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Doin' It Bloggystyle: Back to School with the Fed


Minyanville brings together the best of what they are saying "out there" about the topics we're talking about right here.

Blogs themselves need no introduction, as they get as much publicity as pretty much anything these days, save maybe the latest Britney news. There's an expanding world of excellent financial blogs, covering just about everything, from global economics to swing trading. Minyanville's goal is to bring together the best of what they are saying "out there" about the topics we're talking about right here.

Fed Fed Fed Fed Fed
  • My personal opinion on the Fed is that the Pundit Class ascribes way too much importance to its role in everything. Not to mention the Fed's ability to see future financial developments (productivity miracle, anybody?). Bernanke puts his pants on one leg at a time, though when he does he makes Gold Records.
  • OK, seriously, my take is they look at the same economic landscape the market already sees, and get pushed into action accordingly, not the other way around.
  • So will they cut or not? If not, then We Are All Doomed, *All* being the Punch Bowl Caucus of course.
  • David Gaffen of the WSJ Market Beat has 5 reasons why they will cut (hat tip, Abnormal Returns).
  • Number 3 on the list: "The market is expecting it. Federal-funds futures contracts traded on CME Group are still pricing in a 100% guarantee that the Fed will cut rates on Sept. 18. While the Fed isn't one to necessarily respond to bile-spewing yahoos on television demanding rate cuts, it isn't in the habit of ignoring the market as a practice. "
  • Not sure who is being referenced there...
  • Barry says not to count your cuts so fast. "....before you start screaming Fed Fund Futures, note that since January 2006, there have been half a dozen instances of where the futures were forecasting a cut that never came to pass. "

Tender TED

  • So what is the Ted Spread? Here's the wiki definition. "The TED spread is the difference between the interest rate for U.S. Treasuries and Eurodollars as represented by the London Inter Bank Offered Rate (LIBOR). The TED spread is a measure of liquidity and shows the flow of dollars into and out of the United States."
  • Big spike lately as we know. Some thoughts here from A Dash of Insight.
  • And the Aleph Blog.
  • So conventional wisdom would say a spike is a contrary indicator in the market. But is that so? These numbers via Bespoke seem to suggest otherwise.

  • BZB Trader does some research into the Retail trader here and here and comes up with some interesting factoids.
  • I don't want to give away all the punchlines, but turns out *program* trades account for alot more volume than I had thought (80%) and large traders now have software to break down their prints to mimic smaller traders.
  • Afraid to Trade looks at one day's data and amazingly Retail accounts for only 1/3 of 1% of the volume of program trading.
  • Dr. Brett runs a test and confirms BZB's findings.
  • "I performed a very simple exercise and examined the first hour of trading in a popular stock, AAPL. There were almost 57,000 trades in the first hour alone. By my calculation of how the trades were reported, roughly two-thirds of these trades were broken down into small pieces for execution. Over three-quarters of all first-hour trades were 100 shares. Of the small, 100-share trades, I estimate that about two-thirds were part of larger trades that were executed in pieces by specialized software."
  • Another thought on all this? Programs were able to short on minus ticks before the rule change, so it's only that tiny slice of retail that just got liberated. More evidence that the Downtick Rule did little to add to volatility.

Hail to The Victors!

  • That would be Appalachian State.
  • How big an upset was this? Darren Rovell breaks it down financially.
  • ".....we have to go to the budgets--last reported to the government as part of the equity in athletics reporting from the 2005-06 season. That year, Michigan and Appalachian State had the same amount of football players (116). But Michigan spent nearly three times more on each player ($20,180 vs. $7,715).
    "In part due to payouts, Appalachian State's football program earned $4,069,038 that year compared to Michigan, which pulled in an amazing $50,365,537.
  • It's almost as if the Devil Rays and their $30 million payroll went into Yankee Stadium and took a series from the Yankees and their $200 million payroll. Wait a sec...
  • Here's an interesting point point Rovell makes: the win could actually backfire financially for the Mountaineers.
  • "For now at least, they can make more off playing big opponents than they can selling out their stadium against Gardner-Webb. And given what this has done to Michigan, it's feasible that other big teams might shy away from playing good non D-1 football programs and eliminating paydays for lesser D-1 schools whose fortuitous win wouldn't necessarily cripple a season as much as Appalachian State has done to Michigan. "
  • Eh, not so sure. It was only about a week ago I was reading that BCS schools precisely were scheduling these lesser lights because there was no incentive to schedule tough out of conference games any more. The lesson isn't not to schedule them, it's to not mail in the effort.
  • Besides, Ap. State merchandise is apparently all the rage now in the state of Ohio.
  • And as a lifelong Giants fan, couldn't agree more with Deadspin here. I'm already sick of Tiki and football season hasn't started yet.
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Position in AAPL.
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