Robo-Brokers Go Mainstream

Roboadvisor

Charles Schwab Corp. is weeks away from introducing an automated investing service aimed at winning business from novice investors it does not currently serve, company officials told Reuters.

The service is being developed in-house and likely will be free, giving the San Francisco-based discount brokerage pioneer a leg up on a slew of upstart firms known as robo-brokers that charge management fees of 0.15 to 0.35 percent of a client’s assets.

It would position Schwab as the first conventional brokerage with its own robo-broker offering. In automated investing plans, clients fill out questionnaires about investment goals and risk tolerances. Their answers automatically determine the portfolios of exchange-traded funds or other assets they buy.

Schwab ready to unveil free ‘robo-broker’ service

The Top 10 Countries That Request User Data From Tech Companies

The NSA leak has brought to public knowledge the level of cooperation and sharing of user data going on between tech companies and the U.S. government.

Lest you think that this may just be standard procedure for any nation, Reuters compiled the top 10 countries that request user data from Google, Microsoft, Skype, and Twitter to show that the U.S. is in fact the leading data requester. Submitting over 30 thousand requests to these 4 companies in 2012, the U.S. government is much more involved in the public’s internet lives than other nations.

Also note the asterisk and footnote for the U.S. saying that this “does not include national security requests.” You might think that every user data request would be for national security reasons, but it seems that is not the case.

Top-10-Countries-Requesting-user-Data-From-Tech-Companies

The Email You Send Your Boss After Losing Your Company $2 Billion

The trial of Kweku Adoboli, the UBS rogue trader, is currently underway, and new documents are starting to make their way into the public domain.

Here, for instance, is the email Adoboli sent to UBS accountant William Steward on September 14 of 2011, notifying him that some slightly bad things may have taken place.

With the subject line “An explanation for my trades,” Adoboli provided Steward with an overview of how he came to accrue his trading losses. As you might imagine, it was of course not any one single trade. It was a snowball effect of losing and chasing losses with more risk.

Dear Will

It is with great stress that I write this mail. First of all the ETF [exchange traded funds] trades that you see on the ledger are not trades that I have done with a counterparty as I have previously described.

I used the bookings as a way to suppress the PnL losses that I accrued through off book trades that I made. Those trades were previously profit making, became loss making as the market sold off aggressively through the aggressive sell-off days of July and early August. Initially, I had been short futures through June and those lost money when the first Greek confidence vote went through in mid June.

In order to try and make the money back I flipped the trade long through the rally. Although I had a couple of opportunities to unwind the long trade for negligible loss, I did not move quickly enough for the market weakness on the back of the first back macro data and then an escalation eurozone crisis cost me the losses you will see when the ETF bookings are cancelled. The aim had been to try and make the money back before the September expiry date came through but I clearly failed.

These are still live trades on the book that will need to be unwound. Namely a short position in DAX futures [which had been rolled to December expiry] and a short position in S&P500 futures that are due to expire on Friday.

I have now left the office for the sake of discretion. I will need to come back in to discuss the positions and explain face to face, but for reasons that are obvious, I did not think it wise to stay on the desk this afternoon.

I will expect that questions will be asked as to why nobody was aware of these trades. The reality is that I have maintained that these were EFP [exchange for physical] trades to the member of my team, BUC [the accounts department], trade support and John Di Bacco.

I take responsibility for my actions and the shit storm that will now ensue. I am deeply sorry to have left this mess for everyone and to have put my bank and my colleagues at risk.

Thanks,

Kweku

Blogosphere, We Get It…

A message from the internets.

Barry Ritholtz at The Big Picture:

We get it, cognitive dissonance and psychology stuff. All financial professionals who have sneezed should be thrown in jail for the rest of their days. Also, our confirmation bias is telling us that that thing we thought we liked we actually only like because we like it.

Tadas Viskanta at Abnormal Returns:

We get it, there’s a linkfest for that.

Downtown Josh Brown at The Reformed Broker:

We get it, our homeboy thinks that shiz is whack, wtf they be thinksin buying in at that price?

