit default || Moody’s raises US Aaa outlook to stable || Is FERC just getting started? || China needs farmers land rights, hukou reform  Read more