A program to change the way small-company stocks are traded could slow high-frequency action, though some worry that the initial steps are too tepid.» Read More
At a dinner party Sunday night, a young employee at Wall Street bank that we won’t name (yet) regaled her friends with a tale of management misbehavior. It seems the firm conducts annual 360-degree reviews, where junior level employees are expected to review their managers.
The manager in question sent the junior banker explicit instructions on what should be written in his review. This seems to not only violate the purpose of the review but calls up a sticky matter of professional ethics. Should the junior banker do as instructed? Should the manager be reported? Would you trust a junior employee who ratted out his boss?
The junior banker did not turn in the boss. But she also did not follow his instructions. Instead, she just wrote up the review as she would have had none of this had ever happened.
James Simons may be the founding father of high-frequency trading.
With so many still blaming the flash crash on high frequency trading, it's worth asking what Simons was doing when the crash happened.
Simons told CNBC's Lisa Lee spoke that his firm, Renaissance Technologies, canceled some orders during the "flash crash" and stepped away from trading temporarily.
"We did the obvious thing, we canceled some orders because there was there moments of tumult. So you don't necessarily run in..." said Simons. "We stepped away for one round of trades, but we came back."
So what does this say about whether high frequency trading caused the Flash Crash? It bolsters the evidence that many high frequency traders stopped trading when prices became unstable. Since high frequency traders are important liquidity providers, this withdrawal most likely amplified the effect of unbalanced buy and sell orders. Which is to say: high frequency traders might not have caused the crash but the market's dependence on the liquidity they provide, made the crash more extreme.
President Obama’s new top economic adviser authored an unfortunate piece of economic journalism for the New York Times back in March of 2007 .
Austan Goolsbee wrote \(emphasis added\):
"Congress is contemplating a serious tightening of regulations to make the new forms of lending more difficult. New research from some of the leading housing economists in the country, however, examines the long history of mortgage market innovations and suggests that regulators should be mindful of the potential downside in tightening too much.
This past week the word stimulus has been said more times than I can remember and with both sides of the aisle battling over the success or failure of the first stimulus, and if this second round of spending will boost the economy, I decided to ask some of my contacts on what they think about the economy and the second stimulus policies unveiled by the President.
Mark Olson, former Federal Reserve Governor and co-chairman of the financial services strategic advisory firm, Treliant Risk Advisors says the talk of an economic stimulus was inevitable due to the continuing sluggish economy in an election year, but that doesn't mean opening Uncle Sam's wallet should be the first plan of action, "If Congress chooses to go that path I hope they utilize selected tax incentives as opposed to increased government spending. Tax incentives such as accelerated depreciation can make a quick impact while increased government spending is both inefficient and often an ineffective method of economic stimulation."
“World Panel Backs Banking Rules To Avert Crises.”
That’s the headline from the New York Times story on the so-called Basel III accords.
Do you believe it? Do you believe that despite all our past failures to regulate the banking sector to avoid crises that this time it will be different, that this time we finally got it right?
Let’s back up. Yesterday we learned what top central bankers and bank regulators agreed in Basel about the future of bank capital requirements. (Felix Salmon has a good discussion of the details here .)
The next step will be ratification by the G-20 nations in November, followed by implementation by each participant’s national lawmaking and regulation writing apparatuses.
The US Blandly Likes Basel, But Loves Community Banks Even More. (Conglomerate) The US probably won't make its community banks live up to the complex rules of Basel III, just like it let them skip the complexity of Basel II. From the US perspective, these rules should only apply to large and internationally active banks.
Breaking Down Basel III (Economic Policy Journal) Rob Wenzel points out that the counter-cyclical buffer could have the truly perverse effect of forcing the Fed to have an even looser monetary policy.
The Meaning of Basel: Cohen, Spillenkothen, Stiglitz Speak Out (Business Week) Comments from Joseph E. Stiglitz, Simon Johnson, Paul Miller, Rodgin Cohen and Richard Spillenkothen.
Basel III Arrives \(Felix Salmon\) Argues that banks which embrace the new standards and are proud of exceeding them will ultimately be more successful than those which try to get around them
Robert Wenzel points out that Goolsbee is a member of Skull & Bones. \(Economic Policy Journal\) Also, in July 2009 he predicted that “in one year, the economy is going to be a very happy place.”
Ladies, leave your lipstick at home or you might as well stay at home if you are an employee at Citi.
A list of "What NOT to do" for women professionals was apparently taken from a Citi employees desk and advocates habits women should avoid if they wish to be taken seriously.
The list is taken from the book "Nice Girls Don't Get The Corner Office ," by Lois P. Frankel, but apparently Citi agrees pretty strongly with the rules advocated in the book, seeing as they have apparently taken the initiative to distribute it to some employees.
So a bond trader walks into a bar…
Actually, this isn’t really a joke, but it’s the beginning of a good story I heard Thursday from Kevin Ferry, president of Cronus Futures Management.
CNBC's Patti Domm and Jeff Cox discuss the jobs report and the current dilemma of long-term unemployment.
CNBC's Patti Domm and Jeff Cox discuss the recent GDP numbers and what factors have been affecting it.
Investors give and investors take away, and nowhere has that been more true lately than in value stocks.
A number of banks, including JPMorgan Chase and four others, were struck by hackers in a series of coordinated attacks this month.
Caught in a tug of war between a tightening U.S. Fed and an easing European Central Bank, yields have taken dramatic turns this week.
A program to change the way small-company stocks are traded has drawn worry that the initial steps are too tepid.