There is talk the EU cannot survive. I hope they are wrong: http://www.msn.com/en-us/news/opini...-risk-like-never-before/ar-BBn2tBN?li=AAa0dzB
Oil might lose $40. Copper has imploded. Markets being higher today inspite of France is cyclical. Beware.
Debt Market Distortions Go Global as Nothing Makes Sense Anymore "Something very strange is happening in the world of fixed income. Across developed markets, the conventional relationship between government debt -- long considered the risk-free benchmark -- and other assets has been turned upside-down. Nowhere is that more evident than in the U.S., where lending to the government should be far safer than speculating on the direction of interest rates with Wall Street banks. But these days, it’s just the opposite as a growing number of Treasuries yield more than interest-rate swaps. The same phenomenon has emerged in the U.K., while the “swap spread” as it’s known among bond-market types, has shrunk to the smallest on record in Australia... http://www.bloomberg.com/news/artic...ions-go-global-as-nothing-makes-sense-anymore
A warning to arbs: Where Have All the Arbitrageurs Gone? http://www.bloomberg.com/news/articles/2015-11-19/where-have-all-the-arbitrageurs-gone- Six Strange Things That Have Been Happening in Financial Markets http://www.bloomberg.com/news/artic...that-have-been-happening-in-financial-markets
Is the next exogenous event one of cataclysmic proportions? The food chain is a delicate one. Will 5% of the worlds' human population die as a result? The Earth's dying oceans threatened with mass extinction An ecosystem in turmoil A study released earlier this year found that we may soon see a mass extinction of ocean life. That's alarming, since oceans comprise nearly 70 percent of Earth, provide habitat for more 200,000 known species (and potentially millions more unknown ones) and are integral to all known life on our planet, as well as climate and weather patterns. The World Wildlife Fund estimates the total value of the ocean's assets at around $24 trillion and said if the ocean were measured as an economy, it would have an annual gross domestic product of $2.5 trillion — the seventh largest economy in the world. In the United States alone, what the government calls "the ocean economy" — six economic sectors that depend on the ocean and Great Lakes — contributed more than $282 billion to the U.S. GDP and provided more than 2.8 million jobs in 2011, according to the National Oceanic and Atmospheric Administration (NOAA). Here are five of the biggest challenges the world's oceans face — and how humans can tackle them. http://www.cnbc.com/2015/11/20/the-earths-dying-oceans-threatened-with-mass-extinction.html
"This month marks the seventh anniversary of the Federal Reserve's first round of quantitative easing — the program that more than quadrupled the central bank's balance sheet, sparking a debate over the limits of monetary policy. The Fed is now taking baby steps toward ending its crisis-era policy, laying the groundwork for a widely expected interest rate hike in a few weeks. That hasn't allayed the concerns of a former Fed official who helped implement QE. Andrew Huszar is a Fed veteran who served as the "quarterback" for the world's largest stimulus program by managing the purchase of more than $1 trillion worth of mortgage-backed bonds — only to renounce his support for the entire effort in a 2013 public apology. In a recent interview with CNBC, Huszar insisted the excess liquidity created by the Fed has done more to enrich Wall Street than the average citizen..." http://www.cnbc.com/2015/11/28/qe-quarterback-fed-sees-through-wall-streets-eyes.html
"When Genius Failed I'm re-reading Roger Lowenstein's When Genius Failed, and I'm finding it a remarkable book. Again. It's about the Long-Term Capital Management debacle of 1998, but it could easily be about the financial meltdown of 2007-2009. On pages 71 - 77,Lowenstein discusses "fat tails" in the distribution of returns to financial assets, beginning with this quotation from EugeneFama's dissertation, about daily volatility of stock prices: "If the population of price changes is strictly normal, on the average for any stock...an observation more than five standard deviations from the mean should be observed about once every 7,000 years. In fact such observations seem to occur about once every three to four years." Such large, discontinuous, and "unexpected" events (based on a normal distribution happen fairly frequently. Only seven years before LTCM was founded, prices on the NYSE fell by 23% in one day, an event that Lowenstein characterizes as follows: "In fact, had the life of the Universe been repeated one billion times, such a crash would still have been theoretically 'unlikely.' But it happened anyway.""Theoretically unlikely" means "almost impossible, if the distribution of price changes is normal." But the non-normality of returns was well known... Lowenstein attributes this, in part, to the (high) probability that returns on Day i and on Day i+1 are not independent of each other (which is an assumption of random walks and normal distributions). While that may be sufficient, it is not necessary. The distribution of returns can be non-normal (e.g., have fat tails), but still display independence of observations. What remains amazing is how short the memory of people engaging in financial speculation can be. After the Great Crash of 1929 - 1933, it took nearly 40 years for people to begin to forget. But the lessons of 1987 seem to have evaporated by 1994, and the lessons of 1998 (the LTCM crash) seem to have dissipated by 2002 or 2003. Oddly enough, the new lesson was not that returns to investments in housing would follow a normally-distributed random walk, but that they were non-normal in a specific way--highly, extremely positively skewed. The events that resulted in these crashes may have been low-probability events (even if they were not as low-probability as people thought). But they were probable enough to result in financial crises. Keynes pointed out, 70 or 80 years ago, that even low-probability events, even events that we might attribute to "irrational" movements in market prices of financial assets could be devastating: "Markets can remain irrational for longer than you can remain solvent." I wonder how long we'll remember this lesson this time." http://signsofchaos.blogspot.com/2009/06/when-genius-failed.html
Now we have fat finger tweets: Mistaken FT tweet sends euro soaring "The Financial Times on Thursday sent the euro soaring after erroneously tweeting that the European Central Bank was to leave interest rates unchanged, minutes before the ECB actually cut a key rate. The British newspaper sent out a tweet from Twitter account @FTMarkets at 1238 GMT reading "ECB leaves rates unchanged in shock decision." The alert sent the currency jumping to $1.0611, compared with $1.0542 beforehand. The message linked to a full story, in which the newspaper wrote: "The European Central Bank has left interest rates unchanged, dashing expectations of a cut to its deposit rate..." http://www.msn.com/en-us/money/markets/mistaken-ft-tweet-sends-euro-soaring/ar-AAfYTEO?li=BBnbfcL