Monthly Archives: February 2012
Calling All Arbitrage Players
SocGen: QE3 Will Arrive Soon, But S&P Will Tank First (Chart Porn)
Risk On Bets Rise to the Highest Levels Since September of 2011
Risk On in Oil This Morning As Greece Approves Austerity
Job Losses Appear To Be Picking Up Pace in Europe
Premier Wen Jiabao Fuels Speculation of Easing
Japan’s Economy Shrinks Nearly Double The Estimates in Q4
The Euro Finds Strength After The Greek Parliament Approves Austerity Plan
Asia Trades Mixed While Europe and U.S. Futures Shoot to the Upside
The Mathematical Equation That Caused the Banks to Crash
The Black-Scholes equation was the mathematical justification for the trading that plunged the world’s banks into catastrophe.
It was the holy grail of investors. The Black-Scholes equation, brainchild of economists Fischer Black and Myron Scholes, provided a rational way to price a financial contract when it still had time to run. It was like buying or selling a bet on a horse, halfway through the race. It opened up a new world of ever more complex investments, blossoming into a gigantic global industry. But when the sub-prime mortgage market turned sour, the darling of the financial markets became the Black Hole equation, sucking money out of the universe in an unending stream.
Anyone who has followed the crisis will understand that the real economy of businesses and commodities is being upstaged by complicated financial instruments known as derivatives. These are not money or goods. They are investments in investments, bets about bets. Derivatives created a booming global economy, but they also led to turbulent markets, the credit crunch, the near collapse of the banking system and the economic slump. And it was the Black-Scholes equation that opened up the world of derivatives.
The equation itself wasn’t the real problem. It was useful, it was precise, and its limitations were clearly stated. It provided an industry-standard method to assess the likely value of a financial derivative. So derivatives could be traded before they matured. The formula was fine if you used it sensibly and abandoned it when market conditions weren’t appropriate. The trouble was its potential for abuse. It allowed derivatives to become commodities that could be traded in their own right. The financial sector called it the Midas Formula and saw it as a recipe for making everything turn to gold. But the markets forgot how the story of King Midas ended.
Black-Scholes underpinned massive economic growth. By 2007, the international financial system was trading derivatives valued at one quadrillion dollars per year. This is 10 times the total worth, adjusted for inflation, of all products made by the world’s manufacturing industries over the last century. The downside was the invention of ever-more complex financial instruments whose value and risk were increasingly opaque. So companies hired mathematically talented analysts to develop similar formulas, telling them how much those new instruments were worth and how risky they were. Then, disastrously, they forgot to ask how reliable the answers would be if market conditions changed.
Read the rest here.
Incredible Pictures From Athens On Sunday Night
When Should Traders Be In or Out of Markets?
Joe Fahmy
When should traders be in or out of the market?
There are times when traders should NOT be in the market. There are other times when the market is rocking and traders should get aggressive. How can you tell the difference? Here are 5 helpful tips.
Read the rest here.
Comments »Soros: Merkel Taking Europe in Wrong Direction
American billionaire George Soros slammed German Chancellor Angela Merkelin an interview published on Sunday, warning that her policies could lead to a repeat of the Great Depression.
“I admire Chancellor Merkel for her leadership. But unfortunately she is taking Europe in the wrong direction,” the financier and philanthropist told the weekly Der Spiegel.
Soros warned against addressing the crisis with spending cuts, urging the injection of funds instead.
“Otherwise we will repeat the mistakes that plunged America into the Great Depression in 1929. That’s what Angela Merkel doesn’t understand,” he said.
Read the rest here.
Comments »{PHOTO} ACROPOLIS NOW! THE HORROR, THE HORROR AS GREECE BURNS
{VIDEO} Russians Discover YouTube and Film Random People & Things; Get 4.5 Million Hits
VENTI TROJAN HORSE, EXTRA HOT! Starbucks on Fire in Greece Protests $SBUX
Reports: Starbucks on fire in Greece amid protests as lawmakers debate austerity measures – @AthensNewsEU
- Submitted from
www.athensnews.gr by editor
- via BreakingNews.com
HOLY HELL: Priest Allegedly Told Rape Victim: ‘This is What God’s Love Feels Like’
A Los Angeles attorney is accusing 200 Catholic priests of sexual abuse across California.
