Tagged: Wall Street Journal

Follow the Line

“All this is not a product of nature.”

No I’m not referring to the display, as it were, by Miley Cyrus at the Video Music Awards. If the shortest distance between two points is a straight line, what do you call a stock market with 13 exchanges, forty broker-operated alternative systems, 4,300 FINRA-regulated brokers and dealers, 2,000 order types, a complex routing scheme for moving millions of quotes per second and all the associated messaging traffic at light speed (oh yeah, and hopefully some investing too)?

Well, not a straight line. The Wall Street Journal’s Holman Jenkins wrote a compelling opinion last weekend on the Nasdaq data outage Aug 22, which he titled “How to Think About the Nasdaq Freeze,” and from whence I borrowed today’s opening salvo. You should read it.

As you’ve heard – at length on CNBC – the Nasdaq halted trading for three hours last Thursday due to a connectivity issue that led to failure propagating the marketwide data stream providing consolidated quotes in Nasdaq securities.

The WSJ’s Jenkins argues that whatever the root cause of this latest in a long line of troubling market mishaps, “complexity breeds snafus.” The market where your investors compete to demonstrate belief in the story you deliver is a tangled web. (more…)

Banks BARE All

Where have I been?

Somehow, I missed the fun happening in SEC filings for large banks like Morgan Stanley, Goldman Sachs, JP Morgan, Credit Suisse and Deutsche Bank.

If you already know what BARES are – Buffered Accelerated Return Equity Securities, of course – goody for you, and you should’ve said something.

What first got my attention were big quarterly earnings this period for the banks. Strip out the Financials sector and S&P 500 earnings are measly. But banking is booming. Morgan Stanley reported a 66% jump in year-over-year quarterly net income “as the investment bank bounced back from a slump in trading revenue a year earlier,” said a Wall Street Journal story.

Wait a minute. Interest rates even after upticks since May 22 when Ben Bernanke offered an impression that the Infinite Money Theorem may in fact have a terminus are so low that inflation-protected notes guarantee buyers a loss even now. If banks rely on interest…well, you don’t expect big numbers, right?

Hang on now. Morgan Stanley said these results reflect trading gains. So I checked statistics at the Securities Industry and Financial Markets Association (SIFMA, where former Republican congressman Judd Gregg has just taken the helm). (more…)