The Braille Silver Dollar

The first-ever coin to feature readable Braille is now on sale from the U.S. Mint. The silver (90 percent) dollar features a portrait of Louis Braille, the inventor of the system used by blind people worldwide, on one side with the image of a young boy reading a book in Braille on the flip. Above the boy are the Braille characters for "Braille."

more at

http://www.cnn.com/2009/US/03/26/braille.coin/

Mashups Slowly Gain Traction on Wall Street

With volatility in the financial markets at an all-time high, firms that want to trade ahead of the competition need access to as much information as possible from more sources than ever -- in as close to real time as possible -- or risk being left behind.

To facilitate this information mining, a growing number of financial firms have started turning to mashups, Web-based environments that aggregate content from multiple sources in a single tool. In fact, a recent Aite Group report says financial firms will spend $35 million on mashup technology in 2009.

According to Adam Honore, senior analyst at Aite Group and author of the report, many firms already are using traditional content aggregators -- the type of mashup with which most people are familiar -- to create market alerts, research and trading dashboards, and proprietary fundamental data sets for trading. He added that some are also using business intelligence mashups, which operate like external content aggregators except that they aggregate data from internal databases, to create virtual deal rooms to evaluate IPOs, for instance. Then there are business process management mashups, which help institutions track ongoing management issues, facilitate change management and coordinate sales efforts.

Despite the upside, however, Honore suggests in an interview with WS&T that, with IT budgets shrinking, some financial firms currently feel that there are more-pressing areas than mashups in need of investment. This is particularly the case, he wrote in the report, if a firm's management gets caught up in the "vernacular" of Web 2.0, focusing too much on buzzwords such as "mashup" and other loosely defined concepts that can be confusing to business users. If that happens, Honore noted, the odds are that they will not look twice at the business value of mashup technology.

more at

http://www.wallstreetandtech.com/showArticle.jhtml?articleID=216401169

This Day in Wall Street History 1900: Carnegie incorporates

On this day in 1900, Andrew Carnegie thumbed his nose at the all-but-impotent Sherman Anti-Trust Law and incorporated his Carnegie Steel Company. Much to the chagrin of trust-conscious legislators, the New Jersey-based behemoth towered above the rest of America's steel industry. Initially worth $160 million, Carnegie Steel earned $40 million in profits during its first year as a corporation. Though $25 million of that money went straight into Carnegie's pockets, the Scottish-born industrialist soon put his company on the selling block. In 1901, J.P. Morgan's freshly formed United States Steel Corporation, which again flew in the face of anti-trust laws, anted up a hefty $250 million for Carnegie Steel. The deal made Carnegie the wealthiest man of the gilded age and prompted his retirement from the corporate sector. While Carnegie headed back to his native Scotland to pursue philanthropic endeavors, the giant U.S. Steel Corporation dominated the steel field and burst into the record books as the first, but hardly last, American company to be worth over one billion dollars.

 -Source: www.history.com

SEC fee increase likely to affect trading volumes

Increased fees from the Securities and Exchange Commission on stock transactions are expected to impact trading volumes. The fees are jumping by four times so the SEC can avoid a funding shortfall. Smaller firms will be particularly hard hit by the increase, which goes into effect next month.

more at

http://www.reuters.com/article/ousiv/idUSTRE52M5Z420090323

Bailed out bankers face 90% bonus tax

Top executives at banks that have been given a US government bailout will be hit with a 90 per cent tax on any bonuses they receive, the US House of Representatives determined this week.

According to the new bill, the 90 per cent tax will be imposed on all employees whose total annual pay was more than $250,000 if their firm received in excess of $5 billion in government rescue packages.

The legislation was sparked by news that AIG - which is currently 80 per cent government-owned and has received upwards of $182 billion in bailout funding - had paid some $165 billion to its top executives, some of whom were responsible for the insurer's failings.

In addition to AIG, employees at Citigroup, Goldman Sachs, Bank of America, Morgan Stanley, Freddie Mac and Fannie Mae would also be covered under the new tax legislation, the Dallas News reported.

But Rick Newman, writing for US News & World Report, suggested that a government bailout for AIG may have been preferable to letting the firm collapse - with AIG stating that its failure could have a more damaging impact than the collapse of Lehman Brothers in 2008.

