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Wall Street’s Trading Desks Endure Worst First Half in a Decade

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Re: Wall Street’s Trading Desks Endure Worst First Half in a Decade

#41

Post by dageshi »

fauigerzigerk wrote: post #27
dageshi wrote: post #26

Earlier quoted context omitted.

Perhaps this is what you get when when everyone learns the lessons of a truly severe recession/financial crisis? People anticipate a recession because timing wise one should be due, they actually plan for it and reduce capital investment and just do buy backs instead? So instead of a blowoff followed by recession, we sort of get a leveling off while everyone waits for the next shoe to drop?

I agree that this could explain modest capex. It also explains a lot of other things that are going on right now, such as the Fed planning interest rate cuts purely based on fear without any supporting data. But if corporations expect a recession, why would they increase debt and weaken their balance sheets? Aren't they supposed to do the exact opposite? Perhaps management compensation and shareholder activism explai…

I think "expecting a recession" is maybe too strong, I think it's more a case that they just don't know what's going on. Same with me honestly, history suggests we should have a recession but it's not obvious at all what would cause it, at least to me.

In financial markets it's easy to see behaviour driven by fear and by greed, but this might simply be behaviour driven by confusion.

Re: Wall Street’s Trading Desks Endure Worst First Half in a Decade

#42

Post by bobthepanda »

lefstathiou wrote: post #39
CPLX wrote: post #34

Earlier quoted context omitted.

>I believe, is because most of these trading desks sit in one place - NYC, a super liberal anti trump environment That’s ludicrous. If you know anything about the politics and culture of the NYC finance crowd you know it’s super pro-Trump through and through. He is — literally — one of them.

I believe that is a demonstrably false position. I’ve worked on Wall Street in NYC for 11 years, this statement is not consistent with my experience. There is even data to support it -donations to candidates from these employees is public. Hillary raised 10-1 vs Trump. Link to article below, leave it to you to dig into the fulsome numbers. “Employees of the 17 largest bank holding companies and their subsidiaries hav…

Is that statistic meaningful? I highly doubt that even a majority of the 256k people at JP Morgan are traders.

Re: Wall Street’s Trading Desks Endure Worst First Half in a Decade

#43

Post by SomeOldThrow »

CPLX wrote: post #34
lefstathiou wrote: post #9

A lot of our clients work in investment banks. There’s been a long (since the election) and growing narrative that the market will correct any second now... any second. Meanwhile the market has gone up up up. Part of that, I believe, is because most of these trading desks sit in one place - NYC, a super liberal anti trump environment - so it’s hard not to buy into the narrative and go risk off which means you would h…

>I believe, is because most of these trading desks sit in one place - NYC, a super liberal anti trump environment That’s ludicrous. If you know anything about the politics and culture of the NYC finance crowd you know it’s super pro-Trump through and through. He is — literally — one of them.

Clinton was one of them, too, though. I think I get the point.

Re: Wall Street’s Trading Desks Endure Worst First Half in a Decade

#44

Post by perl4ever »

mrep wrote: post #36
fauigerzigerk wrote: post #22

Earlier quoted context omitted.

That's certainly part of it, but I think share buybacks are another major reason for the disproportionate rise of US markets. US corporations have bought more of their own shares than anyone else in recent years (Unfortunately I can't find the data right now). It explains a huge chunk of EPS growth. Of course that wouldn't have been possible if corporate balance sheets hadn't been better in the US than elsewhere (esp…

> but I think share buybacks are another major reason for the disproportionate rise of US markets. US corporations have bought more of their own shares than anyone else in recent years Share buybacks are just a more efficient way of returning profits back to investors than dividends [0]. > Why can't corporations find anything better to do with that money? Why is capital spending relatively muted while productivity gr…

Share buybacks aren't necessarily done on a regular schedule nor do they imply the same sort of public commitment or are required to be paid for out of profits.

Saying they are just a more tax efficient alternative to dividends assumes that they are exactly substituted for dividend payments in amount and timing, but I don't think that's the case in practice.

Something that I've wondered is, if a company has excess capital why not, instead of acquisitions, dividends, or buybacks, just buy an S&P 500 index fund?

Re: Wall Street’s Trading Desks Endure Worst First Half in a Decade

#45

Post by perl4ever »

dageshi wrote: post #23
Iv wrote: post #16

Earlier quoted context omitted.

Advertisement is a cancer. It is time we forbid it instead of making it fund every website in existence.

All you have to do is pay ALL the websites you visit and it'll go away...

Is there any way to search the internet except for all the advertising supported sites?

Re: Wall Street’s Trading Desks Endure Worst First Half in a Decade

#46

Post by perl4ever »

benj111 wrote: post #7
ThePadawan wrote: post #5

Off-topic discussion below. This is the most vile dark pattern I have seen in recent times. On loading this page, there is an auto-playing, muted video. When you press its pause button, it is unmuted and keeps playing. Only when you press the pause button AGAIN does it actually stop playing. At some point when implementing that feature someone said "Sure, I'm OK with that". What went wrong there?

Is that even a dark pattern? Surely that's just outright lying.

There is a user interface pattern that predominates these days, where a view/page will be loading/changing, and it will reflow between when you click/tap and when that is processed, causing an incorrect response. Sometimes I get caught in a loop, where I try to select something repeatedly and every time it jumps just as I choose it.

