Categories
Economics

Message of the market

Joe Saluzzi tried to get the word out. He really did make a good faith effort. This was one of his numerous appearances on Bloomberg, Fox Business News, CBS etc. The mainstream news media did not ignore him. He was interviewed for about 10 minutes in each station’s Manhattan studio. Each appearance was broadcast live. Receiving that much air time is unusual.

Joe Saluzzi comments on problems with the stock market
The temporal backdrop for this interview was particularly good. I enjoyed watching the market tickers running across the screen. They were triple stacked, and occupied a lot of screen real-estate! The results of a New York State election were reported around the 5 minute mark. I am no longer familiar enough with the NY-NJ-CT area to gauge the significance, but phrases like, “concedes the election” are portentous.

I’ve followed Sal Arnuk, @ThemisSal on Twitter, since 2012. He is Joe Saluzzi’s business partner at Themis Trading. That isn’t how I found this video. Rather, I was reading an Amazon book review, about one of Ernest Chen’s algorithmic trading books. That led me to R. Ryley’s Message of the Markets blog.

The following excerpt is from an anonymous comment on Ryley’s blog post, faithfully reproduced here under Creative Commons License by-NC-ND and replete with all-cap’s

YES. THIS IS THE MOST IMPORTANT NEWS CLIP IN THE PAST SIX MONTHS. THE THEFT OF GOLDMAN SACHS’ MICROSECOND TRADING CODE HAS FURTHER REINFORCED THIS MAN’S COMMENTS… [Such] CODE* CAN BE USED TO UNFAIRLY MANIPULATE THE MARKET IN A WAY THAT GIVES AN UNFAIR ADVANTAGE TO WHOMEVER POSSESSES IT… THEN FACTOR IN THAT 49% OF MARKET ACTIVITY IS PROGRAM [trading], WE KNOW THAT THE IMPACT…IS MATERIAL. IN OTHER WORDS, MANY MARKET PARTICIPANTS, INCLUDING RETAILERS, ARE BEING CHEATED.

In retrospect, it doesn’t seems so strange, e.g. US Taxpayers Pay For SEC to Arrange Early Release of Data to High Speed Trading Firms.

* I am not certain, but believe that Anonymous refers to the circumstances that led to former Goldman Sachs programmer Sergey Aleynikov’s conviction in 2011.

Categories
Economics

The Cleveland Fed Drawing Board goes silent

I find Cleveland to be the most friendly of the 12 Federal Reserve districts. They do a lot of community outreach work, and have a good research department.


ClevelandFedâś”@ClevelandFed

Thank you! 🙂 RT @EllieAsksWhy: Contrast @gapingvoid w/hand-drawn, all-original artwork by @ClevelandFed http://youtu.be/hWdm9pp6NQU1Twitter Ads info and privacySee ClevelandFed’s other Tweets    Evidence of friendly Cleveland Fed!

The Federal Reserve Bank of Cleveland is the headquarters of the U.S. Federal Reserve System’s Fourth District. The district is composed of Ohio, western Pennsylvania, eastern Kentucky, and the northern panhandle of West Virginia.

The Cleveland Fed building was designed by architects Walker & Weeks. The building is considered an historically significant piece of architecture. I like how it looks too. Apparently, few know much about the art and architecture of the building, not even in Cleveland!

The building was extensively renovated about 15 years ago. The architectural and design preservation firm that did the work has some spectacular photos of the interior, which I couldn’t find anywhere else.

I found only one more photograph of the interior, from the Cleveland Fed’s own site. All others were fuzzy, low quality images from an Illuminati conspiracy website. The irony is not lost on me.

This is the entire Drawing Board series of videos produced by the Cleveland Federal Reserve. Really Bad Drawings, Real Simple Explanations consists of 16 videos, with a total playing time of 1 hour and 40 minutes.

Despite being the Cleveland Fed’s most popular YouTube video series (there are actually complements and requests for new videos, instead of disgruntled monetary policy rants!), I suspect that the series has been discontinued. There have been no new entries in 11 months.

Categories
Economics

Market Cap Reference for Valuing Inflated Tech Companies

 This is not very reliable data! It is probably at least three or four years old, although the article publication date is May 2011. 