Fed plans to flood financial system with $1.2 trillion

As part of its efforts to stabilize the economy, the Federal Reserve said it will purchase mortgage-related securities and government bonds. Effectively, the Fed will print more money to pay for the program, which is designed to reduce borrowing costs for loans, including mortgages, and spur the economy. The $1.2 trillion the central bank plans to pour into the system dwarfs previous efforts and indicates an acknowledgment that the economy has worsened.

more at

http://www.washingtonpost.com/wp-dyn/content/article/2009/03/18/AR2009031802283.html?hpid=topnews

Citadel hopes to raise $2 billion for new global macro fund

(Reuters) — Chicago-based hedge fund Citadel Investment Group LLC, hit by heavy losses and client redemptions last year, hopes to raise $2 billion for a new fund making bets on currencies, interest rates and other trades on broad economic trends, a person familiar with the plans said.

Citadel declined to comment.  The firm told potential investors the new Citadel Global Macro Fund Ltd. could eventually grow to a maximum of $5 billion, the source said.

Funds investing in the "global macro" style were among the rare few that that performed well through the past year, increasing the market's interest in these funds. Still these are challenging times for the hedge fund industry, which has seen customers pull out money in droves.

Citadel in December barred withdrawals from its flagship Kensington and Wellington funds, which fell by more than half last year.

These funds now manage $8.1 billion, down half from their high-flying peaks. The Chicago -based firm overall has contracted to about $11.5 billion under management from more than $20 billion last year.

Recently Citadel CEO Kenneth Griffin told investors his funds would slowly allow redemptions to begin as early as the second quarter if the funds met certain thresholds.

The new fund will be managed by a team led by Kaveh Alamouti, a former Moore Capital Management trader who has run the global macro portions of Kensington and Wellington since joining last year.

The fund would charge 2 percent of assets as a management fee, 20 percent of profits and a fee of 0.25 percent to defray trading and back-office costs, the source said.

By comparison, Kensington and Wellington have charged management fees of 6 percent and even 9 percent, plus 20 percent of profits, reflecting the intense investor demand for these funds.

Citadel also intends to launch a fund focused on stocks and another focused on convertible bonds, the source said.

Another Ponzi scheme

Paul Greenwood and Stephan Walsh, principals of WG Trading Investors, were arrested by Federal Bureau of Investigation agents in February on conspiracy, securities fraud and wire fraud. The FBI alleges that Greenwood and Walsh misappropriated a majority of the more than $668 million invested in WG Trading Investors. The National Futures Association had suspended Greenwood and Walsh's membership earlier in the month for failure to produce records related to their commodity pool. The NFA audit was cited by the FBI in its release.

This Day in Wall Street History 1850: American Express founded

This day in 1850 marked the founding of one of America's stalwart companies, American Express. 

The brainchild of Henry Wells and William G. Fargo, American Express was a union of three express transport concerns: Livingston, Fargo & Company, Wells & Co., and Butterfield & Wasson. The newly formed, and initially unincorporated, transportation company was a fast hit with the public; by the close of the Civil War, American Express had set up 900 offices in 10 states.

Success, however, bred competition, and the upstart Merchants Union Express Company, founded in 1866, gave American Express a good run of it for a few years. After two years of furious competition, the companies decided that it would be more profitable to merge than to fight; in late 1868, the American Express and Merchants Union joined together as American Merchants Union Express Company. Fargo took the reigns of the new concern, which, in 1873, adopted its more familiar moniker as the American Express Company. American Express, of course, has since mutated into a giant in the fields of finance and travel, with offices spread across the globe.

 -Source: www.history.com

January sees foreigners withdraw nearly $150 billion from U.S. assets

In January, foreign capital outflows from the U.S. reached $148.9 billion while China increased its Treasury holdings by $12.2 billion, according to U.S. government data. The outflow compares with an $86.2 billion inflow in December. Michael Woolfolk, a Bank of New York Mellon senior currency strategist, said the record outflows were a concern. "This was a truly awful report, throwing into question the funding of the U.S. current-account deficit," he said.

Nasdaq OMX Europe to launch dark pool platform

Press release

Multilateral trading facility (MTF) Nasdaq OMX Europe has announced plans to launch a new pan-European dark pool, Neuro Dark. 

Dark pools are usually designed to enable buyers and sellers to agree large-scale transactions without having to publicly disclose details such as sale price or share volumes. They are designed to prevent block orders from triggering wider market swings. 

However, Nasdaq OMX Europe president Charlotte Crosswell said the Neuro Dark platform will offer a non-displayed marketplace for "all order sizes". 

In a statement, Nasdaq OMX Europe added that Neuro Dark will use a reference price system based on best bid and offer prices and similar functionality to the MTF.

It will also use the same Inet technology to match orders in the dark pool and route unexecuted orders to other non-displayed MTFs. 

