Robot Paradise

[wndysrf]

Some dude on CNBS this morning was bragging on how he has designed a Black Box program which can be used by a HedgeFund with over $100 billion under management.

 

Hey, no problem...

 

Its a Robot's Paradise out there.

 

From today's WSJ:

 

Program Trading Accounts For 76.3% of NYSE Volume

 

By a WALL STREET JOURNAL Staff Reporter

 

NEW YORK -- Program trading in the week ended June 24 accounted for a record 76.3%, or an average of 1.34 billion shares daily, of New York Stock Exchange volume.

 

Brokerage firms executed an additional 1.52 billion daily shares of program trading away from the NYSE, with 4.3% of the overall total on foreign markets. This report included program trading associated with the rebalancing of the Russell 2000 small-stock index. Program trading is the simultaneous purchase or sale of at least 15 different stocks with a total value of $1 million or more.

 

Of the program total on the NYSE, 5.5% involved stock-index arbitrage. In this strategy, traders dart between stocks and stock-index options and futures to capture fleeting price differences. Less than 0.1% involved derivative product-related strategies. Index arbitrage can be executed only in a stabilizing manner when the Dow Jones Industrial Average moves 210 points or more from its previous day's close.

 

Some 48.1% of program trading was executed by firms for their clients, while 32.7% was done for their own accounts, or principal trading. An additional 19.1% was designated as customer facilitation, in which firms use principal positions to facilitate customer trades.

 

Of the five most-active firms overall for the week, UBS AG's UBS Securities executed most of its program trading as principal for its own account. Goldman Sachs Group Inc., Citigroup Inc.'s Citigroup Global Markets, Deutsche Bank AG's Deutsche Bank Securities and Morgan Stanley & Co. executed most of their program trading activity for customers, as agent.

 

.........................

 

In the meantime, more HedgeFunds and Wealth Managers are sprouting up like weeds.

 

Pretty soon, those beach homes out at The Hamptons will be selling over over $100 million!!!

 

From today's WSJ:

 

Costas Will Start UBS Hedge Fund, Jenkins Succeeds

 

By EDWARD TAYLOR and ANN DAVIS

Staff Reporters of THE WALL STREET JOURNAL

 

Swiss banking giant UBS AG named a new head of its investment bank and said John P. Costas, who has led that business for the past 3? years, will start a hedge fund at the firm.

 

Huw Jenkins, 47 years old, the head of the equities division, succeeds Mr. Costas, 48, as head of the investment bank and becomes a member of the group executive board, effective July 1. Mr. Costas also will relinquish his spot on the executive board and the title of deputy group chief executive as of year end, a spokesman said.

 

Mr. Costas was recently considered as a candidate to head Morgan Stanley.

 

Mr. Costas and UBS Chief Executive Peter Wuffli said his new role at UBS was unrelated to any other job prospects.

 

"John Costas said he wanted to run and build this business. We are all excited that he has chosen to build another business for us. The fundamental desire for John Costas to engage in that business was not a surprise and was carefully planned over several quarters," Mr. Wuffli said in a telephone interview Thursday, adding: "It was not related to short-term events in the competitive field or in the markets. It does not affect the ambition level of our investment bank. We have found a very worthy successor to John Costas in Huw Jenkins."

 

Under the plan, in early 2006, Mr. Costas will become chief executive of a new alternative investment-management business, to be called Dillon Read Capital Management, which forms part of UBS's Global Asset Management business.

 

Mr. Costas will report to the head of asset management, group executive board member John Fraser, but remains a nonexecutive chairman of UBS's investment bank, a spokesman said.

 

In a separate move, UBS said it will integrate its two wealth-management units -- the U.S., Swiss and international businesses as well as its Swiss corporate and retail banking unit -- under one business group, global wealth management and business banking, under Marcel Rohner. The integration includes the U.S. brokerage business, the former Paine Webber.

 

............................

 

And it appears that the M & A Boom of 2005 may exceed the bubble days of 2000.

