7 ms·

I'm surprised this actually made it to HN. I've read Barry's blog and have met him in person. He's one of the brightest, most realistic financial commentators

I'm surprised this actually made it to HN. I've read Barry's blog and have met him in person. He's one of the brightest, most realistic financial commentators out there. We've seen an increase in media politicizing market movement. The example he cites was Obama coming out and making comments about financial regulation, and then the market takes a dump. So you'll see on Marketwatch, Y! Finance, Motley Fool and others about how the president's comments caused the market to drop. This is rubbish. Short term noise in the market happens. We were due for a pullback and this, combined with Greek CDS spreads and China's rates, prompted some weakness. The same thing happened during the inauguration, how the market flew further south. And then the pundits came out and proclaimed how the new administration would be terrible for equities-- and then we rallied. A lot. And those pundits who thought there was some correlation between politics and markets disappeared. Same thing here. The WSJ has increased it's politicization of it's content, when it has been known for the best financial news source out there. It may sell more papers, but they are significantly compromising the intellectual integrity of the staff and the brand.

hop 17y ago
Ritholtz has an excellent blog, I don't know how he finds the time to write so much. Highly recommended.
- steveplace 17y ago
  I highly recommend his book "Bailout Nation," the most comprehensive overview of our current situation. Data driven and very well written.
mynameishere 17y ago
So you'll see on Marketwatch, Y! Finance, Motley Fool and others about how the president's comments caused the market to drop. This is rubbish. No, this is rubbish. When the government seeks to regulate huge profit-makers at banks, it's completely rational for those banks' values to fall. This is the consensus view of bullish and bearish commentators alike, and I have no idea why anyone would disagree. The blogger points out that commodities fell harder. That and a nickel and a time machine will get you a cup of coffee. Short term noise in the market happens. A five percent haircut is not "noise". http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chdet=1264194000000&chddm=1955&chls=IntervalBasedLine&q=NYSE:JPM&ntsp=0 http://www.google.com/finance?chdnp=1&chdd=1&chds=1&... And those pundits who thought there was some correlation between politics and markets disappeared. No they didn't, and the rally has been extremely political. I hate linking this over and over, but it needs to be understood. There is a near-perfect inverse correlation between the value of the dollar and the market: http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chdet=1264183560000&chddm=101752&chls=IntervalBasedLine&cmpto=NYSE:UUP&cmptdms=0&q=NYSE:SPY&ntsp=0 http://www.google.com/finance?chdnp=1&chdd=1&chds=1&... You can creepily see this happening on a tick-by-tick basis. I don't know why this is so perfect, but I suspect it almost has to be algos doing it. This is the kind of thing that the government (may) start regulating. http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chdet=1264194000000&chddm=391&chls=IntervalBasedLine&cmpto=NYSE:UUP&cmptdms=0&q=NYSE:SPY&ntsp=0 http://www.google.com/finance?chdnp=1&chdd=1&chds=1&... [<-- jan 22 2010] This is not historical: http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chdet=1204923600000&chddm=100238&chls=IntervalBasedLine&cmpto=NYSE:UUP&cmptdms=0&q=NYSE:SPY&ntsp=0 http://www.google.com/finance?chdnp=1&chdd=1&chds=1&...
- steveplace 17y ago
  When the government seeks to regulate huge profit-makers at banks, it's completely rational for those banks' values to fall. You're assuming markets are rational, and that the short term change in market structure was directly caused by a speech. Again, the point I was trying to make was not that the sentiment due to the speech had shifted, but that the analysis by the WSJ was very politicized and intellectually dishonest. The blogger points out that commodities fell harder. That and a nickel and a time machine will get you a cup of coffee. And the real question then is, did the overall markets fall because of Obama's comments, or because of dollar strength and the widening of Greek CDS spreads? Since materials have a higher weighting in the market, would we not assume the latter? There is a near-perfect inverse correlation between the value of the dollar and the market That correlation started around 2H2008. Correlation running about -.5... nowhere near perfect; however, historically we have a positive correlation. Source: http://bit.ly/spycorr http://bit.ly/spycorr The liquidity infusions that the market has seen has very little to do with U.S. politics. You can creepily see this happening on a tick-by-tick basis. I don't know why this is so perfect, but I suspect it almost has to be algos doing it. This is the kind of thing that the government (may) start regulating. This happens due to capital inflows/outflows from different markets. If capital flows out of bonds, it most likely goes into stocks, which gives us this "creepy" movement... but there's nothing sinister behind it. Algorithmic trading has little to do with this, if at all. One quick note: UUP is probably the worst tracker of dollar strength. It's an etf that is structurally damaged and has contract rollover issues due to it's exposure in front month dollar future contracts. I would suggest DXY or looking at a basket of currencies.