Neuro Dark will go live on April 27th, trading around 800 of the most active European blue chips. The launch remains subject to final approval from the UK's Financial Services Authority. 

IRS sayas Stanford owes $226.6m in back taxes

The Internal Revenue Service (IRS) has filed a request with a federal court in Dallas to pursue alleged fraudster Sir Allen Stanford for $226.6 million in unpaid taxes, according to reports. 

Reuters said the IRS submission contests that the Texas-born billionaire and his wife Susan did not pay the federal income taxes between 1999 and 2003. 

The news agency said the debt could increase as according to the documents, Sir Allen has not filed a 2007 income tax return. 

Sir Allen was charged last month by the Securities and Exchange Commission (SEC) with orchestrating an $8 billion investment fraud through his Antigua-based company, the Stanford International Bank (SIB). 

The SEC also named SIB chief financial office James Davies and Stanford Financial Group chief investment officer Laura-Pendergest-Holt in the enforcement action. Ms Pendergest-Holt has subsequently been charged by the FBI with obstructing the SEC inquiry. 

Reuters noted that earlier this month, 1,000 Stanford group employees had their posts terminated by the court-appointed receiver for the business. A federal judge has also granted an indefinite freeze on Sir Allen's assets. 

Hedge fund fraudster admits jumping bail

A convicted hedge fund fraudster who faked his own suicide to avoid going to prison has pleaded guilty to jumping bail.

Samuel Israel, founder of the Bayou hedge fund group, was sentenced to 20 years in prison last April after he admitted running an investment fraud that cost his clients around $450 million, Reuters reports.

However, a court heard that on the day he was supposed to report to a Massachusetts prison to start serving the term, he disappeared after leaving his car abandoned by a bridge with the words "suicide is painless" etched into the dust on the windshield.

Investigators soon ruled out suicide and launched a manhunt for the former investment manager. Mr Israel turned himself in last July.

The latest hearing had been delayed several times while Mr Israel received medical treatment. He could face an additional ten years in prison for jumping bail.

Sentencing is scheduled for June 24th.

This Day in Wall Street History 1915: FTC is founded

President Woodrow Wilson's first two years in the Oval Office were marked by a whirlwind of activity: the reform-minded former governor of New Jersey pushed an armload of programs through the legislative chain. One such initiative was the Federal Trade Commission (FTC), which, after being devised in 1914, officially began its operations on this day in 1915. Officially charged with curbing corporate actions that blocked competition and the free flow of international trade, the FTC also served to strengthen the ties between business and government. Not only did the agency aid exporters by keeping tabs on tariffs, it also threw its weight behind legislation that would sanction monopolies and trusts in the field of foreign trade. As some historians have noted, the FTC fulfilled Wilson's vision of a global fiscal order led by the United States and facilitated by "open" trade channels. Along with its far-reaching economic impact, the FTC also marked the further consolidation of power in the executive branch of the government, a trend that had been initiated earlier in the century by Theodore Roosevelt. 

-Source: www.history.com

"Uptick rule" for short sellers might make a comeback

The Securities and Exchange Commission is considering restoring the "uptick rule," which requires short sellers to sell shares at a price above the most recent trading price of the stock. The commission "may conduct a public meeting as early as next month to consider whether to formally propose reinstatement of the uptick rule, or consider other measures related to short sales," said John Nester, spokesman for the SEC.

more at

http://www.businessweek.com/ap/financialnews/D96REJ6O0.htm

Investors push back over terms of TALF

Investors, particularly hedge funds, are not comfortable with some of the stipulations for participating in the Term Asset-Backed Loan Facility, saying they give the Federal Reserve and dealers too much power to comb through their books. The program, which is backed by the Fed and the U.S. Treasury, is scheduled to launch next week, but it faces the challenge of getting financial firms to agree to the contract's wording. Rob Toomey, managing director and associate general counsel at SIFMA, says the goal of the contract is to simplify the process for dealers and investors.

Mounting rescue terms make banks keen to return money

Lawmakers and the Obama administration are putting more strings on the taxpayer money that went to financial institutions. The banks have been told to modify mortgages, to allow shareholders a say on executive compensation and to cut dividends, among other requirements. Bankers, including those at Goldman Sachs, Wells Fargo and Iberia Bank of Lafayette, La., say the mounting conditions are making them strive to repay the rescue funds as soon as possible.

more at

http://www.nytimes.com/2009/03/11/business/economy/11bailout.html?_r=3&ref=business

Hedge funds bank on gold

Falling currency yields and continuing uncertainty over the worldwide economy have sparked a new gold rush in the global hedge fund industry. 

