Monday, June 29, 2015

Standard Chartered: easily said —

Standard Chartered: easily said —

"Bill Winters, new chief at Standard Chartered, has a clear mandate. Decide which of the bank’s businesses can produce high and sustainable risk-adjusted returns. Ensure there is enough good-quality capital to support them. Cull assets at the other businesses. Cut costs viciously. Play nice with regulators and politicians. Watch the stock price rise at last, and be seated to general applause."
As the FT points out, all the other banks are going through the same process.  If everyone leaves a field that is not currently profitable, this leaves an open market; if they all crowd into the currently profitable areas, the margins will shrink.

Sunday, June 14, 2015

Modeling market sentiment and pricing options by volume, open interest

Modeling market sentiment and pricing options by volume, open interest - Quantitative Finance Stack Exchange:

"Are there any empirically-proven methods/formulas for weighting IV surfaces, pricing a discount/premium in an option, and/or adjusting any of the 1st- or 2nd-order Greeks for the magnitude (volume or dollar-volume basis traded) of activity in each option contract for a market?"

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Thursday, June 11, 2015

The envelope (theorem) please: Profits, efficiency wages, and monopsony | Arindrajit Dube

The envelope (theorem) please: Profits, efficiency wages, and monopsony | Arindrajit Dube: "As Krugman points out, this is logic of the “envelope theorem.” What I want to clarify in this post is that the logic behind this argument is more general than the particular efficiency wage model Krugman works through.  Any time firms are choosing wages to balance various concerns—as opposed to simply accepting a “market wage” as a constraint—the logic of the envelope theorem applies.  What’s more, two types of empirically relevant models of the labor market—monopsonistic competition and efficiency wages—look pretty similar in this regard, and can be thought of as special cases of a more general model."

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Monday, June 08, 2015

Asset managers’ push into bonds prompts regulatory scrutiny

Asset managers’ push into bonds prompts regulatory scrutiny - "The FSB is chaired by Mark Carney, governor of the Bank of England, who in April said: “Concerns arise about rising risks stemming from the overestimation by investors of the degree of liquidity [in] fixed income markets, as well as the growth of assets under management in funds that offer on-demand redemptions but invest in less liquid assets.”"

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Saturday, June 06, 2015

The Funnel Framework - Stratechery by Ben Thompson

The Funnel Framework - Stratechery by Ben Thompson: "THE FUNNEL FRAMEWORK
All three companies succeed with very different product focuses, but all share the ability to capture a specific type of customer and funnel them to someone who is willing to pay:"

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Friday, May 29, 2015

Startups and the productivity puzzle

Startups and the productivity puzzle:assesses the effect of cheap labour and bizarre consumer choice on UK productivity.

 "In other words, it’s easier to make money by using cheap labour than by investing in machinery. Furthermore, in this example, people would be mad to invest in new machinery because they would be unlikely to make enough to cover their investment. The media love to talk about high-tech entrepreneurship. There may be a few such firms but most of Britain’s startups are low tech or no tech.

Has this county become an El Dorado for cheap labour? Does the business opportunity now lie in setting up a business to exploit what the Economist described as Britain’s pitiful pay and its even more impoverished freelancers? That might explain why, far from improving the country’s productivity, Britain’s startups are making it worse."

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Tuesday, May 26, 2015

Bond liquidity

Dear Buy-side. You seem very concerned about liquidity. Can I suggest paying for it? — Bull Market — Medium: "What needs to happen? Basically, the buy side needs to face up to reality. It needs to start looking at its cost of execution in the long run, rather than on a transaction-by-transaction basis, and understanding that if it prices the brokers out of business, it will have nobody left to make its trades. At present, the regulators aren’t helping with this at all — in a misguided attempt at consumer protection, they make it more or less impossible for a fund manager to make an investment in helping its counterparties. But really, the issue is with the clients themselves. If they want to keep on offering immediate liquidity to their investors (and they do), they need to stop creating the conditions under which that sort of immediacy is impossible for the market to provide."

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