I always thought that was incompetence and not malice, but maybe apparent interface glitches are a significant profit center.

Re: Wall Street’s Trading Desks Endure Worst First Half in a Decade

#47

Post by fauigerzigerk »

mrep wrote: post #36
fauigerzigerk wrote: post #22

Earlier quoted context omitted.

That's certainly part of it, but I think share buybacks are another major reason for the disproportionate rise of US markets. US corporations have bought more of their own shares than anyone else in recent years (Unfortunately I can't find the data right now). It explains a huge chunk of EPS growth. Of course that wouldn't have been possible if corporate balance sheets hadn't been better in the US than elsewhere (esp…

> but I think share buybacks are another major reason for the disproportionate rise of US markets. US corporations have bought more of their own shares than anyone else in recent years Share buybacks are just a more efficient way of returning profits back to investors than dividends [0]. > Why can't corporations find anything better to do with that money? Why is capital spending relatively muted while productivity gr…

>Share buybacks are just a more efficient way of returning profits back to investors than dividends

True, but the effect on share prices is very different. If you compare the S&P 500 with an index (a price index, not a total return index) comprising companies that use dividends instead of buybacks, you get a distorted picture of relative economic success.

>Most companies are demand limited which limits their investment opportunities.

How do you reconcile lack of demand with the historically tight labor market?

>If a companies best investment opportunity gives a return of a measly 2% a year when the market is doing 7%, than you should not do it and instead return that money to investors so they can divert their investments to companies with higher returns.

I do agree with that in principle (provided you account for risk as well), but I'm starting to wonder if there is a self reinforcing element at play that's driving buybacks right now. Shareholders see stock markets rise. They demand buybacks based on your (fundamentally sound) logic. Management feels pressured to buy back stocks, which makes markets rise even more...

Re: Wall Street’s Trading Desks Endure Worst First Half in a Decade

#48

Post by jacques_chester »

lefstathiou wrote: post #39
CPLX wrote: post #34

Earlier quoted context omitted.

>I believe, is because most of these trading desks sit in one place - NYC, a super liberal anti trump environment That’s ludicrous. If you know anything about the politics and culture of the NYC finance crowd you know it’s super pro-Trump through and through. He is — literally — one of them.

I believe that is a demonstrably false position. I’ve worked on Wall Street in NYC for 11 years, this statement is not consistent with my experience. There is even data to support it -donations to candidates from these employees is public. Hillary raised 10-1 vs Trump. Link to article below, leave it to you to dig into the fulsome numbers. “Employees of the 17 largest bank holding companies and their subsidiaries hav…

I see red baseball caps in FiDi.

I don't see them anywhere else.

Re: Wall Street’s Trading Desks Endure Worst First Half in a Decade

#49

Post by mrep »

perl4ever wrote: post #44
mrep wrote: post #36

Earlier quoted context omitted.

> but I think share buybacks are another major reason for the disproportionate rise of US markets. US corporations have bought more of their own shares than anyone else in recent years Share buybacks are just a more efficient way of returning profits back to investors than dividends [0]. > Why can't corporations find anything better to do with that money? Why is capital spending relatively muted while productivity gr…

Share buybacks aren't necessarily done on a regular schedule nor do they imply the same sort of public commitment or are required to be paid for out of profits. Saying they are just a more tax efficient alternative to dividends assumes that they are exactly substituted for dividend payments in amount and timing, but I don't think that's the case in practice. Something that I've wondered is, if a company has excess ca…

> Something that I've wondered is, if a company has excess capital why not, instead of acquisitions, dividends, or buybacks, just buy an S&P 500 index fund?

Because that would tie the value and riskiness of your company to the sp 500 which is inefficient as that effectively forces anyone who wants to invest in your company to also invest in the sp 500. Not everyone has a risk/reward preference that matches the sp 500. It's better to instead return profits to investors and let them reinvest into whatever they want.

Re: Wall Street’s Trading Desks Endure Worst First Half in a Decade

#50

Post by perl4ever »

mrep wrote: post #49
perl4ever wrote: post #44

Earlier quoted context omitted.

Share buybacks aren't necessarily done on a regular schedule nor do they imply the same sort of public commitment or are required to be paid for out of profits. Saying they are just a more tax efficient alternative to dividends assumes that they are exactly substituted for dividend payments in amount and timing, but I don't think that's the case in practice. Something that I've wondered is, if a company has excess ca…

> Something that I've wondered is, if a company has excess capital why not, instead of acquisitions, dividends, or buybacks, just buy an S&P 500 index fund? Because that would tie the value and riskiness of your company to the sp 500 which is inefficient as that effectively forces anyone who wants to invest in your company to also invest in the sp 500. Not everyone has a risk/reward preference that matches the sp 500…

Not everyone owning a given company has a risk/reward preference that matches some hare-brained acquisition.

However, the S&P 500 is approximately the same as the stock market, and so I think it's arguable that "everyone" together does have about the same risk/reward preference.

Buybacks, even if better in the best of all possible worlds, make it difficult to change your mind, whereas an index fund could simply be sold, rather than having to issue more stock. It seems like a lower-friction alternative to accomplish something economically similar.

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