According to the Financial Times, investment pools that have traditionally avoided gold investments are buying up the precious metal at a sometimes record pace as a way of betting against central banks and paper currencies. 

These "gold bulls" include funds that last year bet against investment banks like Lehman Brothers being able to cover their exposure to a collapse in US house prices. 

One such fund manager, David Einhorn of Greenlight Capital, wrote to investors last week stating that he is buying gold because the US dollar is "being debased" as the Federal Reserve takes on more and more debt. 

"Deflation will lead to further steps to debase the currency, while inflation speaks for itself," he added. 

Peter Munk, the founder of the world's largest gold miner Barrick, recently said that the price of metal's price could break the $2,000-per-ounce barrier if central banks shift some of their dollar reserves into gold. 

LCH.Clearnet to open New York office as part of U.S. push

LCH.Clearnet, the largest independent clearinghouse in Europe, is preparing for a push into the U.S. clearing industry by opening an office in New York. The development comes as a group of banks, the London Stock Exchange and Icap plan to make an offer for the clearer. Ed Watts, a Goldman Sachs veteran and former board member of the Depository Trust & Clearing Corp., will lead LCH.Clearnet's New York office.

more at

http://www.ft.com/cms/s/0/9b1aede0-0e33-11de-b099-0000779fd2ac.html

New futures exchange in U.S. to begin operations in June

The Electronic Liquidity Exchange marks the latest effort to break into the U.S. futures markets, which is monopolized by the CME Group. Bank of America, Credit Suisse, Barclays Capital, Deutsche Bank Securities, Citi, JPMorgan, Merrill Lynch, RBS, BGC Partners, a couple of market-making firms and a trading-technology firm established ELX in December 2007.

more at 

http://www.ft.com/cms/s/0/27814ae0-0e48-11de-b099-0000779fd2ac.html

Hedge Funds Hemorrhaging Jobs

The hedge fund sector's worldwide headcount could shrink by 20,000 jobs or 14 percent in 2009, according to a new forecast byOptions Group, a recruiting and strategic consulting firm focused on the financial services industry.

Hardest hit are sales and investor relations staff, followed by back-office operations staff and traders, Options Group says. Forecast job losses will be greatest in the New York area and London, followed by Hong Kong and Tokyo.

"It's across the board," Options Group Chief Executive Michael Karptold Reuters. "Funds are looking to lay off people who are not revenue generators, the people whose ideas are not generating alpha."

Investors continue withdrawing money from hedge funds, further depleting assets already compressed by market losses. Since a portion of fund fees are based on the amount of assets under management, revenue at most firms is falling in tandem with assets. That's what happened last year, when hundreds of funds shut down and industry employment shrank by 6.4 percent or about 10,000 jobs, to 145,000, according to Options Group.

Another Perspective

But another hedge-fund watcher cautions it's difficult to extrapolate from data on assets under management to predict changes in fee income or headcount. "It's very much back-of-the-envelope kind of math," says Neil Wilson, editorial director of Hedge Fund Intelligence, a firm that compiles news and data on the global hedge fund industry.

Funds that generate positive returns, which roughly a third of the industry did last year according to Wilson, earn extra fees for performance. So while worldwide hedge fund assets dropped 32 percent last year to $1.81 trillion, according to Hedge Fund Intelligence data, Wilson says industry-wide fee income might have declined more than 30 percent, or less than that.

Wilson also says direct employment at hedge funds probably is greater than 145,000, and indirect employment – via prime brokers and other outsourced services – accounts for still more jobs dependent on hedge fund business. And 20 percent of the industry's remaining assets are slated to be withdrawn by investors this year, he adds.

All of that suggests Options Group's forecast of 20,000 job losses this year or 14 percent of headcount is, if anything, conservative.

NYSE Euronext, Pipeline to launch share-trading facilities

NYSE Euronext is launching today its alternative trading platform called NYSE Arca Europe. Meanwhile, Pipeline, a U.S. operator, will debut its plans for a "dark pool" trading system to launch in the second quarter. The facilities will open as equity markets continue to deteriorate, raising questions about the viability of such platforms.

more at

http://www.ft.com/cms/s/0/68bfa3e2-0c1a-11de-b87d-0000779fd2ac.html?nclick_check=1

Pandit: Citi profit performance is best in a year

Citigroup's profit performance in January and February was the best the bank has posted in a year, according to CEO Vikram Pandit. In a memo to employees, Pandit said Citi has generated $19 billion in revenue so far this year, even as uncertainty about the firm's future mounts. "We were profitable through the first two months of 2009 and are having are best quarter-to-date performance since the third quarter of 2007," Pandit wrote.