  - mynameishere 17y ago
    Yeah, it's just awful. Not even worth the trouble of shorting. http://www.marketwatch.com/investing/index/DXY/charts?countryCode=US&submitted=true&intflavor=advanced&origurl=%2Ftools%2Fquotes%2Fintchart.asp&time=8&freq=1&comp=uup&compidx=aaaaa~0&compind=aaaaa~0&uf=7168&ma=1&maval=50&lf=1&lf2=4&lf3=0&type=2&size=1&optstyle=1013 http://www.marketwatch.com/investing/index/DXY/charts?countr... I use it as an example because it's actively traded. If capital flows out of bonds, it most likely goes into stocks Pass the bong. What's been going on is simple: Bernanke has been scuttling the dollar in order to force people into all forms of risk. Money has been going to bonds and stocks both, the riskier the better: http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chdet=1264194000000&chddm=98141&chls=IntervalBasedLine&cmpto=NYSE:BND;MUTF:PTTAX;NYSE:UUP;NYSE:JNK&cmptdms=0;0;0;0&q=NYSE:SPY&ntsp=0 http://www.google.com/finance?chdnp=1&chdd=1&chds=1&...
DanielBMarkham 17y ago
Without RTA, I don't think I agree with your comment. For two reasons. First, markets move on information. Maybe one piece of big, important information, like a war, or more generally millions of bits of information. But it is a reasonable observation to note the correlation between big news stories and market moves. Second, most times markets don't move on big news. In that case, the trend that I've seen for over a decade is for people to simply speculate on why the market moved one way or another for a particular day. It's not science, it's not news -- it's informed speculation, or entertainment. I think serious investors let this type of entertainment roll off of them -- after all, people like to chat, and media forums like the WSJ (or HN) provide them a forum to do so. Separating the noise from the signal is the entire purpose of becoming a good investor. Thinking it's all signal or all noise is a good way to never be one.
- steveplace 17y ago
  First, markets move on information. That's half true. Markets move from capital flows of institutions on much larger timeframes-- those flows are what create trends. There is an underlying auction process that facilitates trade and capital flow-- the auction process is the short term noise that is dominated by the larger money about 30% of the time. Yesterday was a great example. Yes, the market had a big move on the news, and capital flows moved quickly out of domestic equities. But we also had rate problems coming out of China and weakness in European credit markets. To say that the brunt of the market movement was caused by a political speech does not correspond to reality. it's informed speculation, or entertainment. Yes! And the WSJ generally avoided that, until recently. I think serious investors let this type of entertainment roll off of them That is not reality, unfortunately.
  - DanielBMarkham 17y ago
    If you're saying that markets do not move on information alone and then several sentences later saying that serious investor _do_ let this type of information affect them? Looks suspiciously like self contradiction. And I'll bet the WSJ has always done this. Pick up an issue from 1950 and see if it isn't tying current news stories to the market. It was the same then. This seems to me to be another version of "things were so much better way back when and now it's all garbage" But I'll bow out. I didn't RTA. Just found your comments popular yet (to me) seemingly uninformed.
mattmcknight 17y ago
Uh...this isn't political. We're hitting the financials with these rules. Being political would be saying that it's a bad thing. This will hit the certain bank profits, so they are among the sectors that took a negative hit yesterday. The little article summary says "pulling down bank stocks", so the blog entry's diversion into commodities is irrelevant. I think the proposal helps explains the drop in GS. The Volcker rule is going to put a dent in GS proprietary trading desk activities. It might have even a bigger effect on BoA, as a large percentage of their profits were from trading... For an even clearer demo of the proposal's effect on prices, look at this chart comparing three banks with huge trading operations and three more regional banks that won't be affected by the proposal. http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=1&chfdeh=true&chdet=1264196981580&chddm=4484&chls=IntervalBasedLine&cmpto=NYSE:G;NYSE:JPM;NYSE:STI;NASDAQ:FITB;NASDAQ:HBAN&cmptdms=0;0;0;0;0&q=NYSE:BAC&ntsp=0 http://www.google.com/finance?chdnp=1&chdd=1&chds=1&...
jberryman 17y ago
The Wall Street Journal since Murdoch, with pretty graphs: http://www.journalism.org/node/10769 http://www.journalism.org/node/10769

