Thursday, October 14, 2010

Price This In

Seems a few lines and ideas struck some readers as either pretty good or fun last post! I do aim to please after all.

Tomorrow is Friday Night so get those requests in. There will be NO Friday Night next week as I will be on New Providence Island getting warm.

Do Not Out Fight the Machines
Not sure how I missed this story, but I saw it on CNBC this morning which means it has to be old:
Norwegians Convicted for Outwitting 'Trading Robots'
The crime you ask? You cannot guess?:
Two Norwegian day traders have been handed suspended prison sentences for market manipulation after outwitting the automated trading system of a big US broker.
Prosecutors said Mr Larsen and Mr Veiby “gave false and misleading signals about supply, demand and prices” by manipulating several Norwegian stocks through Timber Hill’s online trading platform.
Anders Brosveet, lawyer for Mr Veiby, acknowledged that his client had learnt how ?Timber Hill’s trading algorithm would behave in response to ?certain trades but denied this amounted to market manipulation.
“They had an idea of how the computer would change the prices but that does not make them responsible for what the computer did,” he told the Financial Times. Both men have vowed to appeal against their convictions.
How is this a crime? I guess because the HFT computers don't really place real orders, just screw with prices using false and misleading signals it is different somehow. In any case, don't fight the robots, your fate is sealed! I would hope they appeal as this would make an excellent test case. I would donate to the legal defense.

Google Misses Estimates
Yes, they missed my estimates.

Google (GOOG) had earnings up tonight and beat Wall Street estimates for $6.69 (hee hee who got that number out?) by posting $7.64 a share. Too bad EconomicDisconnect's estimate was for $8.50 a share so GOOG missed wildy actually. How did I come up with my estimate? Who cares, how does anyone? If GOOG has beaten the Street's estimates 92% of the time by 5% or more why the hell would anyone even care what they estimate earnings at? Mine and theirs carry equal weight in real terms, but not in terms of "the game". I guess unemployed people buy a ton of crap they find through Google. I use Yahoo myself but I am old school.

Latest Estimates for Foreclosure-Gate
While we are talking estimates, here are two I saw today for Foreclosure-Gate Fallout (FGF) that I will update daily as I see them:
Jeff Gundlach Expects The Foreclosure Moratorium To Have Negligible Impact On MBS
No real numbers but lets say $0-$100 million in dead tree work


Around $400 Billion as says Market Ticker (almost any post) as he types fast and furious in glee.

Quite a spread. Can CONgress act before the election or will we see a Christmas Night at 11:59pm ramrod screwjob go through? You know where I am betting. (see the Montreal Screwjob here, it's not what you think!)

Related: JPM is looking to sell $4 Billion in 10 and 30 year debt even as they sit on piles of cash so high you could measure the distance to the laser range finders on the moon in $1 dollar bills! Houston we have a problem, or share buy back by issuing debt?

Price This In
It can get annoying to hear so many talking about how resilient/strong/upbeat/moving up the markets are like either that matters to anyone in the real world (those without $500k plus trading accounts they can lightning trade .5% moves during the day) or even like the so called awesome markets are not being actively targeted by free money and liquidity from the highest levels. I love chartists and I read quite a few, but the lack of a macro lense can get annoying at times.

So here is your homework assignment (should you choose to accept it!) price out the S&P under the following scenarios:

-QE 2.0 at either 300 Billion total one shot or 15 Billion on a monthly basis (almost 1/10th POMO, another stealth QE)?

-August 2011, when unemployment is at 9.8%, GDP has registered a 0.4% number, and tax receipts are still in the dumps?

-Ok, in the above example now add QE 3.0 expectations?

-Say in 2013 we are on QE 7.0 or whatever, have stocks moved up the whole time (DOW 30,000 here we come!) or has anyone figured it out?

Now I can offer these questions are are too far out for anyone to really be on the hook for, but so was where we are now a year ago; a slowing economy that is not adding jobs and banks that may still be facing real issues. Yet we are approaching serious all time highs in equities!

I am getting angry with myself for talking about things stock market related so much. Stocks are a sideshow (for regular people) but easily influenced so that is where the bulk of the work is being done. I guess I just try to do what I can.

Final Notes
So what do you see first off? A duck or a rabbit?:

From one of the first Optical Illusions ever explored! I will put a poll up to get votes! Please vote!

Last note;
I will probably stay light until I leave for vacation next week. Mostly fun stuff and light fare. When I get back I will be looking to make a few changes around the site so I would welcome any and all input! What do you want to see more of? Less of? What topics? Macro? Micro? Boxing? Really all, I would like some input so I can formulate a plan.

Have a good night.


watchtower said...

I think you should do a macro post, something along the lines of where you think the US will be in 20 years.

My birthday is next week, are you serious about playing any YouTube video that I want as long as it's not 'the band that shall not be mentioned'?

Even if it's not pc?

Even if it's Rick Astley's Never Gonna Give You

Of course I'm just joking about that, but I got to get a feel for what's possible.

getyourselfconnected said...

birthdays are bigtime with me and nothing is more special! Anything you want except that band, I can make no exceptions on that one!

Since when have I been PC?

More macro huh. 20 years is a long time!

watchtower said...


I'm going out of town this weekend for my birthday with just the wife.

Going to drink too much, eat too much and then stumble into the casino and lose too much money before heading back to the hotel to hopefully 'you know what' too much, wish me luck on all accounts!

But before that, for my birthday Friday Night Entertainment request I would like (remember, you said anything except you know who!) Joe Tex's 'Aint Gonna Bump No More With No Big Fat Woman'.

It could possibly be the only disco genre song that I can stand.

GawainsGhost said...

For Friday Night Entertainment, I suggest Grand Funk Railroad, "We're An American Band."

Seems appropriate for the situation.