Check this out:

 

Lots of Merger Activity. Bank of America Provides Final Flourish,

While Bids From China Roil U.S. Politics

 

By DENNIS K. BERMAN

Staff Reporter of THE WALL STREET JOURNAL

 

The mergers train just keeps rolling along. The past three months of mergers and acquisitions produced the most active period since the end of 2000, with corporations and investors putting down $665.9 billion for deals around the world, 53% more than the year-earlier period.

 

From utilities and cable television to banks and real estate, companies showed they wouldn't shy away from doing deals even amid a lackluster stock market.

 

Activity in the second quarter picked up by nearly every measure. In the U.S. alone, the amount spent on deals surged 73%, compared with the second quarter of 2004, and rose 20% from this year's first quarter. Private-equity firms continued their march into the fray, accounting for 17% of global M&A activity, a sharp increase from 11% last year, according to data from Thomson Financial.

 

Through the first-half of this year, the dollar volume of global deals involving retailers surged 137% according to data firm Dealogic, while oil and gas deals also leapt 137%, and technology rose 60%.

 

"It feels to us like there is more depth to the market than there has been even through last year and the beginning of this year," says Paul Stefanick, chairman of global M&A at Merrill Lynch. "We saw some large transactions then. Now, the number of deals in the $500 million to $10 billion range feels higher."

 

Some of the biggest deals came from outside the U.S. Among them were the $18.3 billion purchase by Italy's UniCredito Italiano SpA of Germany's HVB Group, the $6.8 billion acquisition by Italy's Banca Popolare di Lodi of Banca Antonveneta SpA, and the $3.5 billion acquisition by Spain's Telefonica SA of Czech Republic's Cesky Telecom AS.

 

Those were just a warm-up. Perhaps the most discussed move of the quarter was the unsolicited $18.5 billion proposed purchase of Unocal Corp., El Segundo, Calif., by China National Offshore Oil Corp.'s Cnooc Ltd., an attempt to break up Unocal's more than $16 billion deal to be acquired by Chevron Corp., San Ramon, Calif., for $16 billion.

 

Cnooc's announcement came the same week as a $1.3 billion offer for Maytag Corp., Newton, Iowa, by Chinese appliance maker Qingdao Haier Ltd. and U.S. private-equity funds Blackstone Group and Bain Capital, which were trying to unseat an earlier $1.13 billion proposal from rival private-equity firm Ripplewood Holdings LLC.

 

Those proposals were a sign of the overall confidence in the market, says Mark Shafir, Lehman Brothers global head of mergers. "There is a lot less taint about busting up someone's deal. That's a part of doing business now, especially in the post-Sarbanes world," he says, referring to the Sarbanes-Oxley legislation, which has made boards more responsive to higher offers in order to fulfill their fiduciary responsibility to shareholders.

 

Should the second half of 2005 be as busy as the first, the year will go down as the most active since the fading days of the investing boom of 2000, when an overblown stock market produced total M&A volume of $3.4 trillion. Global deal volume is on pace to reach $2.5 trillion this year, according to Thomson.

 

"We're not seeing any slowdown because of an increase in oil prices," says Frank Aquila, an M&A partner at New York law firm Sullivan & Cromwell.

 

Private-equity firms show no signs of slacking off. Total private-equity volume rose 54% from the year's first quarter, to $116 billion, according to Thomson.

 

There had been some concerns that financing for a set of large U.S. private-equity deals in the U.S. -- the $6.6 billion purchase of Toys "R" Us Inc. and the $4.9 billion acquisition of Neiman Marcus Group Inc. -- would falter amid a jittery debt market. Those deals show little sign of falling apart. Private-equity buyers instead may have to pay slightly more in financing costs to get their quarry.

 

"The question for the second half of the year is whether capital markets will remain robust enough to continue to propel that level of activity," says Doug Braunstein, J.P. Morgan's head of investment-banking coverage and M&A. "On a relative basis, interest rates will still be at an attractive level."

 

An unexpected or large increase in interest rates could derail M&A activity, says Paul J. Taubman, Morgan Stanley's global head of mergers and acquisitions. Big changes in the stock and debt markets also could affect the overall corporate confidence that feeds deals.