Bridgewater named biggest US hedge fund manager

Connecticut-based Bridgewater Associates has topped a new poll to find the United States' biggest hedge fund manager, overtaking JP Morgan Chase. 

The rankings, compiled by Absolute Return magazine, puts the firm's assets under management at $38.6 billion as of January 1st. This represents an 11 percent decline since July of last year, but it was still enough to beat the Wall Street veteran. 

JP Morgan came second with $32.9 billion under management, down 26 per cent in the six months to the end of 2008. 

New York's Paulson & Co climbed one place to third with $29 billion in assets under management, swapping places with DE Shaw Group, which clocked up investments worth $28.6 billion. 

Overall, the Absolute Return survey found that the number of US hedge fund managers controlling $1 billion or more had declined by 19 percent to 218 firms. 

New York was found to be the heartland of America's hedge fund industry, with 121 fund managers - including seven of the top ten firms - calling the Empire State home. Connecticut was second with 29, followed by California. 

Thomson Reuters to Provide Sub-Millisecond Access to ISE

Thomson Reuters today announced it has launched a new ultra low latency market data solution to the International Securities Exchange (ISE). Through Reuters Data Feed Direct, clients can access ISE’s Depth of Market Feed which provides increased trading opportunities within the equity options market by disseminating five price levels aggregated by quantity. 

Markets participants can deploy the new solution from within their own premises, co-located at the exchange or at Thomson Reuters hosting centre. Engineered with very low standard deviation across current and forecasted market data rates, the new data feed is targeted at high frequency and algorithmic trading.

Jeff Soule, head of Market Data at ISE, said: “ISE is committed to providing low latency, direct access to our market data for active trading firms looking to improve their market making efficiencies and enhance their trading decisions. We are excited to have Thomson Reuters provide an off-the-shelf interface using Reuters Data Feed Direct to reduce development and maintenance efforts for their customers that require a low latency solution.” 

Scott Kennedy, Global Business Manager, Direct Feeds, Thomson Reuters, said: “With the continued growth in algorithmic trading in the equity options markets, exchange order book depth is becoming increasingly important and Thomson Reuters continues to provide low latency access to that deep liquidity for automated trading applications. We see our relationship with the ISE as an endorsement of the success of our low latency solutions with global execution venues.”

Thomson Reuters currently has over 50 premium low latency venues available via direct exchange connectivity, in addition to more than 300 markets available via its leading, real-time feed solutions.

City of London facing 'explosion' in fraud cases

The UK is facing a series of "mini-Madoff" scandals in the coming months as investment frauds currently being investigated by City of London Police and the Serious Fraud Office (SFO) come to light, the head of the agency has warned.

SFO director Richard Alderman told the Independent that authorities are currently tracking a spate of trading, investment and mortgage scams linked to economic downturn.

Mr Alderman added that a "big Ponzi" scheme similar to the $50 billion (£34.4 billion) scam orchestrated by disgraced Wall Street broker Bernard Madoff is among the cases under investigation.

Detective Superintendent Bob Wishard of the City of London Police fraud squad said: "The growing number of frauds in the City and the deepening recession has prompted speculation that Britain could soon see its first £1 billion fraud."

He warned that there are "undoubtedly some huge investment frauds going on".

In December, the SFO wrote to the City's legal and accounting firms calling on whistleblowers to come forward if they had evidence of suspected fraud.

This Day in Wall Street History 1933: Roosevelt declares bank holiday

When Franklin Roosevelt started his first term in the White House in 1933, he inherited a nation in the depths of the Depression. A record 13 million Americans were unemployed and businesses were drowning in red ink. Perhaps even more pressing was the head-spinning string of bank failures which had triggered a frantic run on the nationÝs savings vaults. The wave of withdrawals by panic-stricken depositors further dried up banks' already-depleted supply of liquid assets and pushed the nation's banking system to the brink of disaster. On March 5--the day after being sworn into office--Roosevelt stepped into the breach and declared a "bank holiday," which, for four days forced the closure of the nation's banks and halted all financial transactions. The "holiday" not only helped stem the frantic run on banks, but gave Roosevelt time to push the Emergency Banking Act through the legislative chain. Passed by Congress on March 9, the act handed the president a far-reaching grip over bank dealings and "foreign transactions." The legislation also paved the path for solvent banks to resume business as early as March 10. Three short days later nearly 1,000 banks were up and running again. 

