Posts from Monday Jul 22 2013

The Closer

FURTHER FURTHER READING

- 99-yr-old minimum wage custodian and his employers show why everyone hates economicsRead more

A charted history of robot evolution, and some thoughts on jobs

A fun couple of charts plotting the history of robotics innovation from a new report by the Atlantic Council, with our thoughts below (click to enlarge): Read more

Software eats the world, charges for the privilege

Charlie Warzel’s piece at Buzzfeed last week reminded us of something Ben Horowitz explained in a debate sponsored by The Economist two years ago. The widespread monetisation of the internet on a much bigger scale, if not quite inevitable, at least would be consistent with previous computing cycles. Just as the earlier “Internet is free” era, when the technology was promising but had yet to realise its ability to make money for its owners, was consistent with those earlier cycles. Read more

Should Michael Coscia have been fined, or medicated?

Much hoopla on Monday from the FCA, Britain’s newly-fashioned regulator, as it meted out a $903,176 fine to Michael Coscia, a dirty HFT operator caught manipulating crude oil futures back during the autumn of 2011.

We learn that…

Between 6 September 2011 and 18 October 2011 Coscia used an algorithmic programme of his own design to instigate an abusive trading strategy known as “layering”. During this time, Coscia placed thousands of false orders for Brent Crude, Gas Oil and Western Texas Intermediate (WTI) futures from the US on the ICE Futures Europe exchange (ICE) in the UK.

Full details are available in the final notice, but you’ll want to click on the image below for an “animated example of Mr Coscia’s trading…” Read more

A list of China bear repellents

Deutsche Banks’ China economics analysts are pondering why their forecast for 8.5 per cent growth next year is well above consensus (and even well above the IMF’s 7.7 per cent and the World Bank’s 8 per cent).

They have come up with a list of reasons why everyone else might be overlooking some positive possibilities for future economic growth. We’re not sure if we agree, but bear with us (haha) anyway. Read more

Commodities and banks, a recap

The New York Times ran a big piece on the ongoing commodity shuffle this weekend. The one FT Alphaville (and others) have been writing about for a long while now, and which applies to both metals and energy markets.

The story followed a Reuters article reporting that the Fed was now “reviewing” a landmark 2003 decision that first allowed regulated banks to trade in physical commodity markets. It was this, we always noted, that allowed for the emergence of a so-called physical loophole for a number of top Wall Street institutions active in commodity markets. The fact that they were swap dealers with physical exposures ensured they were eligible for exemptions (on such things as position limits) whilst other financial institutions were not. Read more

Failing to settle in Japan

Check it, from JP Morgan’s Flows & Liquidity team:

The 233 repo fails in the month of June is four times larger than the typical monthly pace of 60-70 and the trend is quite suggestive. (A fail is where one market party fails to deliver the security or cash it had promised to send to another entity within a specific time frame. It’s a problem for both buyers and sellers since it means they could have to go and buy them out in the open market for what could be a higher or lower price.)

From JPM, with their emphasis: Read more

Markets Live: Monday, 22nd July, 2013

Live markets commentary from FT.com 

The (early) Lunch Wrap

Sweeping victory for Japan’s LDP || Deutsche plans to shrink balance sheet by up to a fifth || Fed reconsidering banks’ physical commodities activities || GlaxoSmithKline says Chinese laws may have been violated || At least six other global pharma companies used the Chinese travel agency implicated in GSK bribery claims || UBS agrees to settle US housing claims || BoJ governor says more stimulus is an option || Portugal’s prime minister ruled out calling a snap general electio || BP failed in its attempt to freeze compensation payments || US vulture funds swoop on Co-op debt || British fraud investigator held in China || Markets wrap || FTAV’s latest Read more

Why new leverage ratio rules could stifle repo markets

Earlier this month the Fed, together with the Office of the Comptroller of the Currency and the FDIC, proposed a leverage ratio rule for big US banks.

JP Morgan says it is now worried about the punitive effects such ratios might have on repo. Read more

China’s interest rate liberalisation: more complicated than it looks?

You probably heard on Friday that China took some steps towards liberalising lending rates. Although this was reported so widely that it sounded like a very big deal, most reports also pointed out that’s really because of what it might signify about the new leadership’s intentions. In themselves, the changes announced on Friday are expected to have very limited effects. Or… will they? Read more

Further reading

Elsewhere on Monday,

- Why the SEC/Steve Cohen case is so important.

- The Brent-WTI spread is gone! For now.

- About that Goldman commods furore…

- The lucky-take-all societyRead more

The 6am Cut London

Asian stocks mixed as Japan election boosts yen || Japan upper house victory for LDP || Deutsche plans to shrink by a fifth || Fed reconsidering banks’ in physical commodities || Portugal’s PM rules out early election || Jaguar moving into ‘entry-level luxury’ market || BoJ governor says more can be done if needed || BP fails to get compensation payouts frozen || US vulture funds swoop on Co-op debt Read more