Why do I say that? Well, the market cap of AAPL (Apple Computer) was only $68 million, CVS and Caremark were reported separately (they completed a merger in 2007) and there is data for Lehman Brothers and Bear Stearns, yet both have been out of business for years.

Also, the units look suspect. M usually means “millions”. Which would imply that every one of these 200 companies had market caps greater than $10 billion, and many with market caps of $100 billion or more. That seems high, particularly for old data. Maybe I should just delete this entire entry….

Categories
Economics

Federal Revenues by Source UPDATE

MY OBSERVATIONS
ONE The Heritage Organization did not update this in 2011, although they claimed they did. The chart below was posted and announced for Tax Year 2010, using May 2010 data, according to the heritage.org website. Why is it identical to the post and announcement made in May 2011? Actually, it seems like there should be more than a two-month time lag to obtain prior tax year information from the Congressional Budget Office. Yet heritage.org seems to experience a mere one month delay, from April 15, 2010 to May ?, 2010. For 2011, the time lag was even less, see WSJ article dated May 12, 2011. That seems very unlikely.

Categories
Economics

Ultra short epistemology post

So many clever people, such good writing, so little time!
I read something that I liked today. Let me share the joy. It seems fitting, particularly in these uncertain times, with a possible rapture scheduled for the weekend, amongst other things:

Probabilities are for understanding… Truth is a rhetorical device.

Categories
Economics

Long Tail Tales

I found this chart on Chris Anderson’s old TypePad blog. Chris Anderson is the original “Mr. Long Tail” (more details follow at the end of this post).

The Long Tail of Travel

What does the long tail of travel look like now? What is the breakdown of the stacked bars for years 2009 and 2010? I would guess that the long tail of travel has shortened. Why would the trend reverse? (Note that I resisted the temptation to say “turned tail”).

Two reasons:

  • Air fare increased due to higher fuel costs, discouraging those who would take the path less traveled, and 
  • Less leisure travel, and probably less business travel as well. This would be due to an increase in risk-averse tendencies for passengers concerned about deteriorating economic circumstances, whether their own or in general.

Chris Anderson’s 2009 post included another premise: Travel destinations had become more diverse due to the effect of social media tools. Specifically, that

  • better word-of-mouth communications, and
  • peer ratings and reviews

were highly credible. As a result, travellers were more willing to try destinations that were less mainstream, not necessarily promoted by the travel industry, and thus more diverse. And so the long tail grew.

Social media effect

Has the “social media effect” (I prefer to think of it as a more efficient means of information propagation) been sufficient to overcome the economically-motivated forces to the contrary?

There is only one way to answer that. Run the data! 

I’ll see what I can do, as a follow-up post. Any expression of reader interest would be an additional motivation. Feel free to express your enthusiasm (or otherwise) as a comment. Note: Study included U.K. travel data only.

The Long Tail

For fans of the original New York Times best seller, published in 2006, or even for those who never read it (like me), here’s your reward for stopping by my Annex.

The Long Tail is now available as an 80-page graphic novel. As part of the promotion, read it free of charge for the next two months, before the official release date by SmartComics in late April. Or check this Twitter communique for additional details.

Disclaimer: I am a 100% UNPAID communicator of information. This is not an endorsement. But I will mention that Chris Anderson seems to be reasonably worthwhile as someone to follow or better yet, include on a suitable list for Twitter users. He is @chr1sa.

Categories
Economics

Industrial Production and Capacity Utilization

The Philadelphia Branch of the Federal Reserve Bank released its September 2010 Industrial Production and Capacity Utilization report this morning. It is an interesting economic indicator, due to its frequency (monthly), timeliness (within a fortnight of the prior month-end), and long history of well-documented tracking, readily available from 1972 through the present.

The salient number, based on my review and recall from past days of buy-side proprietary trading of fixed-income securities, is the capacity utilization percentage. This is why:

  • Rising industrial production levels, in absolute terms, were driven by technological progress in manufacturing methods, more than increased economic activity.
  • The same can be said for capacity, although the Fed does provide helpful indexing as a percentage of the historical peak level in 2007.
  • Utilization is the percentage of actual capacity used for production, which indicates to me the level of demand  required for actual goods (not services!) and thus the demand for U.S.-manufactured industrial products, as a percentage of the maximum possible supply that could be produced.

