John At The Center

The president was told that there was no danger of doing too much fiscal stimulus, and that we should do as much as we could from an economic point of view. It was entirely clear in the meeting where this was discussed that a larger fiscal program would have larger multiplier effects. The constraints were political, and indeed the seriousness of those constraints is demonstrated by the fact that the ultimate bill that passed was between 70 and 80 percent as large as what the president sought.

via Larry Summers, Un-king of Kumbaya – NYTimes.com.

Fiscal Stimulus.

When the inevitable silver crash happened, it took down other commodities like oil with it. That’s because of all the speculation in the market, and the fact that funds which speculate in silver tend to be exactly the same funds speculating in oil. When you get a big margin call in silver (and margin requirements on silver had just been raised before the crash), then you have to sell some of your other holdings to meet that call. And your most liquid holding is likely to be in oil.

At times of volatility, correlations move towards 1. We saw that in every market during the crisis, and we saw it again in commodities on Thursday. Which is why protecting yourself with diversification is so dangerous. Just when you need the protection, it disappears.

via Why commodities crashed | Felix Salmon.

The move was certainly accelerated by the rise of algorithms and high-frequency traders, who have moved quite aggressively from stocks into commodities of late. These black boxes can go from being very long to very short in an alarmingly short space of time, and I suspect that many of them made money, rather than lost it, in the volatility.

via Why commodities crashed | Felix Salmon.

You can see why a young guy out of college might get a kick out of working here. And why a Phi Beta Kappa who studied physics and neuroscience at Harvard might have had a hard time getting in the door. Imagine the psychological impact of having that kind of money and machinery at your fingertips. You must feel powerful. Too powerful, even, like a young pilot whos just been given the keys to his first F-35 Lightning II tactical strike fighter. A mixture of relish and trepidation.

via On the Floor Laughing: Traders Are Having a New Kind of Fun – James Somers – Technology – The Atlantic.

By contrast, tech stocks are significantly less frothy than they’ve been in years. Historically, shares of technology companies have traded at about a 30 percent premium to the broad market, based on their P/E ratios. That’s because tech companies have traditionally enjoyed faster earnings growth than other types of businesses. Today, however, technology’s P/E is on par with that of the overall Standard & Poor’s 500-stock index.

via Technology Stocks May Become an Unlikely Haven – NYTimes.com.