JPMorgan develops robot to execute high-speed trades (FT)
LOXM’s job is to execute client orders with maximum speed at the best price, by using lessons it has learnt from billions of past trades — both real and simulated — to tackle problems such as how best to offload big equity stakes without moving market prices. “Such customization was previously implemented by humans, but now the AI machine is able to do it on a much larger and more efficient scale,” said David Fellah, of JPMorgan’s European Equity Quant Research team. So far, the European trials showed that the pricing achieved by LOXM was “significantly better” than its benchmark.
HSBC Rises as Second Quarter of Growth Backs Turnaround Story (BBG)
The results indicate Gulliver’s revamp of HSBC is starting to bear fruit as the bank starts to grow again after five years of declining revenue. The chief executive officer has spent most of his tenure shrinking and imposing central control over HSBC’s vast global network, exiting almost 100 businesses and 18 countries while enduring several costly misconduct scandals. “You could argue there is a more focused, logical, cohesive set of businesses that remain and there is absolutely growth” on show at HSBC now, Gulliver said on a call with analysts.
Late Credit-Card Payments Stoke Fears for Banks (WSJ)
The average net charge-off rate for large U.S. card issuers—the percentage of outstanding debt that issuers write off as a loss—increased to 3.29% in the second quarter, its highest level in four years, according to Fitch Ratings. The quarter was also the fifth consecutive period of year-over-year increases in the closely watched rate. The trend, which accelerated in the first half of this year, has started to suppress bank earnings. If consumers’ budgets get more stretched, a pullback in spending could pressure both growth and corporate profits.
Bitcoin is a Teeny Market (Points and Figures)
One of the things that people trading Bitcoin think is that it’s a huge market. They look at all the volume, the ICO’s and all the press and confirmation bias skews their thinking. I got news for you, it’s teeny. Not just teeny. When it comes to bigger markets out there, Bitcoin is a pimple on their ass. Traders know about them, but Bitcoin is hardly the straw that stirs the drink.
Private Equity Takes Fire as Some Retailers Struggle (WSJ)
Payless ShoeSource Inc., Gymboree Corp., rue21 Inc. and True Religion Apparel Inc. were all acquired by private-equity firms during the past decade. Now, lawyers for creditors have questioned whether private-equity firms share blame for the retailers’ financial collapse, in some cases by loading debt on the companies. In the case of Payless, investors Golden Gate Capital and Blum Capital, after a leveraged buyout in 2012, over the next two years paid themselves $350 million in dividends—in total putting more than $700 million in debt on the company. In 2016, Payless said in court papers, it had about $2.3 billion in global net sales, and nearly $840 million in debt.
Floyd Mayweather says he's gonna make a 'shit ton of money' from an initial coin offering (BI)
On Thursday, the undefeated world champion took to Instagram to promote an initial coin offering by Stox, a blockchain prediction company. The ICO will take place on August 2. According to Mayweather's Instagram post, the boxer thinks he's going to make a "shit ton of money" from the capital raise.
Please Stop Talking About the VIX So Much (AQR)
It’s perfectly fine to comment on realized volatility being very low and to worry about that. But we shouldn’t think the VIX is telling us more than that.4 And, importantly, I do think when commentators discuss the VIX they often think it has more import and gravitas than it really does. The VIX tells us almost nothing beyond how much markets have been bouncing around lately. So, instead of saying “the VIX is shockingly low” why not say “markets have been shockingly calm lately”? If you agree the latter is what you're really saying, we are simpatico. If you believe that says the same thing about investor complacency, great.
Earnings shenanigans underpin Wall Street record (FT)
Over this period of earnings recovery from 2015 onwards, there has been a 5 percent increase in the total amount of capital invested by S&P 500 companies, but net operating profits after tax have only edged 1.9 percent higher. Over a slightly longer period, from 2012 to now, net operating profits for the index are actually down by 4.5 percent while total invested capital has increased by 18 percent. These are far from reassuring numbers. The picture they reinforce is that US companies have been able to grow accounting earnings through financial engineering even though their cash flows are actually flat, or even declining.
DoubleLine's Gundlach sues California wine merchant over bogus Bordeaux (Reuters)
Gundlach said Soutirage assured him the wines were real after he expressed concern, but that subsequent testing by a "world-renowned" expert he hired proved otherwise. Among the wines he said were bogus were several classic wines from the Bordeaux region in France, including a 1928 Latour, a 1947 Cheval Blanc, and a magnum of 1961 Petrus. "Soutirage is nothing but a crass huckster," Gundlach said in a complaint filed in a California state court in Los Angeles.
Jon Ronson on bespoke porn: ‘Nothing is too weird. We consider all requests’ (Guardian)
“This is a rare day,” Nate tells me, “working for Mike, shooting real porn.”
“What do you normally do?” I ask.
“Customs,” he says. “Fans write their own scripts and pay us to shoot exactly what they want,” he says. He explains that customs – bespoke porn – is a new growth industry in the Valley. In houses all around us, teams of professional porn-makers are staying afloat by conjuring into life entire films for just one viewer.
“What happens in these films?” I ask.
“There was one guy who wanted us to buy a van,” Nate says, “and have my wife and a couple of other girls drive around in it for a week, and smoke cigarettes in the van, and pee in the van, and at the end of the week, we’d drive it out into the desert and blow it up. He sent us pictures of the van.”