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MARKETS
Dare to be great II – Oaktee
Capital
The real question is whether you dare to do the things that are
necessary in order to be great. Are you willing to be different, and are you
willing to be wrong? In order to have a chance at great results, you have to be
open to being both.
Recap: Drive-by – Global
Macro Trading
Whatever the reason, equities are in a tough spot technically.
Some Chart
Observations – Global
Macro Trading
Biggest Credit Bubble
in History Flashes Warning: ‘Seek Cover’ – Testosterone
Pit
Hidden in the IMF’s just released 188-page Global Financial and
Stability Report is a doozie of a chart that screams not only “credit bubble”
but also flashes a red warning sign: “seek cover, implosion in sight.”
Computer Strategies
Often Rely on Unsound Math, Researchers Say – BB
Strategies that use computer models to predict future market moves are
often based on selective historical data, the authors said in the paper,
“Pseudo-Mathematics and Financial Charlatanism: The Effects of Backtest
Overfitting on Out-of-Sample Performance.” The results lead to “the
proliferation of investment products that are misleadingly marketed as
mathematically sound”.
Faber: Own
Most-Beaten-Down Stocks – etf.com
With such daunting odds, what advice is there for people who dimly
choose to speculate anyway, tying up large amounts of their human capital? There are five specific advice here to
impart.
The Machines Gain
Ground in FX – WSJ
Global probes into the FX market are accelerating the industry shift
from voice to computerized system.
Using a series of statistical measures, the study suggests that Mr.
Buffett has indeed been blessed with an impressively big dose of alpha over a
very long career. But it also reveals something that isn’t impressive at all:
For four of the last five years, Mr. Buffett has been doing worse than the
typical, no-frills Standard & Poor’s 500-stock index fund — so much worse
that it’s unlikely to be a matter of a string of bad luck. Mr. Buffett has
begun to behave like an investor with no alpha at all.
A quant lesson from a
technician – Humble
Student
No quant model for all seasons * Barriers to entry to quant investing
are falling * You have to learn to be a market savvy strategist - because good
quant techniques aren`t going to cut it anymore.
Derivatives Rules Softened in Victory for Banks – BB
HIGH-FREQUENCY TRADING
High Frequency Trading:
All You Need To Know – ZH
In the aftermath of Michael Lewis' book "Flash Boys" there has
been a renewed surge in interest in High Frequency Trading. Alas, much of it is
conflicted, biased, overly technical or simply wrong. And since we can't assume
that all those interested have been followed our 5 year of coverage of a topic
that finally has earned its day in the public spotlight, below is a simple summary
for everyone.
1215095 - The Flash
Boys Mystery Solved – ZH
The Father Of High
Speed Trading Speaks: "The Market We Created Is A Casino; A Complete Mess;
A Rigged Game" – ZH
Scrutiny of
High-Frequency Trading Weighs on Online Brokerages – WSJ
SEC VS GOLDMAN
The SEC's Internal
Battles over Goldman Sachs Probe – The
Americal Lawyer
Now, more than 2,000 pages of documents newly released by the SEC in
response to an American Lawyer Freedom of Information Request sheds fresh light
on the Abacus case. They show deep internal divisions at the SEC over the
investigation and charging of that case, as one veteran lawyer relentlessly
pushed for the SEC to target a more senior Goldman executive, and ultimately
failed.
SEC Goldman Lawyer
Says Agency Too Timid on Wall Street Misdeeds – BB
A trial attorney from the SEC said his bosses were too “tentative and
fearful” to bring many Wall Street leaders to heel after the 2008 credit
crisis, echoing the regulator’s outside critics.
Yes, the SEC was
colluding with banks on CDO prosecutions – Felix
Salmon / Reuters
Now that this information is public, the SEC should apologize to all of
us for its behavior, and promise not to collude with Wall Street again. If it
doesn’t, that’s a clear sign that Wall Street’s most salient watchdog is still
as captured as ever.
ECONOMICS
Global manufacturing
PMI tracker: Growth robust in March – TradingFloor
Austerity,
journalists and the financial sector – Mainly
Macro
The argument that current growth (since 2013 in the UK and maybe from 2014
in the Eurozone) vindicates austerity is ludicrous. Anyone who comes to the
debate without existing baggage can see that developments in the UK and Eurozone have
been entirely consistent with what academic critics of austerity have been
saying. So rather than go over the arguments yet again, let me ask why some
people continue to make or support this ludicrous argument.
Emerging FX: No
longer crawling – The
Economist
The number of economies using hard-currency pegs has actually gone up a
bit over time. And free floating, which peaked right before the global
recession, has lately gone out of fashion. But the big shifts, as it turns out,
are in the hybrid exchange-rate regimes. In particular, there has been a broad
move away from crawling pegs and toward managed floats. That represents a net
move toward more liberalised exchange rates, but it's not the same thing as a
general move to floating.
Chief Economist Of
Central Banks' Central Bank: "It's Extremely Dangerous... I See
Speculative Bubbles Like In 2007" – ZH
The Growing Divide
Within Developing Economies – Project
Syndicate
Look around the
developing world and you will see a bewildering fissure opening up between
economies' leading and lagging sectors. Worse, in many developing countries,
the share of employment in these low-productivity sectors is expanding.
The slumps that
shaped modern finance – The
Economist
Finance is not merely prone to crises, it is shaped by them. Five
historical crises show how aspects of today’s financial system originated—and
offer lessons for today’s regulators
Greed Is Good: A
300-Year History of a Dangerous Idea – The
Atlantic
Not long ago, the pursuit of commercial self-interest was largely
reviled. How did we come to accept it?
Why We’re in a New
Gilded Age – The
New York Review of Books
Paul Krugman: Thomas Piketty, professor at the Paris School of
Economics, isn’t a household name, although that may change with the
English-language publication of his magnificent, sweeping meditation on
inequality, Capital in the Twenty-First Century. Yet his influence runs deep.
It has become a commonplace to say that we are living in a second Gilded
Age—or, as Piketty likes to put it, a second Belle Époque—defined by the
incredible rise of the “one percent.”
IMF/World Bank Spring
Meetings: Three Questions – CFR
Explainer: Why is
deflation so harmful? – CBS News
Who really benefits
from EM export feedback loops? – FT
Manipulate Me: The
Booming Business in Behavioral Finance – BB
The current debate on the shape that monetary policy should take after
the crisis. It revisits the pros and cons of expanding the objectives of
monetary policy, the merits of turning unconventional policies into
conventional ones, how to make monetary policy frameworks more resilient to the
risk of being constrained by the zero-lower bound going forward, and the
institutional challenges to preserve central bank independence with regards to
monetary policy, while allowing adequate government oversight over central
banks’ new responsibilities. It will draw policy conclusions where consensus
has been reached, and highlight the areas where more work is needed to get more
granular policy advice.
Are Countries Better
Off with Their Own Monetary Regimes? – PIIE
What is the best monetary regime for countries facing such stresses? The
answer is that no monetary regime is best for all countries, at all times, in
all circumstances, including times of stress.
Global solar
dominance in sight as science trumps fossil fuels – The
Telegraph
Solar power will slowly squeeze the revenues of petro-rentier regimes in
Russia, Venezuela and Saudi Arabia. They will have to
find a new business model, or fade into decline