What a $4 Million Error Says About Market Anxiety: Opening LineC. Thompson
Why did you make Barclays’s botched trade the most read story yesterday? It was only a less-than-$4 million goof. This probably happens all the time and we don’t hear about them all, so what’s the big deal?
Oh, wait. That’s it, isn’t it?
The Flash Crash, Knight Capital’s meltdown, Goldman Sachs’s options calliope last August, more haywire options trading at NYSE Amex and NYSE Arca at the end of April, Tuesday’s thing, so many different order types that the NYSE was moved recently to say enough already -- is it all getting to be too much? Too complicated?
This time, it appears, it was merely a fat-finger trade that was corrected in a matter of seconds. In the bigger picture, there are "fears that the market is out of control," says Nick Baker, the editor leading our coverage of market structure.
"There’s a fear that you’re going to wake up one day and find out that instead of being a less-than-4-million-dollar error, it’s a many-millions-if-not-billions-of-dollars error, just because some computer got out of control," Baker says.
Don’t blame HFT, Bloomberg View’s Matt Levine says:
"I’m not sure one should read these mini-flash-crashes as proof that high-frequency trading destabilizes markets, or that the liquidity that it offers is particularly fragile. It is, perhaps, proof that high-frequency trading is ruthlessly efficient at taking advantage of dumb trading," Levine wrote Wednesday.
Think this is mostly a U.S. problem? Think again.
"There are safeguards in place, but it doesn’t mean that things can’t go nuts," Baker says. "I guess people are asking themselves, ‘‘When’s the next one coming? Are these small earthquakes, and there’s going to be a big one?"
Good weekend, everyone.
Today’s economic numbers include housing starts at 8:30 a.m. New York time and University of Michigan/Reuters consumer confidence at 9:55 a.m.
No earnings to speak of, but a lot of annual meetings. Goldman Sachs (in Texas), Macy’s, McDonald’s, JC Penney, ICE, Chesapeake Energy and more.
+ Credit Suisse is nearing an agreement to plead guilty and pay about $2.5 billion to the U.S. Justice Department and regulators to resolve investigations into whether it helped Americans evade taxes.
+ Relational Investors has taken a 3.5 percent stake in B/E Aerospace, which has put itself under strategic review, and, according to a person familiar with Relational’s plans, may seek board seats. Relational says B/E, which settled at $96.41 at the close of regular trading yesterday, is worth $130.
+ Certain kinds of swap transactions must move to trading platforms operated by firms including ICAP, GFI Group and Cie. Financiere Tradition starting today under new CFTC rules.
+ Uber, maker of the car-service smartphone application, is said to be in talks for a round of funding that may put the value of the company at more than $10 billion, which ought to help pay its legal bills. Pinterest raised $200 million in funding that values the company at $5 billion.
+ India’s Congress Party has conceded defeat, handing power
+ It’s better than it was, but wildfires are raging in San Diego County.
We missed yesterday’s story about tourism slogans, but it was thought-provoking. Given that American middle-class industry is being slowly, or rapidly, bled out of the U.S., followed by the tax remittances of those companies that manage to remain in name only, tourism is becoming ever more crucial to economies.
Here in the vicinity of Philadelphia, a city once referred to as the Workshop of the World (although Great Britain also laid claim to the moniker), the factories are pretty much dead or gone (along with banks, insurance companies, publishing, etc.) and have largely been replaced by the strategy of "Here, come look at the Liberty Bell." It’s a city that’s done a pretty good job of giving people a way to spend money, not so good at giving them a way to make it.
So, in the interest of those U.S. states not mentioned in the story, states that, like all of them, are trying to lure us all from one to the next to check out their spoon collections or that tree that looks like Dorothy Hamill, we’ve decided to try out a couple slogans, just to be helpful. If you can think of any, please send them in. Seriously. We’ll publish them. Here goes:
New Jersey: Your Road To Success (When Lanes Aren’t Blocked) Georgia Also Is for Lovers. Of Guns. Please Don’t Come to Wyoming. We Don’t Take to Your Kind. Pure Militiagan Colorado Is Ski Country All Summer Long Kansas: Come for the Piety, Stay for the Government Jobs Illinois: We’re More Corrupt Than Louisiana Rhode Island: Your Way to a Better Place Louisiana: No You’re Not Everything Is Legal in Nevada. Everything. Pennsylvania: Enjoy Our Hot and Cold Running Natural Gas
Caxton Associates and Odey Asset Management were buyers of Bank of America in the first quarter, as the bank was botching its stress test.