hop 17y ago

Ritholtz has an excellent blog, I don't know how he finds the time to write so much. Highly recommended.

steveplace 17y ago
I highly recommend his book "Bailout Nation," the most comprehensive overview of our current situation. Data driven and very well written.

mynameishere 17y ago

So you'll see on Marketwatch, Y! Finance, Motley Fool and others about how the president's comments caused the market to drop. This is rubbish. No, this is rubbish. When the government seeks to regulate huge profit-makers at banks, it's completely rational for those banks' values to fall. This is the consensus view of bullish and bearish commentators alike, and I have no idea why anyone would disagree. The blogger points out that commodities fell harder. That and a nickel and a time machine will get you a cup of coffee. Short term noise in the market happens. A five percent haircut is not "noise". http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chdet=1264194000000&chddm=1955&chls=IntervalBasedLine&q=NYSE:JPM&ntsp=0 http://www.google.com/finance?chdnp=1&chdd=1&chds=1&... And those pundits who thought there was some correlation between politics and markets disappeared. No they didn't, and the rally has been extremely political. I hate linking this over and over, but it needs to be understood. There is a near-perfect inverse correlation between the value of the dollar and the market: http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chdet=1264183560000&chddm=101752&chls=IntervalBasedLine&cmpto=NYSE:UUP&cmptdms=0&q=NYSE:SPY&ntsp=0 http://www.google.com/finance?chdnp=1&chdd=1&chds=1&... You can creepily see this happening on a tick-by-tick basis. I don't know why this is so perfect, but I suspect it almost has to be algos doing it. This is the kind of thing that the government (may) start regulating. http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chdet=1264194000000&chddm=391&chls=IntervalBasedLine&cmpto=NYSE:UUP&cmptdms=0&q=NYSE:SPY&ntsp=0 http://www.google.com/finance?chdnp=1&chdd=1&chds=1&... [<-- jan 22 2010] This is not historical: http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chdet=1204923600000&chddm=100238&chls=IntervalBasedLine&cmpto=NYSE:UUP&cmptdms=0&q=NYSE:SPY&ntsp=0 http://www.google.com/finance?chdnp=1&chdd=1&chds=1&...

steveplace 17y ago
When the government seeks to regulate huge profit-makers at banks, it's completely rational for those banks' values to fall. You're assuming markets are rational, and that the short term change in market structure was directly caused by a speech. Again, the point I was trying to make was not that the sentiment due to the speech had shifted, but that the analysis by the WSJ was very politicized and intellectually dishonest. The blogger points out that commodities fell harder. That and a nickel and a time machine will get you a cup of coffee. And the real question then is, did the overall markets fall because of Obama's comments, or because of dollar strength and the widening of Greek CDS spreads? Since materials have a higher weighting in the market, would we not assume the latter? There is a near-perfect inverse correlation between the value of the dollar and the market That correlation started around 2H2008. Correlation running about -.5... nowhere near perfect; however, historically we have a positive correlation. Source: http://bit.ly/spycorr http://bit.ly/spycorr The liquidity infusions that the market has seen has very little to do with U.S. politics. You can creepily see this happening on a tick-by-tick basis. I don't know why this is so perfect, but I suspect it almost has to be algos doing it. This is the kind of thing that the government (may) start regulating. This happens due to capital inflows/outflows from different markets. If capital flows out of bonds, it most likely goes into stocks, which gives us this "creepy" movement... but there's nothing sinister behind it. Algorithmic trading has little to do with this, if at all. One quick note: UUP is probably the worst tracker of dollar strength. It's an etf that is structurally damaged and has contract rollover issues due to it's exposure in front month dollar future contracts. I would suggest DXY or looking at a basket of currencies.
- mynameishere 17y ago
  Yeah, it's just awful. Not even worth the trouble of shorting. http://www.marketwatch.com/investing/index/DXY/charts?countryCode=US&submitted=true&intflavor=advanced&origurl=%2Ftools%2Fquotes%2Fintchart.asp&time=8&freq=1&comp=uup&compidx=aaaaa~0&compind=aaaaa~0&uf=7168&ma=1&maval=50&lf=1&lf2=4&lf3=0&type=2&size=1&optstyle=1013 http://www.marketwatch.com/investing/index/DXY/charts?countr... I use it as an example because it's actively traded. If capital flows out of bonds, it most likely goes into stocks Pass the bong. What's been going on is simple: Bernanke has been scuttling the dollar in order to force people into all forms of risk. Money has been going to bonds and stocks both, the riskier the better: http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chdet=1264194000000&chddm=98141&chls=IntervalBasedLine&cmpto=NYSE:BND;MUTF:PTTAX;NYSE:UUP;NYSE:JNK&cmptdms=0;0;0;0&q=NYSE:SPY&ntsp=0 http://www.google.com/finance?chdnp=1&chdd=1&chds=1&...

