Tag Archives: trading

Trading

Would you buy a bond that outlives you?

Why would anyone want to buy a bond that last longer than they do?

These ultra-long-dated assets fell out of favor in the fallout from the financial crisis, as investors shifted to shorter-duration bonds to protect them against unpredictable spikes in interest rates. But now the “century bond” is returning to prick investor interest.

Canada has become the latest to sell long-dated debt, with its auction of 50-year bonds. At the sale of bonds maturing in 2064 earlier this week, the Canadian government doubled the minimum target size of the sale, raising $1.36 billion.

Century bonds tend to be issued by governments and well-established companies, but both have to pay a premium to investors over a 30-year bond, which tends to the longest dated debt available from most firms.

 

http://www.cnbc.com/id/101631721

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    Bill Gross’ spectacular fall from the top of the bond market has put tens of billions in play at a time when minuscule yields demand a fixed-income superstar. A brilliant, battle-scarred billionaire, Jeffrey Gundlach, stands ready to be coronated. Bond manager Jeffrey Gundlach is wearing a white T-shirt, faded blue…
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  • Wall Street's Worst-Case Scenario: A Run on Bonds
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    All it takes is a few mouse clicks to buy shares in the Scout Unconstrained Bond Fund (SUBFX), an exchange-traded fund that tracks a concoction of debt tied to the government, financial firms, mortgage pools, and other entities. And all it takes is a few mouse clicks to sell—something that has begun…
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  • Five bond market risks to worry about: Pimco
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    Bond investors hungry for yield have pushed further and further into high-risk territory and Pimco sees five warning signals that credit markets are getting overly frothy. "The lower reaches of the credit market have become particularly stretched," Christian Stracke, global head of Pimco's credit research group, said in a note last…
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  • Watchup :: Argentina to meet again with debt mediator, bonds rise
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    (Reuters) - Argentina said on Tuesday it would meet with a mediator for the second time this week in the country's dispute with "holdout" investors, lifting market hopes for a deal needed to avoid another painful debt default. With the economy already in recession, President Cristina Fernandez's cash-strapped government has…
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Trading, USA

Faulty technology triggered CME trading outage

The worst-ever trading outage on the world’s most important agricultural markets was triggered when sophisticated technology tripped over a trading halt in a single market, the executive chairman of exchange operator CME Group Inc told Reuters.

The April 8 outage stopped electronic trading in 31 agricultural markets that influence global prices for food staples such as wheat, corn and pork, and sent a flood of traders into CME’s normally deserted open-outcry futures pits to execute transactions.

The electronic trading platform handles around 95 percent of the volumes in grain futures on a typical day, and market participants have been in the dark about the cause of the failure, with CME only saying a “technical issue” was to blame.

The unusual outage came from a technical fault that involved “implied technology” systems, which can facilitate the execution of spread trades, CME Executive Chairman Terrence Duffy said in an interview this week.

http://www.reuters.com/

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  • #EUR/USD fresh highs after breaking through 1.3650 resistance and 50DMA at 1.3655
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  • Is the U.S. stock market rigged?
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    This month marks the fifth anniversary of the current bull market on Wall Street, making it one of the longest and strongest in history. Yet U.S. stock ownership is at a record low and less than half of Americans trust banks and financial services. And in the last two weeks,…
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  • When hedge funds are overwhelmingly on the same side as the broader market, you know it's a crowded trade.
    57
      When even hedge funds are overwhelmingly on the same side of an investment as the broader market, you know it's a crowded trade. This is where the euro finds itself going into 2015. Traders, investment banks, asset managers and the so-called "smart money" of hedge funds are all betting…
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Trading

Hedge Funds Get Aussie Bets Wrong Second Time

Commodity Futures Trading Commission data show the most-bullish six-week change to Aussie positions in more than 1 1/2 years over the period to April 22, just in time to catch a slump that made the local dollar the past week’s worst performer among 10 currencies tracked by Bloomberg Correlation Weighted Indexes. Earlier this year, futures traders were forced to abandon near record bets on declines when the Aussie rallied from the 3 1/2-year low reached on Jan. 24.

“The Aussie is in a steady range and, rather typically, short-term money is getting poorly positioned at both ends of the ranges,” said Hugh Killen, Westpac Banking Corp.’s Sydney-based global head of foreign exchange. “The market has got itself long at relatively unattractive levels and we could see a further sell-off as a result.”

The local dollar slid 1.5 percent in the past week against other major peers, the Bloomberg indexes show, after an April 23 report showing subdued inflation eroded bets the central bank will increase rates this year. The currency will probably fall to 88 U.S. cents by year-end from 92.43 cents as of 12:15 p.m. in Sydney, according to the median of forecasts compiled by Bloomberg.

 

http://www.bloomberg.com/

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  • Why are hedge funds not updating data ?
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Trading

Whatever Happened to the “Twitter Fund”? #Twitter #Hedgefund

There has been a lot of buzz about the use of social media to inform trading and investment decisions in recent years, with some claiming that, if properly harnessed, big data from social media platforms could prove to be some kind of crystal ball for the markets.

Certainly, this was the thinking behind the ‘Absolute Return Fund’ – a $40.5 million hedge fund based solely on a strategy of using social media data to inform trades. The fund, which was started in late 2010 by London-based investment firm Derwent Capital Markets, based its investments on an analysis of 10% of the 10 million tweets that were then being sent on a daily basis on Twitter.

Using trading algorithms and sentiment analysis techniques to mine tradable data from the Twitter firehose, the fund returned an impressive 1.86% in its first month of trading, a result that beat both the market and the average hedge fund. Then, it abruptly shut down, citing a near-total lack of investor interest in what was then an innovative approach to trading.

http://www.hedgethink.com/

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Trading

Russia Bond Sales Fail as Ruble to Micex Drop on Ukraine Tension #bond #russia

Russia scrapped bond sales for the seventh time in eight weeks as investors demanded higher yields after the U.S. said the country wasn’t taking steps to de-escalate the crisis in Ukraine.