-Source: www.history.com

Jobless Claims Fall 31K To 639K

New U.S. claims for state unemployment benefits fell last week for only the third time since the start of the year, though they remained at a level consistent with a steep decline in February payrolls.

Initial claims for jobless benefits fell 31,000 to 639,000 after seasonal adjustments in the week ended Feb. 28, the Labor Department said in a weekly report. The previous week, already a 26-year high, was revised to show an even sharper drop of 670,000. Wall Street economists had expected a smaller decline of 12,000 last week, according to a Dow Jones Newswires survey. Jobless claims have nearly doubled in the last year.

The four-week average, which aims to smooth volatility in the data, rose 2,000 to 641,750, the highest since October 1982.

Stanford accused 'refuses to cooperate' with fraud investigation

One of people accused of helping the billionaire businessman Sir Alan Stanford to orchestrate an $8 billion investment fraud is reportedly refusing to cooperate with US investigators. 

James Davis, chief financial officer at the Antigua-based Stanford International Bank (SIB), was named in a civil suit filed by the Securities and Exchange Commission (SEC) on February 17th. 

He, along with Sir Alan, Stanford Financial Group chief investment officer Laura Pendergest-Holt and three Stanford group companies, is accused of helping to run a Ponzi scheme which used fabricated historical returns to lure investors into supposedly high-yield certificates of deposit sold through SIB. 

Bloomberg reports that in court papers filed in Dallas on February 27th, Mr Davis stated "I hereby assert my privilege against self-incrimination under the Fifth Amendment of the US Constitution and decline to testify or provide an accounting."

Sir Allen and Mr Davis are not facing any criminal charges, the news service reports. 

Ms Pendergest-Holt was charged on February 25th with criminal obstruction of the SEC's investigation. She has been released on a $300,000 bond and is under electronic surveillance. 

JPMorgan reportedly made $5 billion in derivatives profit

In one of the worst years on Wall Street, JPMorgan Chase reaped $5 billion through trading over-the-counter derivatives, sources said. Led by Matt Zames, the JPMorgan trading desk might have benefited from Lehman Bros.' collapse and the takeover of Bear Stearns, because the developments left hedge funds and companies with fewer derivatives-trading partners. "It's a flight to quality," said Craig Pirrong, a finance professor at the University of Houston. "They expanded the scale of business, the number of trades people wanted to do with them, and it gave them pricing power." 

CME volume drops 28% in February

(AP) — Exchange operator CME Group Inc. said Tuesday average trading volume across its exchanges fell 28 percent in February from a year ago, but is trending up compared with recent months.

An average of 10.8 million contracts were traded per day on CME Group's exchanges in February, compared with 15.1 million contracts traded per day during the same month last year. However, average daily volume increased 14 percent from 9.5 million contracts in January.
Total February volume was 206 million contracts, of which 79 percent were traded electronically.

Trading volume was down across nearly all of CME Group's product lines, with interest-rate contract volume tumbling the furthest. February interest-rate volume fell 51 percent to an average of 4.1 million contracts per day from 8.5 million contracts per day in February 2008.
Volume at the New York Mercantile Exchange, where physical commodity futures are traded, averaged 2 million contracts, up 6 percent from the prior-year period.

CME Group acquired the New York Mercantile Exchange in August 2008.

CME Group shares added $2.48, or 1.4 percent, to $175.76 in mid-morning trading.

Doug Kass Calls The Bottom at S&P 666

Doug Kass called a market bottom on March 2. He says events now confirm that and his watch list of twelve economic indicators shows things are improving.

Kass called the market crash early, shorted Warren Buffett’s Berkshire Hathaway successfully when many thought doing so was insane, and in the years I’ve been reading him, seems plenty savvy.
He says the current mood of pessimism in the markets is astoundingly gloomy and  unwarranted. I would agree, and would expand that to include society at large. Some commentators appear to be trying to outdo each other with predictions of how dire things will become and how doomed we are.

On Feb. 17, he presented a watch list of conditions that, if in an improving trend, would likely indicate that a sustainable up move is possible for equities. 

He then reviewed this checklist (and added one more factor) to determine the market's standing. 

Bank balance sheets must be recapitalized. Yesterday a comprehensive bank rescue package was introduced. It is obviously too early to consider its full impact, but the details of the program suggest to this observer that it will likely be effective in clearing toxic bank assets. (We grade the package a B+, up from a D+ only two weeks ago.) 

