Tuesday, April 1, 2014

Rigged Markets????

Moneyball" author Michael Lewis takes on the phenomenon of high-frequency trading (making money by cutting milliseconds off transmission time to a stock exchange) in "Flash Boys: A Wall Street Revolt" (W.W. Norton ): This book started when Mr. Lewis first heard the story of Sergey Aleynikov, the Russian computer programmer who had worked for Goldman Sachs and then, in the summer of 2009, after he'd quit his job, was arrested by the FBI and charged ... with stealing Goldman Sach's computer code. ... He was usually described as a 'high-frequency trading programmer' ... That was a term of art that, in the summer of 2009, most people, even on Wall Street, had never before heard. ... Why was the code ... so important that ... Goldman Sachs needed to call the FBI? ...

Over the past decade, the financial markets have changed too rapidly for our mental picture of them to remain true to life. ... The U.S. stock market now trades inside black boxes, in heavily guarded buildings in New Jersey and Chicago. ... The ticker tape that runs across the bottom of cable TV screens captures only the tiniest fraction of what occurs in the stock markets. ... This book is an attempt to draw [a picture of what has replaced the trading pits] ... of post-crisis Wall Street; of new kinds of financial cleverness ...

The financial markets were changing in ways even professionals did not fully understand. Their new ability to move at computer, rather than human, speed had given rise to a new class of Wall Street traders ... getting very rich very quickly without having to explain who they were or how they were making their money. ... Some of them ... 'would sell their grandmothers for a microsecond.' (A microsecond is one millionth of a second.)

MICROSOFT TO OFFER OFFICE FOR iPAD - One of the most lucrative software franchises in history, Microsoft Office, has finally come to the most influential computing device of the last few years, the iPad. Microsoft introduced the long-awaited suite of applications, which includes Word, PowerPoint and Excel, at an event here Thursday, where the company's new chief executive, Satya Nadella, committed to making the software work on all major computing devices ... Microsoft plans to create Office apps for tablet computers running Google's Android operating system, too. ...

To some, the move is a refreshing sign of a new Microsoft, one slowly unshackling itself from an era when its major decisions were made in deference to Windows, Microsoft's operating system. But skeptics wonder if Microsoft has waited too long, giving people who use iPads, especially business professionals, years to get used to life without it and giving an opening to start-ups and Apple's competing products.

BAD WEEK – Mark Zuckerberg Loses $3 Billion in a Week as Tech Titans Fall, [Facebook] plummeted 11 percent after [announcing] it would buy virtual-reality firm Oculus VR Inc. for at least $2 billion. ... Google Inc. co-founders Sergey Brin and Larry Page lost a combined $3 billion ... Jeff Bezos ... [lost] $1.9 billion after [Amazon] announced it would cut prices for cloud services ... a day after Google cut its prices.

I don’t feel so bad after losing $10 on the NCAA basketball pool.

BIRTHDAYS THIS WEEK – Birthday wishes and thoughts this week to: Richard Chamberlain (80), Doris Day (90), Jane Goodall (80), Gordie Howe (86), Shirley Jones (80), Elle MacPherson (50), Craig T. Nelson (70).

WHAT IS NEW AT TREASURY - Floating-rate notes are proving to be a success, with the U.S. Treasury's first new debt offering in 17 years being scooped up at auction by investors seeking an alternative money-market security. The U.S. sold $13 billion of floaters [last Wednesday] at a bid-to-cover ratio, which gauges demand by comparing the amount of bids with the amount of securities offered, of 4.67, higher than the 2.9 average of fixed-rate debt sold this year by the government.

CITI’s MESS - Several large banks, including J.P. Morgan Chase and Bank of America, are set to pay out significantly larger dividends this year after they passed the U.S. Federal Reserve's stress tests that measure a lender's preparedness for a severe economic downturn. But one noteworthy name will not: Citigroup. We report that the Fed rejected Citi's capital plans—for the second time in three years—because of deficiencies in its risk-reading processes. The decision comes as a blow to Chief Executive Michael Corbat, who has made efforts to bolster the bank's reputation following a 2008 government rescue. And the ruling took Citi executives by surprise, particularly since Mr. Corbat had been in close contact with regulators. Meanwhile, flexing its muscle as the de facto global financial regulator, the Fed also rejected the capital plans of three foreign-based banks, after subjecting them for the first time to its annual test process.