The preliminary annualized utilization for September 2010 is 74.7% of capacity. This is well below the yearly average of 80.6% from 1972 through 2009. However, utilization of capacity has increased from the 2008-2009 low of 68.2%, as well as the September 2009 value of 70.5%. While I feel some concern about the economic situation in the immediate months ahead, it is encouraging to note the breakdown by process stage:

  • For crude production, the operating rate increased 0.7% points to 86.9%, almost half a point higher than the 1972 to 2009 average
  • For primary and semi-finished stages, utilization declined 0.6% points, to 71.5%, about 10.1% points below the long-run average
  • For the finished stage, utilization decreased 0.1% points to 73.8%, about 3.7% points below the long-run average

If crude production rates drive primary, semi-finished and finished stages, then the more historically comparable rates of crude manufacturing will perhaps carry through into the later stages of production in the next three manufacturing reports of the fourth quarter of 2010.

*Note that for the purposes of this Federal Reserve Statistical Release, the industrial sector is comprised of manufacturing, mining, electric and gas utilities, as well as the logging, newspaper, periodical, book, and directory publishing industries.

Categories
Economics

High-speed rail from China to California

Earlier this morning I was reading a surprisingly, pleasingly blunt BBC article, about California’s trade mission.  The actual title is Arnold Schwarzenegger sells California to East Asia! While visiting, Governor Schwarzenegger wanted to have a look at the latest high-speed passenger rail transportation technology.

The State of California, with its $19 billion deficit, is investigating public transportation alternatives used in other parts of the world. Japan is interested in contracting to build the trains and loaning California the money to pay for the work. China is too.

How high-speed rail came to China

China has the world’s longest high-speed rail line. However, the expertise to develop and build it was largely contributed by European and Asian countries with advanced technological skills in everything from control systems to laying tracks.

When the Japanese and European companies that pioneered high-speed rail agreed to build trains for China, they thought they’d be getting access to a booming new market, billions of dollars worth of contracts and the cachet of creating the most ambitious rapid rail system in history.  What they didn’t count on was having to compete with Chinese firms who adapted their technology and turned it against them just a few years later.
—Train Makers Rail Against China’s High-Speed Designs

There will be some fascinating intellectual property issues should China decide to enter the high-speed rail market as a producer and exporter, given the origins of the technology.

China will also experience market-based challenges in the form of competition from countries such as South Korea, who has worked in a contractual arrangement with the EU’s high-speed TGV passenger rail. Both South Korea and Japan would be eager to work with U.S. government or government-funded entities, whether state of federal, in upgrading our nation’s passenger rail service.

California’s fascination with rail transit

California’s history with high-speed rail goes back to 1982, during the days of Governor Jerry Brown. With just a single law, Brown created a California High Speed Rail project and exempted it from California Environmental Quality Act rules. In 1996, the state legislature created a High-Speed Rail Authority. Last year, the California State Auditor expressed some concerns about the state’s High-Speed Rail Authority: â€śIt Risks Delays or an Incomplete System Because of Inadequate Planning, Weak Oversight, and Lax Contract Management”.

Re-patriation initiative

Demanding transfer of advanced technology from foreign companies, in exchange for access to China’s vast domestic market, has become something of a Chinese national economic strategy.  Despite being forward-looking, China is already encountering challenges that come with a global race to the bottom.

Shanghai authorities have revealed that they are using a database of Chinese students studying abroad in a bid to attract top talent back to the city. The database is populated with information corresponding to Chinese students attending the world’s top 100 universities…
—Student database used in Chinese “re-patriation” effort

Categories
Economics

Succor for Soles and Souls

For my Phoenix area reader segment, have a gander at this shoemaker review from New Times publisher’s online Transplants To Phoenix Examiner columnist Susan Rienzo,“A Shoe Repair Shop That Restores Soles AND Souls”.