Wednesday, October 27, 2010

Stocks held for an average of 11 seconds

An interesting revelation on the High Frequency Trading travesty.

From Washington's Blog:

The Fourteenth Banker writes today:

In the stock market, program trading dominates volume. I heard recently that 70% of trade positions are held for an average of 11 seconds.

He's correct.

As the New York Times dealbook noted in May:

These are short-term bets. Very short. The founder of Tradebot, in Kansas City, Mo., told students in 2008 that his firm typically held stocks for 11 seconds. Tradebot, one of the biggest high-frequency traders around, had not had a losing day in four years, he said

Similarly, FT's Martin Wheatley pointed out last month:

I know of one HFT firm operated out of the west coast of the US that boasts its average holding period for US equities is 11 seconds

And market analyst Peter Cohan writes at AOL's Daily Finance:

70% of trading volume on the major exchanges is conducted by high-frequency traders who hold a stock for an average of 11 seconds.
The fact that the vast majority of stock market trades are held for 11 seconds shows that the stock market is not a real market with real traders governed by the law of supply and demand, and that there is no real price on

Greece Reignites Europe Debt Woes

From the UK Telegraph
By Ambrose Evans-Pritchard

Europe's debt woes have returned to the fore after Greek premier George Papandreou threw open the door to fresh elections and vowed to liberate the nation from "slavery and surveillance".

Yields on 10-year Greek bonds jumped 31 basis points to 9.57pc and the euro tumbled 2 cents to $1.385 against the dollar as investors awoke to the risk of political upheaval in Greece, not helped by warnings from bond giant PIMCO that Athens will default within three years.

"We have not yet escaped the danger. I am sounding the alarm," said Mr Papandreou.

While he promised to stick to the EU-IMF austerity plan, he threatened to go to the country if upcoming local elections fail to give his socialist PASOK party a clear mandate. "There can no deadlock in democracy, the people have the power to decide," he said.

The main opposition group New Democracy has yet to give a watertight pledge that it would abide by the terms of the EU's €110bn (£97bn) rescue, or the "Memorandum" as it is known.

PASOK itself is fraying at the edges in any case. A socialist rebel candidate from the "anti-Memorandum" bloc leads the polls for the Athens region.

Mr Papandreou is responding with populist gestures, granting pensioners a €300 bonus and rejecting calls by Brussels and his own central bank for further belt-tightening. "There will be no new measures on wage-earners or pensioners, they have paid enough," he said.

The fiscal picture is extremely delicate. Eurostat is expected to raise Greece's budget deficit for 2009 to 15.1pc of GDP from 13.3pc. Public debt will rise to 127pc instead of 115pc, bringing the country closer to a debt compound spiral.

Mohamed El-Erian, chief executive of Pimco, said the EU-IMF package prevents Greece from growing its way out of the crisis and will test political consensus to destruction. He said it would be healthier for both Greece and Europe to opt for orderly debt restructuring.

Most investors seem to agree that the EU-IMF plan is unworkable, merely buying time for German and French banks to shift Greek liabilities on to EU taxpayers. A Barclays survey found that 82pc of clients expect the eurozone to face a debt restructuring, a sovereign default or even a full break-up by 2013.

Hans Redeker, currency chief at BNP Paribas, said global attention may switch back to Europe once the US Federal Reserve clears the air on quantitative easing next week.

"We are seeing a complete failure of the EU to agree on common foundations for how to solve the eurozone's problems. Germany is demanding a mechanism for controlled bankruptcy but the high-debt states refuse to accept this," he said.

"And over the next few months we are going to find out what fiscal consolidation in Europe really means."

Peter Schiff - "Gold is Money"

Peter Schiff is interviewed by Eric King of King World News on gold and economics......listen here

Bankers in Bomber Jackets

For a bit of mid-week light relief, Max and Stacey blow up some bankers.

CFTC puts spotlight on silver trades

By Gregory Meyer and Jack Farchy

Financial Times, London
Tuesday, October 26, 2010

A senior US commodities regulator has alleged fraud in silver trading more than two years after investigators began a probe into the market.

Bart Chilton, commissioner at the Commodity Futures Trading Commission, said "members of the public" and "publicly available documents" convinced him the silver markets are tainted by violations of federal commodities law.

"I do believe that there have been repeated attempts to influence prices in the silver markets," Mr Chilton said on Tuesday at a meeting in Washington. "There have been fraudulent efforts to persuade and what I consider deviously control that price."

The CFTC, the US watchdog, in September 2008 disclosed that it was investigating misconduct in the silver market. The announcement followed complaints by small investors that silver prices were artificially on

Link to Bart Chilton's press release

Eric Sprott - Bonfire of the Currencies

By Eric Sprott

Bonfire of the Currencies

World governments just can’t get enough conflict these days. They’ve now resorted to battling each other with money printing. The devaluation race is in full gear, and it’s tough to keep track of who’s winning. It’s been just wonderful for investors, of course. In addition to contending with 0% interest rates, they now have to navigate through increased currency volatility and uncertainties associated with potential inflation. Gold and silver are benefiting greatly from this ‘currency war’ as investors seek safe harbor in hard money. We can’t say we’re surprised to see gold and silver where they are, but it has been surprising to witness just how willing and open governments are to blasting their own currencies down in value. Although we have complete confidence that the economists at the world’s various central banks know exactly what they are doing, we’re content to own precious metals investments in the meantime until such a day arises when the currency war winner is finally announced.

Just to make sure you’re up to date in currency war news, the most recent devaluation shot was fired by the Federal Reserve on August 17, 2010, when it initiated its permanent open market operations (POMO) to stimulate economic activity. The central bank announced its intention to reinvest the proceeds of its maturing mortgage-backed security holdings back into Treasury bonds. Combined with recent comments by the Federal Open Market Committee (FOMC) on increasing the US inflation rate (through money printing), world governments have been coerced into action. They’ll be damned if they let the US devalue against their own respective currencies and slam their exports, so everyone’s devaluing in tandem. It’s literally a "race to the bottom", with all major currencies on the potential fiat currency chopping block.

By our count, no less than 23 separate countries have now intervened in the foreign exchange market in some way since September 21, 2010. The goal for all is to increase the supply of their respective paper currencies in order to drive them down in value. In the cases where countries can’t print outright, they have intervened through capital controls or "open mouth" operations (ie. talking down your currency in policy meetings, etc.). Both approaches have significantly increased the currency market’s volatility. Japan’s October 5th announcement of a "new fund" to purchase assets ranging from government to corporate bonds has forced other countries to pursue the same policy, and the world now awaits similar announcements from the United States and UK in the form of new Quantitative Easing programs.2

Investors aren’t clueless, however, and many are shifting capital to protect themselves. A large number of commodities are now benefiting from the uncertainty created by the devaluation race. Gold, Silver, oil, copper, wheat, sugar and Platinum are all on the run, and yet we have no reported inflation! on

Martin Armstrong - Debt & Tyranny

The latest musings on markets, gold, debt and increasing government tyranny from the cycles guru Martin here