Bank lending must be restored. While bank lending standards remain tight, my view is that yesterday's announcement of ring-fencing toxic bank assets will almost unquestionably succeed in unclogging the transmission of credit. (Grade B, up from a C previously.) 

Financial stocks' performance must improve. Financial stocks have finally awakened from the dead, and the recent outsized move to the upside could foreshadow continued market strength. Historically strong relative performance in the shares of asset managers -- such as Franklin Resources (BEN Quote - Cramer on BEN - Stock Picks), T. Rowe Price (TROW Quote - Cramer on TROW - Stock Picks) and AllianceBernstein (AB Quote - Cramer on AB - Stock Picks) -- presage a better equity market, and Monday's strong group action was conspicuous in its outperformance. (Grade B+, up from a D.) 

Commodity prices must rise as a confirmation of worldwide economic growth. Beginning two weeks ago, commodities' prices began to strengthen, and the Fed's message last week accelerated that trend. Gold, copper (at the highest level since November) and crude oil (over $54 a barrel) continued to rise yesterday, reflecting a combination of continuing inflationary and currency debasement fears coupled with the possibility that worldwide economic growth might stabilize sooner than later. Finally, the TIPS market is forecasting some higher inflation, and a little inflation is better than a lot of deflation. (Grade B, up from a C+.) 

Credit spreads and credit availability must improve. Spreads remain worrisome and the transmission of credit remains poor, but the economy should gain traction as public policy is implemented, money is made more available and lending terms are liberalized. (Grade D, flat from two weeks ago.) 

We need evidence of a bottom in the economy, housing markets and housing prices. The retail industry has exhibited evidence of sequential improvement in the January through March period. Other economic signs are somewhat more ambiguous but, nevertheless, are showing some life. Months of inventory of unsold homes are declining and so are mortgage rates, but home prices have yet to stabilize despite an improvement in the affordability indices and a better relationship between home ownership and rental costs. Nevertheless, yesterday's strong existing homes sales release raises the specter of a better spring selling season than most anticipate. I contend that housing could surprise to the upside and might lead most other economic indicators higher. (Grade C+, up from a C-.) 

We need evidence of more favorable reactions to disappointing earnings and weak guidance. I am encouraged by the better price action in the face of poor earnings results and guidance in a wide range of companies, including Freeport-McMoRan Copper & Gold (FCX Quote - Cramer on FCX - Stock Picks), FedEx (FDX Quote - Cramer on FDX - Stock Picks), Airgas (ARG Quote - Cramer on ARG - Stock Picks) and General Electric (GE Quote - Cramer on GE - Stock Picks). (Grade B+, up from a C+.) 

Emerging markets must improve. China's economy (PMI and retail sales) and the performance of its year-to-date stock market have turned decidedly more constructive, but other emerging markets remain moribund. (Grade B up from a C.) 

Market volatility must decline. The world's stock markets remain more volatile than a Mexican jumping bean. (Grade C+, flat with two weeks ago.) 

Hedge fund and mutual fund redemptions must ease. I am comfortable writing that the worst of the redemptions are behind the asset management industry. Nevertheless, the disintermediation and disarray in the hedge fund and fund of fund industries still have a ways to go. And while brokerage account liquidations appeared to have decelerated last week (coincident with rising share prices), my high net worth brokerage contacts continue to experience account closures and a panicked constituency. (Grade C, up from a D.) 

Marginal buyers must emerge. Low invested positions at hedge funds and by individual investors no doubt fueled March's market rise as the fear of being out has begun to replace the fear of being in. These two classes could continue to be the near-term marginal buyers fueling stocks. Corporate acquirers could also emerge as important marginal buyers, and the recent step up in merger and acquisition activity -- for example, Genentech (DNA Quote - Cramer on DNA - Stock Picks), Petro-Canada (PCZ Quote - Cramer on PCZ - Stock Picks), Schering-Plough (SGP Quote - Cramer on SGP - Stock Picks) and Daimler (DAI Quote - Cramer on DAI - Stock Picks) -- is a concrete indicator that another important marginal buyer has surfaced. As the year progresses, a meaningful upside move awaits a broad asset allocation move of pension funds out of fixed income and into equities. (Grade B, up from a C.) 

