High-Speed Traders Form Trade Group To Press Case (WSJ)
To counter what they say is the industry’s unfair reputation as a disruptive force in the markets, a group of high-frequency trading firms have hired a pair of heavy-hitting political strategists and formed a trade group to press their case with regulators and lawmakers. The strategists, Kevin Madden and Erik Smith, last week submitted paperwork to found a group called the Modern Markets Initiative, with headquarters in Washington, D.C. Backed by four high-speed firms, it plans to bolster a website Tuesday that will include a video arguing that high-frequency traders have made the financial markets cheaper and faster for investors, a blog to respond to critics and links to academic research.
For Mark Zuckerberg, Tumult and Turnaround (WSJ)
Mr. Zuckerberg still wears jeans and a T-shirt to work, drives a black, stick-shift Volkswagen GTI and keeps the temperature in his glass meeting room, known as the “aquarium,” near 68 degrees to keep everyone alert. As a holiday gift, friends of Mr. Zuckerberg got socks decorated with the image of Beast, his white, woolly Hungarian shepherd. Yet Mr. Zuckerberg has learned to embrace—or at least accept—the reality that he now is in charge of what might be bluntly described as the most visible advertising business in the world. It is a big leap for the college dropout who wrote in a letter to potential investors just before the initial public offering: “Facebook was not originally created to be a company.”
Steven Cohen Appears Oblivious to the Law (Bloomberg)
A Frontline documentary, “To Catch a Trader,” to air Jan. 7 on PBS stations, makes clear that Cohen has no one but himself to blame. Using never-before-published video, “To Catch a Trader” reveals snippets of a 2011 deposition in which Cohen is asked about his understanding of the SEC rules governing insider trading. Cohen was being deposed as part of a lawsuit brought by Fairfax Financial Holdings alleging that a group of hedge funds conspired to drive down the price of the Canadian insurer’s stock; the lawsuit was eventually dismissed. The director of the documentary, Nick Verbitsky, received a copy of Cohen’s two-day deposition on a USB drive — with a Bugs Bunny head on top of it — from an anonymous source who left it for him across the street from Frontline’s New York City office, wedged between two bars of scaffolding. (“You can’t make this stuff up,” Verbitsky e-mailed me.) At one point in the deposition, Michael Bowe, a lawyer representing Fairfax, asked Cohen about his familiarity with insider-trading rules. You would think Cohen would be very knowledgeable on the subject. “The way I understand the rules on trading inside information, it’s very vague,” Cohen replied.
JPMorgan Chase Nears a $2 Billion Deal in a Case Tied to Madoff (Dealbook)
The bank plans to reach as soon as this week roughly $2 billion in criminal and civil settlements with federal authorities who suspect that it ignored signs of Bernard L. Madoff’s Ponzi scheme, according to people briefed on the case. All told, after reaching the Madoff settlements with federal prosecutors in Manhattan and regulators in Washington, the bank will have paid some $20 billion to resolve government investigations over the last 12 months.
Iowa Man Arrested After Fight Over PB&J Sandwiches (AP)
Police say an Iowa man was arrested after he pulled a knife on his brother during a fight over peanut butter and jelly sandwiches. The Des Moines Register reports that Jerome Davis was arrested on Friday after the confrontation with his brother in their Des Moines home. Both men are in their 50s. Davis’ accuser told police he was angry because he believed his brother was eating too many peanut butter and jelly sandwiches. Davis allegedly made three sandwiches and ate them in their living room, and made another less than an hour later. A police report says the brothers began to argue about laziness and overeating. Davis allegedly pulled out a folding knife and held it his brother’s face. Davis was charged with domestic abuse with a weapon.
Study Suggests Recovery in U.S. Is Relatively Vital (NYT)
The study, presented over the weekend at the annual meetings of the American Economic Association, rejects comparisons with regular postwar American recoveries, as other economists have made, and instead examines 100 major, or “systemic,” financial crises that have occurred over the last two centuries, in the United States and abroad. It found that relative to previous American financial crises, the current economy is doing substantially better. Across nine major financial crises in the United States, the average peak-to-trough decline in inflation-adjusted per-capita gross domestic product is about 9 percent, and it has taken an average of 6.7 years to recover to the precrisis peak. During the years after crises, five of the nine episodes also had a “double-dip” downturn. By contrast, the recent American subprime crisis beginning in 2007 had “only” a 5 percent drop in per capita output, and took “only” six years to get back to the precrisis peak. And so far, at least, there has been no second downward turn.
‘Polar Pig’ Threatens Coldest U.S. Weather in Two Decades (Bloomberg)
The coldest air in almost 20 years is sweeping over the central U.S. toward the East Coast, threatening to topple temperature records, ignite energy demand and damage Great Plains winter wheat…Hard-freeze warnings and watches, which are alerts for farmers, stretch from Texas to central Florida. Mike Musher, a meteorologist with the U.S. Weather Prediction Center in College Park, Maryland, said 90 percent of the contiguous U.S. will be at or below the freezing mark today.
Daring Investors Brave Pakistan Market (WSJ)
In a daring move, investors are heading to Pakistan and braving one of the world’s most dangerous countries to benefit from a newly elected government that is rolling out an economic program to aid the struggling economy. The benchmark index traded in the financial capital Karachi jumped 49.4% last year, ranking as one of the world’s top performers. The market jumped another 2.8% Thursday, the first trading day of 2014.
Big Board Scores One for the Humans (WSJ)
For the first time in at least 19 years, the New York Stock Exchange in 2013 landed more initial public offerings of technology and Internet companies than the Nasdaq Stock Market, the home of Apple Inc., Google Inc. and Amazon.com Inc. Officials at the Big Board and several young technology firms attribute some of the shift to the comfort that investors and executives take in knowing trading in NYSE-listed stocks is overseen by so-called designated market makers. Formerly known as specialists, they are a dwindling band of stock traders who help set prices around the opening and closing bells and ensure orderly trading, at times by overriding the NYSE’s automated trading system to smooth volatility. All trading on Nasdaq takes place electronically. Companies preparing to make their public debut are increasingly anxious about technical hiccups, analysts say, in the wake of snafus that have hit markets in recent years, including the 2010 “flash crash” and the technology lapses that marred Facebook Inc.’s 2012 debut on Nasdaq.
Pope Francis leaves New Year’s voice mail for nuns in Spain (CNN)
The nuns in a Carmelite community in Lucena, Spain, received a voice-mail message on New Year’s Eve that they had to share with the world. The caller was Pope Francis. “What are the nuns doing that they can’t answer?” the Pope said jokingly. “I am Pope Francis, I wish to greet you in this end of the year, I will see if I can call you later. May God bless you!” The nuns passed the audio message to the Spanish radio network COPE, which is linked to the body that runs the Roman Catholic Church in Spain. The nuns were praying when Francis called shortly before noon, and so didn’t answer, the radio network said. When they played the voice mail back, they got a surprise. The prioress of the convent, Sister Adriana, told the radio network she “literally wanted to die” when she first heard the message. “Our friendship goes back 15 years but we never thought the pope would remember to think of us,” she said. After the nuns realized that they had missed a phone call from the Pope, they didn’t know what to do. They consulted with their local bishop and tried to call Francis back, without success, the radio network said. The nuns decided simply to wait in hope of another call. Hours later, the phone rang again — and this time they answered.