 

For now, there is nothing that looks like a serious threat, Mr. Taubman says. Across the economy, "we have a degree of confidence, and [gross domestic product] growth is steady. [M&A] Activity doesn't seem to be out of line from where it should be," he says.

 

...........................

 

Y'all be careful this weekend.

[Tchaikofsky]

Close: The market showed good resilience following yesterday's drubbing, as strong manufacturing data reassured investors that the economy can still expand in the face of rising interest rates and higher energy prices... Stocks opened higher on the notion yesterday's broad-based selling efforts, after the Fed gave no hint of an end to further tightening, may have been an overreaction...

 

While it still appears more rate hikes are likely, the Fed's policy directive was also more upbeat on the economy than the previous statement, saying expansion remains firm, labor market conditions continue to improve gradually and that long-term inflation expectations remain well contained... Just after the market opened, investors received further validation after a report showed U.S. manufacturing grew at a faster than expected pace in June as price pressures eased... The June ISM survey of national manufacturing conditions rose to 53.8%, above forecasts of 51.5% and a previous read of 51.4%... The prices paid component eased to 50.5% - the lowest since Feb. 2002 - from 58.0% in May, lending further credence that inflation remains under control...

 

However, even though the bullish ISM data dispelled concerns of a waning economy, the data subsequently raised worries that further rate hikes may be forthcoming, as Treasurys closed near session lows and the benchmark 10-year note (-31/32) finished above 4.0% for the first time this week... Another factor limiting market gains was a 4.0% surge in crude oil prices ($58.75/bbl +$2.25), as ongoing refining concerns exacerbated commodities traders' fears of holding short positions heading into the long, holiday weekend...

[fxfox]

if you ever thought that you are not good enpugh in trading or that there are many many better traders than you out there, then read this and after that you will feel some kind of relief. This is from a forex forum from today, i read posts like those quite often, one only can shake his head in disbeleive, but those guys are real:

 

about GBP/USD which closed at 1.7676 today and was under heavy pressure last few days:

 

"1 minilot long cable from 8554 from May 13

1 minilot long cable from 8381 from May 16

Leaving these unhedged over the holiday weekend.

still long because I don`t want to take the huge loss. Don`t want to reverse on this pair as it is not yielding in that direction."

 

that guy trades forex, the hottest and fastest market and looks at the YIELD! Who the fornicate gives a damn about yield on an intraday basis! Some folks dont even have the smallest clue what market they trade, yet they jump in with 1000s of dollars and go broke in just a few weeks. Man, they rate hike cycle in GBP is over since WEEKS and WEEKS!

 

last but not least:

 

" still holding damn chf since 1.1900... sad story..."

 

USD/CHF closed at 1.2977 today

 

they dont use stops, they dont have a clue, they just jump in........... oh man.

 

 

I post this becuase of entertainment for guys liek K-Wave but also as a warning:

 

Those markets are tricky, but they ARE tradeable and you can make money, but you MUST make your homework, a good understanding of charts is an absolute MUST, if you doubt that charts and corresponding TA works than dont ever trade Forex, never ever! But IF you are good you make decent coin.

[FeedFool]

Nikkei Charts

 

 

Seems to be doing somekind of flag like HUI.

[FeedFool]

Another 14 points of bearish run???

 

Next turn date is the 8th

 

I just don't think world is going to end yet.

 

Lets just see how it plays out

[Hiding Bear]

Close:

 

While it still appears more rate hikes are likely, the Fed's policy directive was also more upbeat on the economy than the previous statement, saying expansion remains firm, labor market conditions continue to improve gradually and that long-term inflation expectations remain well contained... Just after the market opened, investors received further validation after a report showed U.S. manufacturing grew at a faster than expected pace in June as price pressures eased... The June ISM survey of national manufacturing conditions rose to 53.8%, above forecasts of 51.5% and a previous read of 51.4%... The prices paid component eased to 50.5% - the lowest since Feb. 2002 - from 58.0% in May, lending further credence that inflation remains under control...