Caxton’s holding in Bank of America rose to about 3 million shares, valued at almost $51 million at the end of March, Dakin Campbell reports today after yesterday’s deadline for 13-F filings. George Soros was a seller.
As for Citi, Highfields Capital Management and TPG-Axon Management were buyers in the first quarter, according to filings.
The police commissioner in Wolfeboro, New Hampshire, was overheard referring to Obama with the most vile racist word in the language -- you know what it is -- and then doubled down on it.
Confronted in person by a resident of the town who says she heard him saying the words in a diner, and then again by her in a letter to the Granite State News, Robert Copeland responded with a letter in the newspaper, writing:
"My use of derogatory slang in reference to those among them undeserving of respect is no secret. It is the exercise of my 1st Amendment rights. […] I believe I did use the ‘N’ word in reference to the current occupant of the Whitehouse (sic). For this I do not apologize -- he meets and exceeds my criteria for such," according to the Concord (New Hampshire) Monitor.
And you thought people hate Obama because of his policies. We’re going to have to revisit our state slogans.
Jeff Gundlach says Recession Babies are too unemployed and too scarred by the mortgage meltdown to provide a kick to the housing market. Sam Zell says the share of Americans who own their homes may plunge to as low as 55 percent at some point from 64.8 percent in the first quarter and from the 2004 peak of
69.2 percent, because Americans aren’t getting married and having children.
Legg Mason’s Bill Miller says baloney.
"Anytime there’s a cataclysm, people always say it’s never going to come back," Miller tells Alexis Leondis.
Miller is bullish on housing based on homebuilders’ outlooks and easier lending requirements.
"The housing recovery is far less robust right now than it’s ever been historically coming out of a recession," which means there’s so much room for improvement. "That’s the opportunity and also what gives rise to the confusion."
So, these are your contestants. Who ya got?
We’ll probably get in trouble for this one, but we can’t help gagging at the notion of U.S. public-relations firms taking millions of dollars to polish the image of despots and rogue nations who are essentially U.S. adversaries.
Kristen Schweizer and Matthew Campbell tell us today about Omnicom’s Ketchum unit, which, while the U.S. and EU and Ukraine are locked in the early days of a conflict that could lead to a new New World Order, is taking millions of dollars to try to make people think Russia is just awesome.
While at present there are no laws against it, and no sanctions in that direction, the work "can’t be based on being blind to the unethical reality of the situation on the ground," a University of Greenwich communications professor tells the reporters.
This weekend’s projected top draw at the box office is "Godzilla," which we find depressing. It’s not depressing that a monster movie is going to draw so well. When they finally make a movie version of "Ultraman," we’ll be first in line. (We just fell down a YouTube rabbit hole watching "Ultraman" clips for 15 minutes.)
It’s depressing because it’s got a cast that really should have more self-respect. Bryan Cranston? No way. David Strathairn? You mean Edward R. Murrow has stooped to this? Sally Hawkins? She’s British. They’re way too snooty for monster movies. Also, she was just nominated for an Oscar in a Woody Allen film. She follows with this?
In the updated telling, Godzilla has either caused some kind of heinous accident at a nuclear plant or was awoken by it; the nuclear-age allegory remains. However he was awoken, it appears to have been on the wrong side of the cooling tower. You can see a trailer here.
(Leave it to the New York Times to intellectualize a Godzilla movie: "Appreciation of a movie like this requires an almost morbid degree of connoisseurship, which may, in practice, be hard to distinguish from bored acquiescence.")
We’re going to venture a guess that the script has some decent writing to it to lure the likes of those actors. The money was just gravy.
The New York Mets said farewell to Derek Jeter last night with a pretty classy gift. Building on the theme of the Subway Series, the Mets put Jeter’s No. 2 in a framed mosaic of subway tiles with both Mets and Yankees colors. Someone put thought into that.
In the game itself, two kids making their big-league debuts each took the mound last night, the Yankees’ Chase Whitley and the Mets’ Jacob deGrom, and put on a pitchers’ duel. Yankees 1, Mets 0. The teams split the four-game series.
Looks like Donald Sterling has no intention of going away quietly. Sports Illustrated is reporting that Sterling refuses to pay the $2.5 million fine levied by NBA Commissioner Adam Silver for making disparaging comments about black people and that he may sue the league.
On the court, Sterling’s L.A. Clippers ran out of road last night, falling to Oklahoma City 104-98, while Indiana ousted Washington 93-80. Both Oklahoma City and Indiana won their series by 4-2. Next up, Indiana takes on Miami for the Eastern Conference starting Sunday, and Oklahoma City meets San Antonio for the Western Conference on Monday.