The market's internals must improve. I am comforted by a number of improving technical conditions that have emerged since the March low and that have continued in force over the past two weeks since the market has made program off that nadir. Indeed, the conditions of the recent low were different than others -- in sentiment, volume, number of new lows and in intensity. The move from the October lows to the March lows indicated growing fear and gave way to rising cash positions and the loss of hope, but the market's internals were improving. November's DJIA low of 7,552 was nearly 11% below the October low of 8,451, and the March low of 6,547 was 22.5% under October's low. While each new low was more frightening than the prior one, however, there were improving technical and sentiment signals. For example, NYSE volume at the October low expanded to 2.85 billion shares; at the November low, volume dropped to 2.23 billion shares; and at the March low, volume was only 1.56 billion shares. As well, new lows traced decreasing levels: At the October low, there were 2,900 new lows; at the November low, there were 1,515 lows; and at the March low, there were only 855 new lows on the NYSE. Moreover, the combination of last Tuesday's 12:1 ratio of advancing stocks over declining stocks coupled with that day's 27:1 up-to-down volume ratio has not occurred in almost 65 years. Remarkably, yesterday was the fifth 90% upside day in March, which is clear evidence of a broadening market. 

Bernie Madoff on New York magazine cover

About This Cover:

Issue Date: March 2, 2009
On the Cover: Bernie Madoff
Photographer/Artist: Darrow

Bernie Madoff’s historic swindle was one of the biggest stories in New York — and the country — this year. In its March 2, 2009, cover treatment, New York magazine eschewed familiar business-magazine conventions for a bold, daring, and somewhat gruesome depiction of Madoff as the Joker. The artist, Darrow, takes a banal-but-emotional news photo of Madoff and turns its subject into “the grinning, bloodshot-eyed Joker, the diabolical supervillain who delights in terrorizing Batman’s Gotham City,” as the Associate Press described the cover in a story on the economy’s new villains. (The cover ran the Monday after the Academy Awards; the gamble was that Heath Ledger would win and his image would be in the forefront of people’s minds.) The sheer audacity of Madoff’s pathological stunt, plus his inscrutable smile and physical resemblance to the comic-book villain, made the Joker an ideal embodiment of the notorious schemer.

AIG Reports $61.7 Billion Loss, the biggest quarterly loss in corporate history

The federal government agreed Monday morning to provide an additional $30 billion in taxpayer money to the American International Group and loosen the terms of its huge loan to the insurer, even as the insurance giant reported a$61.7 billion loss, the biggest quarterly loss in history.

The loss of $22.95 a share compared with a fourth-quarter loss in the period a year ago of $5.3 billion or $2.08 a share. For the year, A.I.G. lost $99.3 billion or $37.84 a share, compared with a profit of $6.2 billion or $2.39 a share for 2007.

In the quarter, A.I.G. took a $21 billion charge related to taxes and wrote down $25.9 billion in assets, including mortgage-back securities and credit-default swaps.

The company’s general insurance business lost $2.8 billion compared with a profit of $2.1 billion in the quarter a year ago. Premiums dropped 16.3 percent to $9.2 billion and earnings from premiums fell 5.9 percent to $10.98 billion.

The government intervention would be the fourth time that the United States has had to step in to help A.I.G., the giant insurer, avert bankruptcy. The government already owns nearly 80 percent of the insurer’s holding company as a result of the earlier interventions, which included a $60 billion loan, a $40 billion purchase of preferred shares and $50 billion to soak up the company’s toxic assets.

After 90 years as a global insurance powerhouse, AIG is expected to announce a plan to break itself up. The insurer will cede control of American International Assurance and American Life Insurance to the U.S. government in exchange for a rescue worth at least $30 billion. "We are breaking up AIG, but we are trying to do it in a way that preserves value for the taxpayer, the employees and the businesses," one source said.

UBS computer glitch blamed for $31bn trade error

Switzerland's largest bank, UBS, has said that a glitch in the computer systems of its Japanese securities unit led to the company mistakenly placing a $31 billion order for convertible bonds in the videogame designer Capcom.

UBS Securities Japan said human error - so-called 'fat finger syndrome' - had not been to blame for ordering 100,000 more bonds than it wanted. The company had intended to place a 30 million yen cross trade to simultaneously buy and sell bonds but the technological error meant it placed a three trillion yen buy order instead.

In terms of monetary value, the incident was the biggest botched trade in the history of the Tokyo Stock Exchange (TSE) but fortunately for UBS, it was cancelled at no cost to the bank and had little effect on the markets.

UBS has been involved in two previous trade errors on the Tokyo bourse. In 2001, it mistakenly sold stock in the advertising firm Dentsu and four years later, it profited from a mix-up at Mizuho Securities when a trade sold 610,000 shares for one yen each, rather than selling one share for 610,000 yen.

That incident prompted the TSE to introduce a new rule allowing traders to cancel large erroneous trades.