According to NBC affiliate in Los Angeles, attorney Ray Boucher has mapped out at least sixty locations of where suspected priests reside in California.
“Many if not all these priests have admitted to sexual abuse,” Boucher told NBC Los Angeles. “They live within a mile of 1,500 playgrounds, schools and daycare centers.”
One of the alleged victims, Dan Smith, graphically detailed his incident with a local priest when he was a child.
“He would rape me and then say this is what God’s love feels like,” Smith told Los Angeles NBC.
Boucher represents over 500 suspected victims suing the Los Angeles Archdiocese for sexual molestation. The LA Archdiocese reached a $660 million settlement with most of the victims in 2007.
But the archdiocese is being accused of a cover up by letting priests leave the country or hide in rehab until the legal deadline for prosecution runs out.
Comments »Earnings This Week
Monday:
- DryShips Inc DRYS
- Limelight Networks Inc LLNW
- Magnum Hunter Resources Corp MHR
- Rackspace Hosting Inc RAX
- Ultra Clean Holdings Inc UCTT
Tuesday:
- Avon Products Inc AVP
- EMCORE Corp EMKR
- Fossil Inc FOSL
- Gramercy Capital Corp GKK
- Michael Kors Holdings Ltd KORS
- Spartan Motors Inc SPAR
- STEC Inc STEC
- The Goodyear Tire & Rubber Co GT
- Valmont Industries Inc VMI
- Weight Watchers International Inc WTW
- Zipcar Inc ZIP
- Zynga Inc ZNGA
Wednesday:
- Abercrombie & Fitch Co ANF
- Ancestry.com Inc ACOM
- Blue Coat Systems Inc BCSI
- Blue Nile Inc NILE
- CF Industries Hldg Inc CF
- Clearwire Corp CLWR
- Cliffs Natural Resources Inc CLF
- Deere & Co DE
- Devon Energy Corp DVN
- Dr Pepper Snapple Group Inc DPS
- Equinix Inc EQIX
- Hyperdynamics Corp HDY
- Intrepid Potash Inc IPI
- Ion Geophysical Corp IO
- Itron Inc ITRI
- MEMC Electronic Materials Inc WFR
- NetApp Inc NTAP
- NetEase.com Inc NTES
- Nvidia Corp NVDA
- Oceaneering International Inc OII
- Peets Coffee & Tea Inc PEET
- Sky-mobi Ltd MOBI
- Terex Corp TEX
- Tesla Motors Inc TSLA
- Vonage Holding Corp. VG
- Zillow Inc Z
Thursday:
- Apache Corp APA
- Baidu Inc BIDU
- Datalink Corp DTLK
- DirecTv DTV
- General Motors Co GM
- GNC Holdings Inc GNC
- Huntsman Corp HUN
- iPass Inc IPAS
- Key Energy Services Inc KEG
- Newpark Resources Inc NR
- Nordstrom Inc JWN
- Reliance Steel and Aluminum Co RS
- Rovi Corp ROVI
- SunPower Corp SPWR
- Ultra Petroleum Corp UPL
- VF Corp VFC
- Westinghouse Solar Inc WEST
Friday:
- Eog Resources Inc EOG
- Giant Interactive Group Inc GA
Note: Earnings dates are subject to change, please check date for accuracy.
Comments »Whitney Houston Found Dead in the Bathtub
Comments »Beverly Hilton hotel employees tell TMZ … Whitney Houston was found dead in the bathtub of her room.
As we previously reported, a member of Whitney’s entourage discovered her responsive and called hotel security, who then called 911.
We’re told police arrived to the scene within minutes and fire was already there on an unrelated call. Paramedics performed CPR, but it did not work and she was pronounced dead at 3:55 PM.
Our sources say there were no obvious signs of foul play, but BH PD detectives have begun a full investigation.
As of this post, cops are still waiting on a warrant to search the room.
