Thursday, February 27, 2014

Suspicious Stock Trading By SEC Staff: Who Guards The Guards?

From Bloomberg, "Study Finds SEC Staff Sold Shares Before Settlements Made Public" by Dave Michaels:
People working for the U.S. Securities and Exchange Commission who owned stock in companies under investigation were more likely to sell shares than other investors in the months before the agency announced it was taking enforcement actions, according to a new academic paper.

SEC employees holding shares of five firms including JPMorgan Chase & Co. and General Electric Co. (GE) in 2010 and 2011 sold stock in 62 percent of the trades they initiated, compared with 50 percent among all the investors who traded those shares in that period, Emory University accounting professor Shivaram Rajgopal reports in the paper.
"It does suggest it is likely, or probable, that something is going on," he said.
‘Circumstantial Smoke’

"All we can do is show some statistical, circumstantial smoke, and we don’t know if there is really a fire,” Rajgopal said. Still, he added, “It’s not clear why we should find this pattern by sheer chance."

Wednesday, February 26, 2014

Do Nothing Option Helps People Accomplish Goals

From Knowledge@Wharton, "How the Option to Do Nothing Can Help You Get Things Done:"
Wharton marketing professor Rom Y. Schrift and Jeffrey R. Parker, a marketing professor at Georgia State University, figured out that introducing the option of doing absolutely nothing into a choice set will actually help us persevere to reach our objective. Their observations on the nuances of choice architecture are outlined in the forthcoming paper, "Staying the Course: The Option of Doing Nothing and Its Impact on Postchoice Persistence," to be published in the journal Psychological Science.
For example, let’s say someone is thinking about joining a gym. If the person is given the choice of joining Gym A or Gym B, he or she may pick Gym A as a preference, try it out and aim not to quit. But the researchers say if people were given the choice of Gym A, Gym B or not joining a gym at all, they may pick Gym A and be more likely to keep going simply because they were presented with an option of not joining at all. Knowing that you really wanted to join Gym A over not signing up for a membership anywhere makes you less likely to quit, they note.

Though it may sound like a small change, Schrift and Parker’s studies proved that given an additional option of doing absolutely nothing can make all the difference in the world. Having the choice of not doing something can actually transform people’s likelihood of accomplishing their goals.

Tuesday, February 18, 2014

Electronic Trading Replacing Foreign Exchange Traders

From Bloomberg, "FX Traders Facing Extinction as Computers Replace Humans" by Ambereen Choudhury and Julia Verlaine:
Electronic dealing, which accounted for 66 percent of all currency transactions in 2013 and 20 percent in 2001, will increase to 76 percent within five years, according to Aite Group LLC, a Boston-based consulting firm that reviewed Bank for International Settlements data. About 81 percent of spot trading -- the buying and selling of currency for immediate delivery -- will be electronic by 2018, Aite said.

"Foreign-exchange traders are much like stock floor traders: a rapidly dying breed," said Charles Geisst, author of "Wall Street: A History" and a finance professor at Manhattan College in Riverdale, New York. "Once the banks realize they are costing them money, the positions will dwindle quickly."
"The old model is going away," said John Taylor, founder of New York-based FX Concepts LLC, once the world’s biggest currency hedge fund before it went bankrupt last year. "But it’s better to say the old model has gone away several times. This is just the latest of those times."

Wednesday, February 12, 2014

US Wind Farms Map

From Bloomberg, "Wind Power Is Boring; This Isn't" by Tom Randall:
Wind has become so predictable and commonplace that it's hard to imagine where all the U.S. turbines could be hiding -- currently enough to power more than 12 million homes. Fortunately, we don't have to imagine anymore.
US Wind Farms Map

Tuesday, February 4, 2014

CBO Presentation And Projections On The Economic And Budget Outlook For 2014 To 2024

From CBO Press Briefing, "The Budget and Economic Outlook: 2014 To 2024" by Douglas Elmendorf, February 4, 2014:

CBO Report On Slow Recovery of the Labor Market: Short 6 Million Jobs At End Of 2013

From The CBO Report, "The Slow Recovery of the Labor Market:"
In assessing the slow recovery of the labor market, CBO estimates the following:
  • Of the roughly 2 percentage-point net increase in the rate of unemployment between the end of 2007 and the end of 2013, about 1 percentage point was the result of cyclical weakness in the demand for goods and services, and about 1 percentage point arose from structural factors; those factors are chiefly the stigma workers face and the erosion of skills that can stem from long-term unemployment (together worth about one-half of a percentage point of increase in the unemployment rate) and a decrease in the efficiency with which employers are filling vacancies (probably at least in part as a result of mismatches in skills and locations, and also worth about one-half of a percentage point of the increase in the unemployment rate).
  • Of the roughly 3 percentage-point net decline in the labor force participation rate between the end of 2007 and the end of 2013, about 1½ percentage points was the result of long-term trends (primarily the aging of the population), about 1 percentage point was the result of temporary weakness in employment prospects and wages, and about one-half of a percentage point was attributable to unusual aspects of the slow recovery that led workers to become discouraged and permanently drop out of the labor force.
  • Employment at the end of 2013 was about 6 million jobs short of where it would be if the unemployment rate had returned to its prerecession level and if the participation rate had risen to the level it would have attained without the current cyclical weakness. Those factors account roughly equally for the shortfall.

Slow Recovery of the Labor Market: CBO Report