TIME COVER, "THE LAST DAYS OF 'MAD MEN': It made television history by making history into television - Behind the scenes of the final season," by James James Poniewozik: "On April 13, ... 'Mad Men' ... airs the first of its 14 remaining episodes (seven to air this year, seven next). ... It's finishing up its time-lapse tour of a decade of American change through American culture. And it's wrapping up its run as the signature show of a period in which the same kind of people who used to say 'I don't even own a television' were now arguing whether film and novels could even compete with TV drama. ...

"However 'Mad Men' ends, it will leave behind a TV-drama business much bigger in material and ambition. TV's top dramas -- and drama-tinged comedies like 'Girls and Louie' -- have a hold on the culture that only a handful of books or movies do anymore. 'House of Cards' and 'Homeland' transfix politicos, while HBO's literary murder mystery 'True Detective' absorbed viewers in the fiction of Lovecraft and the philosophy of Nietzsche.

FIFTY YEARS AGO TODAY - on March 27, 1964 - the front page of The Times, at the bottom of the page, ran a story that became an instant staple of the city's folklore - "37 Who Saw Murder Didn't Call the Police: Apathy at Stabbing of Queens Woman Shocks Inspector," by Martin Gansberg: "Twenty-eight year-old Catherine Genovese, who was called Kitty by almost everyone in the neighborhood, was returning homes from her job as manager of a bar in Hollis." Kitty Genovese would be been 79 this July. Read the article, along with a bio of the reporter. http://goo.gl/JacZbe

--A BOOK out this month, "Kitty Genovese: The Murder, the Bystanders, the Crime that Changed America," by Kevin Cook, argues that The Times vastly exaggerated the citizens' apathy. The Post last month carried an extensive account of Cook's case, "Debunking the myth of Kitty Genovese": "One could argue that Genovese became a legend ... when ... Police Commissioner Michael 'Bull' Murphy had lunch with The ... Times' new city editor ... Abe Rosenthal. After Rosenthal brought up a case Murphy wished to avoid discussing, the commissioner pivoted to the Genovese case. ... Rosenthal assigned a reporter ... to dig deeper."

COLLEGE CHRONICLES – The regional director of the National Labor Relations Board ruled Wednesday that Northwestern University scholarship football players are eligible to form the nation's first college athletes' union. Although the decision applies to private universities only, we note that it could have broad ramifications for college athletics. Our story examines what it might mean for athletes, the National Collegiate Athletic Association and the NLRB. And we raise the question of what will happen in conferences when private schools compete with public ones. Northwestern immediately said it would appeal the decision. The NCAA, the collegiate-sports governing body that wasn't party to the proceeding, said in a statement that it was disappointed. "We strongly disagree with the notion that student-athletes are employees," the chief legal officer wrote.

JACK ASS OF THE MONTH - Some La Verne residents has earned the Jack Ass of the Month award for raising strong objections to the location of a Walmart Neighborhood Market in the City of La Verne.

In protesting the establishment of a 39,525-square-foot Walmart market in the old Stein Mart store, two residents who refused to give their names negatively blasted Pomona, characterizing the entire city and its residents as unsavory, criminal and undesirable and felt a Walmart market would generate similar shoppers and visitors in La Verne.

“We’re a classy town. We don’t want just anything to go in there and we don’t want that class of people to come here. We don’t want Pomona. Forget about being politically correct,” said the woman who declared she’d walk out of the meeting if a Walmart official repeated the fact its markets meet First Lady Michelle Obama’s healthy foods and nutritional goals to help reduce childhood obesity. Although others in the audience gasped at her remarks, she virulently continued, saying “They’re a lower class than us. I don’t care about organic food or Michelle Obama.”

Yes, La Verne is sure a classy town. Has anyone been to the Thursday Farmers’ Market…real class? So we congratulate the nameless two residents of the City of La Verne as our Jack Asses of the Month.