 

<{POST_SNAPBACK}>

 

Well, well. Expectations are well contained.

 

What does that mean? The Fed looks at long term futures contracts on interest rates and commodities. It therefore concludes, based on thinly traded far out contracts, that inflation is low.

 

Remember a year ago, one and two year contracts on oil were much lower in price than now. Did they predict anything? Perhaps only losses for those who sold them short.

 

I suppose when the time comes that these contracts actually do predict inflation, the Fed will stop using them.

[GTNWORSE]

Another 14 points of bearish run???

 

Next turn date is the 8th

 

I just don't think world is going to end yet.

 

Lets just see how it plays out

<{POST_SNAPBACK}>

 

Naw, not quite yet Come to poppa baby!

[Guest]

Inflation well contained? Consider this since the year 2000

 

- Housing prices have doubled or tripled.

 

- The cost of gas has doubled (In january 2002 I was paying $1.09 in northern ca).

 

- health insurance premiums have nearly doubled.

 

- grocery prices up 20-30%

 

- car insurance up 30%

 

- wages FLAT (unless you work for the government).

 

The prices of everything you need are increasing. The "well contained" part of inflation are the toys you want.

 

The Alice in Wonderland economy brought to you by Sir Alan Greenspan.

[GTNWORSE]

Hi Guys,

 

I going to go out on a limb here and say that, from this point forward in the cycle, real estate prices are beginning to come down. Listings are beginning to pile up on the market, ridiculous peices are being smirked at, and selling times are increasing fast.

I'm not sure if all the "bubble talk" has had some effect on speculators and buyers, or if they have just hit the wall with respect to the prices they are willing to pay. Prices began to "weaken" in Beverly Hills 2 months ago in the multimillion dollar properties. Historically, that's where they usually start.

I took a guess at the beginning of the year that median prices here in L.A. would end the year up 5%. I'm still sticking by that bet I made with Dozer. I don't know if Mark is seeing the same trend taking shape down south in the O.C. or not, but I suspect it is taking shape.

The only question now, as far as I'm concerned, is how much they "correct". I'm still standing by my 30% figure. If rates rise appreciably from here, though, all bets are off.

 

Have a nice weekend

[realist]

Program Trading Accounts For 76.3% of NYSE Volume

 

<{POST_SNAPBACK}>

 

Here's an interesting analysis from JesseL on this topic:

 

http://jessel.100megsfree3.com/ProgrammingTrading.png

 

When program trading exceeded 70% towards the end of each quarter, take a look at how the next quarter began thereafter...

 

KABOOM BABY!

[longOnUranus]

Program Trading Accounts For 76.3% of NYSE Volume

 

<{POST_SNAPBACK}>

 

Here's an interesting analysis from JesseL on this topic:

 

http://jessel.100megsfree3.com/ProgrammingTrading.png

 

When program trading exceeded 70% towards the end of each quarter, take a look at how the next quarter began thereafter...

 

KABOOM BABY!

<{POST_SNAPBACK}>

From this chart, it is also apparent that a trend is present re: larger % of program EOQ trades since 2004 (huge spike 6/04 but overall trend pattern looks sigmoid (sic) - and we are at the plateau).

 

Equally apparent is that SPX has failed to make a higher high on each EOQ spike, the last 3 quarters (ie, post election). So...those black boxes that trade off lowly quarterly time frames are losing..at least for their clients. This is consistent with the flattening yield curve, bond short/long carry trade, becoming extinct over the same 3 quarters.

 

So to make any money at all, the boxes must perform a type of carry trade, playing short/long duration arb differences in various world markets and indices...except with millisecond durations.

 

As Mark's guy on Crapvision stated, you need 100B..and an expensive black box...to do this.

 

And as this HUGE amount of cash flees in nanoseconds across world markets, and as other black boxes catch on to the game, these arbs will perish quickly.

 

One huge bad print in the FOREX...one mega DARPA server failure in Arlington...a sudden ten sigmoid in Beijing...

 

There will be no "failsafe"... the whole charade will fall out of bed before the Wall Street circuit breakers get the http "wake-up" packet.

