Wednesday links: low quality liquidity

• abnormalreturns
• July 29th, 2009

“In less than 9 months, the Nasdaq has gone from being 40% below its 200-day EMA to being 10% above its 200-day EMA. Talk about a huge swing.”  (StockCharts Blog)

The reversal in high yield spreads are nearly as breathtaking as the crisis-led rise.  (Bespoke)

Is China’s stock market gotten ahead of itself?  (Trader’s Narrative also Contrarian Edge)

Thank goodness.  Congress is going on vacation.  (Marketwatch)

Paul Wilmott, “Thus the problem with the sudden popularity of high-frequency trading is that it may increasingly destabilize the market.”  (NYTimes)

“..they [HFT firms] can pull their liquidity from the market at any time, and they’ll pull it at exactly the moment we need it the most.”  (Atlantic Business)

High frequency trading brings “low quality liquidity” into the markets.  (Marginal Revolution)

High frequency trading as a “hidden liquidity tax.”  (Felix Salmon)

“In a world where technology and algorithms can give you an immediate advantage there’s a huge incentive in electronic-izing OTC order flow.”  (FT Alphaville)

How are the 3x leveraged S&P 500 ETFs SPXU and UPRO being traded?  (VIX and More)

The hedge fund rebound meme gains ground.  (naked capitalism)

Goldman Sachs (GS) has backed away from commercial real estate.  (Matthew Goldstein)

Is an IPO of Dollar General by KKR a turning point for private equity?  (WSJ)

“With the investment-banking industry a shadow of its former self, could it be that the future of the newly public KKR, along with Blackstone and maybe others, will be to become increasingly like, and competitive with, Goldman Sachs?”  (Economist)

“The truth here is that the SEC realizes the markets need a certain amount of shorting to keep everyone honest. Shorting is like free trade: The more you know, the more you realize its importance.”  (Dealscape)

“Unless companies are compelled to keep their offerings “simple enough to understand”, we will face repeated rip-offs and crises – both macroeconomic and personal – arising from our financial sector.”  (Baseline Scenario)

Is a PPIP mutual fund really a good deal for individual investors?  (Clusterstock)

The technology industry held up pretty well through the recession.  (Real Time Economics)

Peru and its stock market has weathered the global economic meltdown.  (Slate)

The Emerging Global Shares Dow Jones Emerging Markets Titans Composite Index Fund (EEG) looks a lot like a BRIC fund.  (TheStreet)

“China’s IPO market isn’t working.”  (Breakingviews)

A cautionary note on the house prices have bottomed meme.  (Calculated Risk, ibid also Free exchange)

Leave it to Microsoft (MSFT) to craft such a complicated deal with Yahoo! (YHOO) fraught with execution risk.  (24/7 Wall St., DealBook)

Think a coin toss is a 50/50 proposition?  Think again.  (The Big Money)

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