The Finance Ministry canceled the sale of as much as 10 billion rubles ($280 million) of nine-year ruble securities and the same amount of five-year notes because there were no bids at acceptable prices, according to a statement on its website. The Micex Index (INDEXCF) of equities declined for a third day Russia’s benchmark bonds dropped.

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  • #Crimea Through a Game-Theory Lens
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Trading

$40 Million Twitter-Based Hedge Fund Now Open for Business #twitter #hedgefund

Derwent Capital Markets, a London investment firm that has long been touting itself as the first social media-based hedge fund, has opened its doors.

The £25 milllion ($40.5 milion) hedge fund is basing investments on an analysis of 10% of the 10 million tweets sent daily. The firm applies trading algorithms and sentiment analysis to those tweets before making its bets. (We’ve written about why social media analysis makes financial sense.)

Derwent may be the first boutique investment firm to take this approach, but the idea of using information gleaned from social networks as a stock market predictor isn’t new. StockTwits, for instance, is a popular third-party Twitter app that provides a forum to discuss investment-related matters. Others in the space include Chart.ly and Covestor.

http://mashable.com/

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Trading

How Ray Dalio built the world’s richest and strangest hedge fund. #RayDalio #hedgefund

Ray Dalio, the sixty-one-year-old founder of Bridgewater Associates, the world’s biggest hedge fund, is tall and somewhat gaunt, with an expressive, lined face, gray-blue eyes, and longish gray hair that he parts on the left side. When I met him earlier this year at his office, on the outskirts of Westport, Connecticut, he was wearing an open-necked blue shirt, gray corduroy pants, and black leather boots. He looked a bit like an aging member of a British progressive-rock group. After a few pleasantries, he grabbed a thick briefing book and shepherded me into a large conference room, where his firm was holding what he described as its weekly “What’s going on in the world?” meeting.

Of the fifty or so people present, most were clean-cut men in their twenties or thirties. Dalio sat down near the front of the room. A colleague began describing how the European Central Bank had just bought some Greek bonds from investors at a discount to their face value—a move that the speaker described as a possible precursor to an over-all restructuring of Greece’s vast debts. Dalio interrupted him. He said, “Here’s where you are being imprecise,” and then explained at length what a proper debt restructuring would entail, dismissing the E.C.B.’s move as an exercise in “kicking it down the road.”

http://www.newyorker.com/

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Trading

The truth about insider trading. @turneyduff #HFT #InsiderTrading

I wonder if SAC Capital’s Steve Cohen sent Michael Lewis a thank-you note. Lately, it seems like all anyone can talk about is high-frequency tradingand the new book “Flash Boys.” But long before there was HFT, there was insider trading.

There’s a common perception (fueled by a rabid media) that insider trading is equivalent to getting Wednesday’s winning lottery numbers on Tuesday. Sometimes it is — but not often. Don’t get me wrong, if Rajat Gupta called me at 3:58 p.m. to say Warren Buffett is going to infuse Goldman Sachswith a $5 billion boost in the middle of a financial crisis, that would be like LeBron James stealing the ball and heading down court for a SportsCenter highlight.

http://www.cnbc.com/id/101586358

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Trading

Why the algobots that rule Wall Street are good—and why they’re evil, too. #HFT

The stock market isn’t rigged, but it is taxed.

It always has been. As Justin Fox points out, for as long as people have been trading stocks, there have been middlemen taking a cut of the action. Now, that cut has gotten smaller as markets have gotten bigger and more technologically-advanced, but it’s still there. It’s the implicit fee that intermediaries charge for making sure there’s a buyer for every seller, and a seller for every buyer—for “making markets.”

But there’s a new kind of middleman today. They don’t work at stock exchanges or banks. They work at hedge funds, and trade at whiz-bang speeds. These “high-frequency traders” (HFT) use computer algorithms—a.k.a., algobots—to arbitrage away the most infinitesimal price discrepancies that only exist over the most infinitesimal time horizons. You can see just how small and how fast we’re talking about in the chart below from a new paper by Eric Budish and John Shim of the University of Chicago and Peter Cramton of the University of Maryland. It uses 2011 data to show the price difference between futures (blue) and exchange-traded funds (green) that both track the S&P 500. These should be perfectly correlated, and they are—at minute intervals. But this correlation disappears at 250 millisecond intervals, a little more than half the time it takes to blink your eyes. This is the “inefficiency” that HFT makes less so.

http://www.theatlantic.com/

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BOE, ECB, Europe, FED, Trading, USA

Dr Faber predict stock market crash #Stockmarket #nasdaq

Dr Faber is predicting a 1987-type stock market crash this year only it will be worse.

The US technology-heavy Nasdaq plummeted by 3.1 per cent on Thursday night (US time), its biggest one-day drop since November 2011.

Dr Faber, the editor of the Gloom, Boom & Doom Report, has already called for growth stocks to decline this year. He said ridiculous stock valuations were not the crash catalysts, saying the Federal Reserve was also to blame.

“This year, for sure – maybe from a higher diving board – the S&P will drop 20 per cent,” Dr Faber said.

CNBC noted that Dr Faber predicted in August last year a 1987-type crash was looming.

Since then the S&P 500 has risen about 9 per cent.

Mr Grantham said the bust would be particularly painful because “the Fed and other central banks around the world have taken on all this leverage that was out there and put it on their balance sheets.”They will become cheap again. That’s how we will pay for this. It’s going to be very painful for investors,”

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