Percentage of US stock trading done by high-frequency firmsA Closer Look: European Equities, Commodities And Corporate Profit Margins

A look at performance by sector in European stocks over the last year reveals that auto companies were “the strongest sector, boosted by signs of life in the euro-zone economy and helped further by falling yields, which aids heavily-indebted companies.  Insurers were also strong performers, lifted, among other things, by equity market gains.  Laggards included food and beverages, possibly as interest switched out of staples amid signs of economic revival, and basic resources, hit by concerns of a China slowdown.”  Meanwhile, do you need commodities in your portfolio?  Performance analysis of commodities as a broad asset class since 1991 shows “performance was fairly abysmal considering total bond market returns were one-and-a-half times better with less than a third of the volatility.”  Furthermore, commodities “don’t generate any earnings or pay dividends like stocks.  They don’t make periodic interest income payments like bonds…Plus, if you hold a diversified portfolio of stocks, you should already have commodities exposure through energy, mining, agriculture and natural resource companies.”  That being said, safe havens like gold have outperformed the market in the first quarter this year.  Also, here’s a really in depth analysis of the problem with the “corporate profit margins are excessively high and, therefore, will revert to their historic mean” theory.  Basically, the problem has to do with the failure of GDP and GNP to accurately incorporate foreign profits/costs into the model, meaning that as globalization continues and corporations extend their reach beyond their political boundaries, our economic analysis should adjust.  Furthermore, “there are no ‘divinely-ordained’ constants that govern the system.  The averages that economic variables exhibit, and the settling points towards which they gravitate, can and do change as secular conditions in economies change.”  Dan McCrum at Financial Times mostly agrees with this conclusion, however wonders about how to “come up with a satisfying explanation for the different eras (i.e. different means).”

High-Frequency Trading May Get A Dan Brown Book

Markets always have been under pressure to make access cheaper and faster.  At the same time, they’ve tried to wall off participants who gain an unfair advantage.  And traders always have looked for a crack in the door to regain an advantage.  It’s just as true today with computers that bump high-speed trading firms to the front of the line, as it was when traders actually ran to the front of the trading booth — or buttonwood tree — to front run.”  Meanwhile, looks like Dan Brown and Michael Lewis have something to talk about: “Under a gazebo’s shade, a Ukrainian physicist who aspires to be a monk met with a Milwaukee lawyer seven years ago and began planning a firm whose profits from rapid-fire stock trades would go mostly to charity.  They and another founder eventually named it SXP Analytics LLC after St. Xenia, an 18th century Russian who gave the poor her possessions.”  Also, here’s how your buy order gets filled.

WA: Giving A Debtor A Big Club Against Lenders

The United States District Court in Tacoma, WA has made a controversial ruling regarding the transfer of a bankrupt Washington State company’s debt between “financial institutions”.  “The problem, as they saw it, was that the loan agreement limited loan transfers to ‘financial institutions.’  And the courts in Washington tell us that hedge funds are not ‘financial institutions’ — something that may come as a bit of a surprise to the drafters of the Dodd-Frank Act.”  Furthermore, by hindering the ability of hedge funds, financial institutions etc. to trade loans in default, lenders may need to consider the increased risk next time they make a loan to a Washington-based company.

USA: Apple, Pfizer, Others Form ‘Go Slow’ U.S. Patent Lobby Group

“Major U.S. companies including Ford, Apple and Pfizer have formed a lobbying group aimed at pushing back at some changes to the patent system members of Congress have proposed, saying these measures would hinder protection of valuable inventions.  The group is concerned about pending legislation aimed at fighting so-called patent assertion entities (PAEs), companies which produce nothing but instead buy up patents and then attempt to extract licensing fees or sue for infringement.”

What: Strategy&: The Artist Formerly Known As “Booz & Company”

Strategy and…strategy and…strategy and…….smoking the reefer.  (Couldn’t resist)

WaitWhat: Warren Buffet Is Always In Favor Of Kittens

USA: Foreign Trade Cut Into First-Quarter Growth

USA: Construction Is Muted Because Too Many Buildings Went Up During The Boom

USA: Ignore ADP


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