Why Do We Pay Attention to Fed Forecasts?

Source: WSJ The short answer is because their Expectations are what drive policy, and Fed Forecasts are what drives their expectations … Thus, despite their terrible forecasting track record, Fed forecast matter to policy implementation. This piece is cross-posted from The Big Picture with permission.

Quote Blast Loops May Have Caused Nasdaq Freeze

Nanex did some digging into market data before the Nasdaq blackout at 12:20 EDT on August 22, 2013. They discovered several significant periods of extremely high quote volume. By plotting the number of messages for each of the 6 multicast lines used by the Tape C SIP (Securities Information Processor), we discovered the quote blasts map […]

Curse of the Narrative: Everybody Loves A Good Story

When it comes to storytelling, we have a long and venerable history of narrative. The spoken word emerged millennia ago — before even the Greeks — when the only way to share knowledge was verbally, person to person, generation to generation. It is in your DNA to love a good story. You know, neat tales […]

Is Gold Overdue for a Bounce?

Back in my days as a trader, I would peruse the lists of 52 week lows looking for reversal candidates. The key was finding an intelligent entry that had a very tight stop, so it presented a good risk reward. I am happy to risk one dollar to make three. Slowly build the position over […]

Is the Cyclical Bull Over Or Is This Just a Pullback?

Since the peak in May, global markets have been bouncing about. There have been various explanations given for these crosscurrents, but few ring true to this seasoned trader. Perhaps we can derive a better explanation as to what this might mean. Let’s start in Asia, where the Japanese Nikkei Dow 225 has been setting off […]

S&P500 Index to Profits at all U.S. companies

I have to admit: I have never seen this ratio before. Standard & Poor’s 500 Index to profits at all U.S. companies. Its a price to earnings ratio of the main US stock market against ALL US earnings. According to this little used, odd ratio, Stocks are much cheaper after four years of gains than […]

Proposal for New Hedge Fund Fee Structure: 1% + 33% of Alpha

One of my pet peeves is the way that insiders — whether corporate CEOs, hedge fund managers, or elected politicos — capture compensation (or credit) for normal cyclical gains they had little or nothing to do with. This is the approach favored by the Crony Capitalists — those people pretending to be free market participants, […]

Equity Risk Premium is High (This is Bullish)

  Last week, I posted the above chart from the NY Fed’s Liberty Street Economics. This morning on Squawk Box, David Tepper of Appaloosa discussed it — and his comments reversed the futures from negative to positive. Here is a brief explanation of what this chart — a compilation of 29 valuation models — means: The equity risk premium is […]