If someone says he’s going to make water, it means one thing. If he says he’s providing liquidity, it means another. We should clear (and perhaps clean) that up. In the stock market, some firms call themselves “liquidity providers.” The…
View pageThere’s a mistake in last week’s Market Structure Map. We never made it to Boston! The forecasters missed it and snow walloped us with a ferocity that shut Denver International Airport by air and land and we were stranded for…
View pageKaren and I are in Boston seeing friends at the NIRI chapter (we sponsor) and our trip today like last week coincides with snow in Denver. Next winter if the slopes turn bare, we’ll schedule a couple flights to bring…
View pageOutcomes are culminations, not events. Denver bid farewell this week to retiring Broncos quarterback Peyton Manning who for eighteen years accumulated the byproducts of focus, discipline and work, twice culminating in Super Bowl victories. The idea that outcomes are culminations…
View pageFollow the money. Or the currency. Yesterday markets soared on queue with a Chinese currency devaluation in the form of lower bank reserve requirements (which increases money and reduces its value). For those who at the words “currency devaluation” feel…
View pageYesterday on what we call Counterparty Tuesday, stocks plunged. Every month options, futures and swaps expire and these instruments represent trillions of notional-value dollars. Using an analogy, suppose you had to renew your homeowners insurance each month because the value…
View page“Other than that, everything’s okay.” My friend Gary, a smart guy with an MBA from the University of Chicago, uses that line to herald dire situations. It’s from the old UK sitcom starring John Cleese, Fawlty Towers. In one episode,…
View pageThere’s no denying the connection between tulips and derivatives in 1636. The Dutch Tulip Mania is often cited as the archetype for asset bubbles and the madness of crowds. It might better serve to inform our understanding of derivatives risk.…
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