BRACKETOLOGY 101 - Final Four is Saturday on TBS: Florida (36-2) vs. Connecticut (30-8), 6:09 p.m. ... Wisconsin (30-7) vs. Kentucky (28-10) [VandeHei vs. Deckard!], 40 mins. after the first game. Championship game is Monday.

Look ahead: Fearsome Final Foursome headed to North Texas. Unlike the past few years, there will be no upstarts or Cinderella in the Final Four. These are the big boys all right, but each one has a big chip on their shoulders. ... [The Florida] Gators will have to go through the last two teams to beat them this season (UConn and Wisconsin) or their biggest SEC rival (Kentucky). ... The [UConn] Huskies became the first No. 7 seed to reach the Final Four since the tournament expanded to 64 teams in 1985. ...

Wisconsin's tell-it-like-it-is coach [Bo Ryan] had been a regular at the Final Four, taking his father, Butch, to every one since 1976 as a birthday gift. Bo had a hard time getting there with his team, though, winning over 700 games, playing in the NCAA tournament 13 straight years and reaching the Sweet 16 six times -- and not one trip to the Final Four. ... The Wildcats ... are playing with a cohesiveness and confidence that wasn't there earlier in the season, racing into the Final Four after pulling out a last-second victory over Michigan.


2014 Major League Baseball Picks – American League: East – Baltimore Orioles, Central – Detroit Tigers, West – Anaheim Angels. Wild Card – Tampa Bay Rays, Kansas City Royals. A.L.C.S Detroit over Anaheim

National League: East – Atlanta Braves, Central – St. Louis Cardinals, West – Los Angeles Dodgers. Wild Card – Washington Nationals, Cincinnati Reds. N.L.C.S St. Louis over Washington.

2014 World Series Champs – St. Louis Cardinals over Detroit Tigers

(NHL, April 5) Colorado Avalanche (47-21-6) at St. Louis Blues (50-17-7), St. Louis is the best team in hockey currently, they outlast the Avs 5 - 1.

SCIAC Game of the Week (Sat. April 5-baseball) University of La Verne Leopards (13-12) vs. Whittier Poets (16-9). First place Poets will prevail, 8 – 5.

2014 Season to date (21-24), ouch!

MARKET WEEK - Wall Street is coming off a mixed week which saw the Nasdaq’s struggles in the spotlight. The Nasdaq Composite lost more than two percent for the second time in three weeks despite a mildly positive session Friday, and is now five percent below its 52-week high reached earlier this month. A busy week for economic numbers starts off on the light side, with only the March Chicago PMI on the schedule for Monday. Economists expect that number to come in at 58.8, down from 59.8 in February. Investors are no doubt looking ahead to Friday and the release of the March employment report.

DRIVING THE WEEK - Jobs report Friday expected to show a gain of 200K as some of the weather-related hit from earlier months is reversed. The jobless rate is expected to tick down to 6.6% from 6.7%. Hourly wages are expected to rise 0.2% ... ISM Manufacturing on Tuesday at 10:00 a.m. expected to rise to 54.0 from 53.2 ... Construction spending at 10:00 a.m. Tuesday expected to rise 0.1% ... ADP employment report Wednesday at 8:15 a.m. expected to rise by 190K ... ISM non-manufacturing at 10:00 a.m. Thursday expected to rise to 53.5 from 51.6 ...

GM CEO Mary Barra faces a pair of hearings on the company's ignition switch recall problems, Tuesday before House Energy & Commerce at 2:00 p.m. and Wednesday before Senate Commerce at 10:00 a.m. ... House Financial Services holds a hearing Wednesday at 10:00 a.m. on allegations of discrimination at the CFPB ... Today is the ostensible deadline for enrollment in health plans under Obamacare but anyone who says they started the process before today (or has some other excuse) will still be able to sign up. So it's not really the deadline.

Next week: Our annual Tax blog, along with a tardy Words of the Month.

Until Next Monday, Adios.

Claremont, CA
March 31, 2014

#IV-50, 207

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