 

Like 9/11, if you're not already out, or already short, or both...you'll have no chance to catch the knife.

[Guest]

Program Trading Accounts For 76.3% of NYSE Volume

that's not true

 

99% of the stock market is small retail Investors making prudent long-term Investments based on solid business fundamentals and compelling equity values, guided by the in-depth research and analysis of their hard-working brokers and updated by the straight-shooting reporting of unbiased professional financial journalists on C.N.B.C.

 

enjoying the opportunity to participate in our free, fair, open, honest markets by grabbing their own piece of Corporate America, to ensure their own American Dream, a comfortable retirement in a strong economy with low inflation, surrounded by friendly neighbors in a Home that appreciates 20% per year, with cash on tap from Ditech

 

thanks to all those fine Corporate Insiders working long hours looking out for the common stockholders, our wise Government Leaders, a fiscally responsible Congress, and a rock-solid monetary policy backed by, ahh.....er....well, never mind

 

butt you can't lose buying and holding

 

You Nattering Nabobs of Negativism, you bad bad bad news bears, you better get with the program!

 

it's all good, all the time

 

you see, higher crude oil prices are good for energy stocks, and lower crude oil prices are good for all stocks

 

higher interest rates serve only to keep inflation under control at 0.000000001% with a core rate of only 0.0000000000000000000000000001%

 

get on board the elevator and hold on tight

 

stocks are never gonna be cheaper

 

they're not makin' any more ya know

[termin-Al]

Program Trading Accounts For 76.3% of NYSE Volume

that's not true

 

99% of the stock market is small retail Investors making prudent long-term Investments based on solid business fundamentals and compelling equity values, guided by the in-depth research and analysis of their hard-working brokers and updated by the straight-shooting reporting of unbiased professional financial journalists on C.N.B.C.

 

enjoying the opportunity to participate in our free, fair, open, honest markets by grabbing their own piece of Corporate America, to ensure their own American Dream, a comfortable retirement in a strong economy with low inflation, surrounded by friendly neighbors in a Home that appreciates 20% per year, with cash on tap from Ditech

 

thanks to all those fine Corporate Insiders working long hours looking out for the common stockholders, our wise Government Leaders, a fiscally responsible Congress, and a rock-solid monetary policy backed by, ahh.....er....well, never mind

 

butt you can't lose buying and holding

 

You Nattering Nabobs of Negativism, you bad bad bad news bears, you better get with the program!

 

it's all good, all the time

 

you see, higher crude oil prices are good for energy stocks, and lower crude oil prices are good for all stocks

 

higher interest rates serve only to keep inflation under control at 0.000000001% with a core rate of only 0.0000000000000000000000000001%

 

get on board the elevator and hold on tight

 

stocks are never gonna be cheaper

 

they're not makin' any more ya know

<{POST_SNAPBACK}>

 

 

This is hysterical!

 

As I read this, I laughed out loud.

 

What makes it funny is that it is exactly how all this bulls**t is sold to us everyday. What's worse, I think the average Joe buys into it.

[Jimi]

Hi Guys,

 

I going to go out on a limb here and say that, from this point forward in the cycle, real estate prices are beginning to come down. Listings are beginning to pile up on the market, ridiculous peices are being smirked at, and selling times are increasing fast.

I'm not sure if all the "bubble talk" has had some effect on speculators and buyers, or if they have just hit the wall with respect to the prices they are willing to pay. Prices began to "weaken" in Beverly Hills 2 months ago in the multimillion dollar properties. Historically, that's where they usually start.

I took a guess at the beginning of the year that median prices here in L.A. would end the year up 5%. I'm still sticking by that bet I made with Dozer. I don't know if Mark is seeing the same trend taking shape down south in the O.C. or not, but I suspect it is taking shape.

The only question now, as far as I'm concerned, is how much they "correct". I'm still standing by my 30% figure. If rates rise appreciably from here, though, all bets are off.

 

Have a nice weekend

<{POST_SNAPBACK}>

Appreciate your report from the field.

[Jimi]

 

 

Shorty is funny.