Weekend of Jan 26, 2013

1. Let us celebrate. The NYT reports (here) that the SEC may start requiring parties settling with them to now also admit culpability! In the past, firms did not have to admit any wrongdoing, they just paid the fine, went away and did it again!

2. Congress may expand mark-to-market rules for derivatives (here). Ask me about it in class this week as we talk.

3. This post from the Big Picture reminds me of things I have said multiple times to multiple audiences regarding individuals investing/trading in financial markets. Obviously, these are not new notions or my notions. Some of you have seen them elsewhere,  some of you may have heard them from me for the first time, still others may not have read them at all. Regardless of which group you belong to, forget them at your own peril!

4. As Apple stock languishes, this story regarding SIRI’s past and possible future caught my eye this morning. And have you heard the one about Apple being responsible for this rally? The theory is that it is all the money coming out of Apple stock that is fueling the price of other stocks! Apparently it is the reverse of the long Apple/short everything else trade. Recall too this post from a couple of years ago on relative value index options that were designed to make just this kind of trade. Someone should go on Bloomberg to check out the volume in these options to see if there is any credibility to the assertion.

5. The same argument can be made by replacing Apple with Bonds. This one is a bit more credible, if there are really economic good things happening, plus there is less unanimity at the Fed, then perhaps it is time to be out of bonds. A look at TLT tells you that this has indeed been happening.  And of course, let us not forget the perennial argument about short squeezes and fund manager catch-up that is made each time there is a seemingly inexplicable market rally.

6. Two leading mattress companies have opposite reactions to earnings, the reasons are interesting, see (here).


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