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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
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.
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
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
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
Live markets commentary from FT.com
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
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
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