The financial markets worldwide are getting slaughtered and the best financial twitter accounts are spouting inside acronyms faster than Ebola is spreading in Big D. Here are some examples:
SPOOS is slang for S&P 500 Index futures. VIX? Here is a hint: Continue reading “Slabbed Finance: In case you were wondering what the heck is a VIX and SPOOS……”
This is Saturday so I’m going to indulge a topic I find interesting plus we finally get to hear publicly from Tyler Durden at Zerohedge. I wrote the first post on this topic on Slabbed as part of an economic roundup post last month where I featured financial expert John Mauldin’s paper, Buddy, Can You Spare $5 Trillion?. The post didn’t completely fall on deaf ears as our good friend from the insurance industry Sup recognized the importance of the topics covered.
Tyler Durden has been researching this topic since fall of last year and he has an interesting viewpoint which he blogged on back on the 2nd:
Taking the 6 billion daily average, and applying an average stock price of $20/share and using the assumption that HFTs represent 70% of the volume, while capturing 50% (and according to Zero Hedge sources, this number could be as high as 90%) of the 53 bps average IS spread in 2008 results in HFT slippage capture of over $220 million daily on NYSE stocks alone. And this does not even count rebates. Taking this one step further, assuming 250 trading days in a given year, brings the total annual costs to investors (and revenues to HFT strategies) to over $55 billion. If one expands this methodology to non-NYSE member stocks and exchanges, a reasonable guess for HFT tolls in the US alone to be over $100 billion.
One can see why HFT is a sacred cash cow for the limited group of participants who benefit from “providing liquidity.”
Recently, the market cap of U.S. listed stocks was just under $12 trillion: if the total annual cost to investors is indeed in the $100 billion ballpark, which they fork over to the likes of Goldman, RenTec and others for providing liquidity, it means that the liquidity premium of stock trading has increased to 0.8% of total assets. Continue reading “A bit more on the costs of high frequency trading”
I’m glad I was running deliveries today and riding down Beach Blvd rather than watching the market. So I’ll start with this picture I took with my Blackberry.
With no clouds in the sky and coolish temperatures it was a great time to flip back the moon roof, slide down the back glass and enjoy the ride between stops.
On the other hand…….
If I had to think of one word to describe the following uploaded image – it would be UGLY. Continue reading “A Picture is Worth 1000 Words….”