In Case You Missed Them - Some Links of Interest (8/12/09)

Below are some links of interest for 8/12/09, just in case you missed them. Some have already been posted to Twitter.

• According to Boston Consulting Group, institutional investors will demand "innovations" such as alternative investments, i.e., hedge funds, private equity, infrastructure, commodities, absolute return, and quantitative products, among others (All About Alpha). The group also mentions that "Perhaps the foremost trend in actively managed products is the continuing shift out of long-only equity allocations."
• Why have hedge funds underperformed the markets? Apparently, some managers are taking money off the table and proceeding with caution after several months of gains (Investment News). Even with good performance this year, hedge fund fees continue to slide (Wealth Bulletin).
• The Fed exit strategy will amount to paying interest on balances held by banks at the Fed (Bearish News). Essentially, when it comes time to tighten policy, the Fed can raise the rate paid on reserve balances as they increase their target for the federal funds rate. Of course, this will in a sense continue to reward the banks for past failures.
• After two years, some believe that we have failed to learn the three lessons taught by the economic downturn: imbalances in global trade and finance have real consequences, debt brings risk, and globalization does not manage itself, but needs guidance (Telegraph UK).
• China's economy slowed a little in July as large banks rein in lending, with volume of new lending in China dropping 77% from a month earlier, as fears of bubbles persist (Financial Times). Chinese exports fell 23% from a year earlier (Bloomberg). Singapore is not slowing down, with GDP spiking 20.7% (The Straits Times).
  
• General Motor's Volt could be a game changer if it gets the 230 miles per gallon that is being advertised - as long as you stay close to home (WSJ).
  
• The KBW bank index hit an 8 month high, up 144% from the March lows (Carpe Diem).
  
• The Congressional Oversight Panel is warning that smaller banks, which hold a greater concentration in commercial real estate, have the potential for much higher defaults going forward (Calculated Risk). Some small banks will need to raise significant capital (Zero Hedge).
  
• Can the PPIP be used to explain the strong rally in AA-rated CMBS (Clusterstock)? Is a new toxic asset bubble around the corner?
• From Comstock (by way of The Pragmatic Capitalist), deleveraging will continue to take a major toll on the U.S. economy and could wind up producing a couple lost decades, not unlike what Japan has experienced over the last 20 years.
• Brazil's coming rebound (Fund My Mutual Fund).
  
• What about the technology sector? Jim Farrish believes that while short-term there is the reason to tighten stocks, long-term (6-18 months) the sector is still in a bullish uptrend (greenfaucet). Any current correction may be an opportunity to add.
  
• Crude oil and gold both bounce of Fibonacci retracements (market folly), for those of you that care about crude, gold, or trading patterns/sequences.
  
• The housing mess is not yet over (The Big Picture). Zillow.com mentions that almost one-quarter of mortgage holders are underwater, with the figure rising to 30% by mid-2010 (Bloomberg). Ginnie Mae and FHA are becoming $1 trillion subprime guarantors, not unlike taxpayer owned Fannie Mae (WSJ).
• More details on Goldman Sach's amazing winning streak (Here Is The City News). Apparently, Goldman lost money on only two trading days during April, May and June. They also made more than $50m on 58 of the 65 trading days in the period, and at least $100m on 46 days. Amazing.
• The Baltic Dry Index has fallen for its 9th straight day (The Big Picture).
• We are all traders now (Trader's Narrative). The average holding period for a stock on the NYSE continues to fall.
  
• NYSE Bullish Percent Index and NYSE Percent of Stocks Above 200 Day MA Index are near 3 year highs (ES and EC Futures Analysis).
• A look at the importance of normalizing put/call ratios, whether they are going up or down (Quantifiable Edges).
  
• Short are decreasing as the average stock in the S&P 500 had 4.97% of its float sold short by the end of July (Bespoke Investment Group), the lowest level since January 30th. The reduction in shorts represents a decline of 17% from the peak levels in July 2008.
• September can be a cruel month for stocks (WSJ).
• Is the money supply (M1) a good indicator for short- and medium-term stock market behavior (CXO Blog)? Maybe not.
• Obama's derivative plan (WSJ).
• Greg Mankiw provides some wonky talk about carbon taxes (Greg Mankiw's Blog).
• Gamma decay and smiles for levered options (Quantivity).
• VIX calls attract some attention (VIX and More).
• Finally, an interesting link (at least to me) of the changes in WSJ dot portraits (Reuters - Felix Salmon).