DanielBMarkham 17y ago

Without RTA, I don't think I agree with your comment. For two reasons. First, markets move on information. Maybe one piece of big, important information, like a war, or more generally millions of bits of information. But it is a reasonable observation to note the correlation between big news stories and market moves. Second, most times markets don't move on big news. In that case, the trend that I've seen for over a decade is for people to simply speculate on why the market moved one way or another for a particular day. It's not science, it's not news -- it's informed speculation, or entertainment. I think serious investors let this type of entertainment roll off of them -- after all, people like to chat, and media forums like the WSJ (or HN) provide them a forum to do so. Separating the noise from the signal is the entire purpose of becoming a good investor. Thinking it's all signal or all noise is a good way to never be one.

steveplace 17y ago
First, markets move on information. That's half true. Markets move from capital flows of institutions on much larger timeframes-- those flows are what create trends. There is an underlying auction process that facilitates trade and capital flow-- the auction process is the short term noise that is dominated by the larger money about 30% of the time. Yesterday was a great example. Yes, the market had a big move on the news, and capital flows moved quickly out of domestic equities. But we also had rate problems coming out of China and weakness in European credit markets. To say that the brunt of the market movement was caused by a political speech does not correspond to reality. it's informed speculation, or entertainment. Yes! And the WSJ generally avoided that, until recently. I think serious investors let this type of entertainment roll off of them That is not reality, unfortunately.
- DanielBMarkham 17y ago
  If you're saying that markets do not move on information alone and then several sentences later saying that serious investor _do_ let this type of information affect them? Looks suspiciously like self contradiction. And I'll bet the WSJ has always done this. Pick up an issue from 1950 and see if it isn't tying current news stories to the market. It was the same then. This seems to me to be another version of "things were so much better way back when and now it's all garbage" But I'll bow out. I didn't RTA. Just found your comments popular yet (to me) seemingly uninformed.

mattmcknight 17y ago

Uh...this isn't political. We're hitting the financials with these rules. Being political would be saying that it's a bad thing. This will hit the certain bank profits, so they are among the sectors that took a negative hit yesterday. The little article summary says "pulling down bank stocks", so the blog entry's diversion into commodities is irrelevant. I think the proposal helps explains the drop in GS. The Volcker rule is going to put a dent in GS proprietary trading desk activities. It might have even a bigger effect on BoA, as a large percentage of their profits were from trading... For an even clearer demo of the proposal's effect on prices, look at this chart comparing three banks with huge trading operations and three more regional banks that won't be affected by the proposal. http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=1&chfdeh=true&chdet=1264196981580&chddm=4484&chls=IntervalBasedLine&cmpto=NYSE:G;NYSE:JPM;NYSE:STI;NASDAQ:FITB;NASDAQ:HBAN&cmptdms=0;0;0;0;0&q=NYSE:BAC&ntsp=0 http://www.google.com/finance?chdnp=1&chdd=1&chds=1&...

jberryman 17y ago

The Wall Street Journal since Murdoch, with pretty graphs: http://www.journalism.org/node/10769 http://www.journalism.org/node/10769