James Altucher:

We get it, you have killed puppies and murdered babies and robbed banks and lied to the Pope and are probably lying to us right now, but it’s cool ’cause you’re honest about it.

Paul Krugman at the New York Times:

We get it, that guy whose opinion slightly differs from yours must be an idiot.

Brad Delong at Grasping Reality with the Invisible Hand:

We get it, no, that guy really is an idiot, probably the dumbest person in the world, everyone should go tell him how dumb he is right now.

Mark Thoma at Economist’s View:

We get it, we should just keep spending and spending and spending and doing otherwise is pretty much heartless towards the poor.

Brad Delong and Mark Thoma:

We get it, you suckle at the Krugman teet.

Tyler Cowen at Marginal Revolution:

We get it, you’re probably the most well-cultured person alive, now tell us where to eat and what to see at some remote location we’ve never heard of.

Alex Tabarrok at Marginal Revolution:

We get it, there’s a market for those organs you aren’t using, sign up today!

Felix Salmon at Reuters:

We get it, consumer spending issues like payday loans and prepaid debit cards are important and all, but we should really be focusing on developing bike lanes in urban areas, experimenting with fine wines, and appreciating expensive artwork.

Zerohedge:

We get it, bomb-shelter-up with your gold, the apocalypse is near.

Bill McBride at Calculated Risk:

We get it, you’re going to put the economic numbers into beautiful charts the government isn’t smart enough to do themselves. Also, you’ll continue to keep a tight watch on that indicator we’ve never heard of that tracks deliveries by canoe to some island and apparently has its own index.

Scott Sumner at The Money Illusion:

We get it, NGDP targeting.

Dealbreaker:

We get it, layoffs, bonuses, eating contests, fashion, and extramarital affairs.

Yves Smith at Naked Capitalism:

We get it, you’re with Ritholtz, jail ‘em all, MERS. Also, look at these adorable cuddly creatures.

Mike Shedlock at Mish’s Global Economic Trend Analysis:

We get it, you’re going to examine a problem that probably isn’t a very big deal and tell us how its going to ruin modern civilization.

Greg Mankiw:

We get it, all of our problems could be fixed if we just lowered taxes on the rich/job-creators/scrooges.

Joe Weisenthal at Business Insider:

We get it, check out these 2 SHOCKING economic indicators that will change the way we view the WORLD forever.

Steve Randy Waldman at Interfluidity:

We get it, finance and banking is complex but you understand it. It’s also very complex.

Mark Perry at CARPE DIEM:

We get it, drill baby drill!

Noah Smith at Noahpinion:

We get it, you’re an econoblogosphere mediator of sorts.

Cullen Roche at Pragmatic Capitalism:

We get it, QE is NOT printing money.

Blogosphere:

We get it, Apple is a good company and makes good products. Not only that, you’re going to just present the “facts” to us in an “unbiased” way so that we can decide for ourselves that Apple invented the wheel and democracy and capitalism and electricity and has 21489045 patents on that one thing that somebody else just made.

 

The Mafia Is Now Italy’s Largest Bank

Organized crime in Italy is now bringing in profits of $178.89 billion annually.

Reuters:

“With 65 billion euros in liquidity, the Mafia is Italy’s number one bank,” said a statement from the group, which was set up in Palermo a decade ago to oppose extortion rackets against small business.

Organised crime groups like the Sicilian Cosa Nostra, the Naples Camorra or the Calabrian ‘Ndrangheta have long had a stranglehold on the Italian economy, generating profits equivalent to about 7 percent of national output.

This is of course due in large part to the recession, but what does this dictate for the country’s future? At what point will crime stop rising, and by then what could be done to fix it?

“The classic neighborhood or street loan shark is on the way out, giving way to organised loan-sharking that is well connected with professional circles and operates with the connivance of high-level professionals,” the report said.

It estimated about 200,000 businesses were tied to extortionate lenders and tens of thousands of jobs had been lost as a result.