Structured Paper And Crude Oil

I'm posting this here for future reference for myself but since there are 1,000s of you linked to my RSS for this blog, I will explain what I'm storing here.

"Royal Oil, Come On Bubble And Boil"

For the time being, oil exposure is the new MBS exposure.  People are scrambling to find out which bank sold oil-linked that turned out profitable and are trying to locate which outlets and what sizes bought notes that could leave them underwater.   Most of the oil-linked notes were written in Q1 2014 and only expected a draw to between $80 and $85 per barrel, some lasting 1 year and others lasting to 2029.  So far, holders of BNP Paribas notes are getting smoked.  

Direct Edge And Order Types, Sorry, Characteristics

The SEC Reg-NMS document calls light to "complex order types".  I find it weird that the SEC says "complex order types" yet Direct Edge BATS wants to now use the term "characteristic" to describe order types.

Frogs In Boiling Water - FED Turns Up Heat, Global Central Banks Step To The Line For A Junk Shot

Let's be honest about the current state of affairs in finance.  In the days following the end of the FED insatiable monthly bond buying we have seen three, three Central Banks, come out with drastically shocking statements about their course of action.  The moment the US stopped engaging in hand over fist bond and equity futures purchases:

• the Russian CB jacked its one-week repo-rate (9 percent to 10.5 percent), its key rate (from 8 percent to 9.5 percent), and its deposit rate (from 7 percent to 8.5 percent).  
• the BOJ decided to triple purchases of stocks and property funds (ETFs and REITs), extend bond maturities from 4-7 years to 7-10 years, and raised the bond purchases ceiling from Y30 Trillion to Y80 Trillion, 
• the PBOC said cut its main rate for the first time since 2012.  

The US FED carried three separate central banks (for nearly 6 years) and without the US FED, these three musketeers must figure out a way to manipulate indexes to represent real economic growth.  To make it more difficult, Draghi and ECB are out running about "doing whatever it takes" but as for any real action, that's yet to manifest.  The money-system fumblers will never pull it off and they seem to know it.  Notice the desperate lengths banks went to to manipulate LIBOR just as a means to turn profit. 

Confident Context Consoling Corrective Crybabies

Long Buyers Are Doing So With Credit

Brokers are lending because it's more profitable than storing cash in risk-free assets.  Brokers are getting a better return lending than they would parking cash in risk-free assets.  Margin is accessible to longs and shorts.  When you borrow long, according to FINRA Reg-T:

The Emperor Has No Clothes

Hubris is at an all time.  The people we all see on TV and read on the interwebs, regularly, are proclaiming the housing recovery, the consumer recovery, the market recovery, and the all around economic recovery.  These people are idiots.

Pro-HFTers Butting Into The Conversation Are A Half-Decade Late

It's no secret that for years I have written about and interacted on the telephone and in person (and even was the connection for the making of a documentary.  That's yours truly on the wall on the iPad) with people who shared the same questions and worry about the equity and option market micro-structure.  

Recent M&A Activity And What It Means Re: FED Taper

Jason Raznick, the CEO of Benzinga has a Tumblr account that he recently started and his most recent post on M&A activity is worth reading.  The ramp in M&A and the increase in Covenant-Lite backing leveraged loan LBO's has enticed money away from traditional markets (big money went to Alt. Investments as equity risk premium pushed historic threshold and the appeal of low-rate fixed-income lost its luster). 

Apple's Weak Sauce

Apple is showing a weak hand with the talk about buying Beats Electronics, LLC, which has HTC Europe and Carlyle Group as their top investors.  Initial commentary focused on the headphones, a quality of which will never match Bose in my opinion.  There’s a reason Chrysler was in talks with Beats while Mercedes was in talks with Bose.  And guess who drove a Mercedes?  Steve Jobs.