The cocaine nose jobs of Wall Street have reached the conclusion that they cannot trust humans to police their own dirty deals and are turning to AI instead.
Two exchange operators have announced plans to launch artificial intelligence tools for market surveillance in the coming months and officials at a Wall Street regulators say they are about to do the same thing.
The software could snuffle around chat-room messages to detect dubious bragging around a big trade. It could be used to unravel complex issues, like “layering,” where orders are rapidly sent to exchanges and then canceled to move a stock price.
Tom Gira, executive vice president for market regulation at the Financial Industry Regulatory Authority (FINRA) said that the software could track down something dodgy which no one has thought of before.
FINRA plans to test the AI software next year, while Nasdaq and the London Stock Exchange Group expect to use it by the end of the year. The exchange operators also plan to sell the technology to banks and fund managers, so that they can monitor their traders.
Market surveillance already relies on algorithms to detect patterns in trading data that may signal manipulation and prompt staff to investigate. But the problem is that the high volume of data can lead to an overwhelming number of alerts, most of which are false alarms.
The “machine learning” software it is developing will be able to look beyond those set patterns and understand which situations truly warrant red flags, said Gira.
Software maker Adobe appears to have disappointed the cocaine-nose jobs of Wall Street with its latest results. They are weeping…
It was not as if the results were bad, in fact Adobe Systems second-quarter revenue and full-year revenue forecast just about met analysts’ estimates, it is just that Wall Street hoped that they would see increased demand from the outfit’s Creative Cloud package of software tools.
Adobe has been focused on selling its software through web-based subscriptions, which ensures a predictable and recurring revenue stream. This helped Adobe’s cash rise for nine straight quarters and should mean that growth would be predictable going forward as most of the company’s clients were now on the subscription model
However Adobe’s forecast for the current quarter was largely below estimates – mostly because Adobe is always conservative on its outlooks and Wall Street suddenly seems to think that is a weakness.
Adobe’s second-quarter revenue rose 20.4 percent to $1.40 billion as more customers subscribed for Creative Cloud, which includes graphic design tool Photoshop, web design software Dreamweaver and web video building application Flash.
Revenue from the digital media business, which houses Creative Cloud, jumped 26 percent to $943 million, but fell just short of analyst’s estimates of $944.3 million, according to FactSet StreetAccount.
Adobe forecast third-quarter total revenue of $1.42-$1.47 billion, implying year-over-year growth of 16.4-20.5 percent. But the forecast was largely below analysts expectations of $1.47 billion.
Wall Street analysts expect the company’s revenue to rise between 19-22 percent over the next four quarters.
Adobe’s second-quarter net income rose 65 percent to $244.1 million, or 48 cents per share. Excluding items, Adobe earned 71 cents per share, beating analysts’ estimates of 68 cents.
Logitech’s quarterly operating profit fell 1.5 percent, as strong year-end demand for newer music and video accessories failed to to do anything to stop shrinking demand for its computer bits.
It reported an operating profit of $74.2 million for the fiscal third quarter, a decline from $78.6 million. This was reflecting a move to exit the mouse business over the past year.
Still the results were better than Wall Street predicted so it was not all bad. Analysts thought looking for an operating profit of $73.11 million.
Net sales in the December quarter rose about 3 percent to $621.1 million compared to the mean estimate by analysts of $631.6 million.
Logitech has refocused on new accessory lines like wireless music speakers, video conferencing and video game controllers. It hoped this would offset a decline in personal computers and demand for its mice and keyboards that defined the brand.
Shares in Apple tanked after fears that it might sell less iPhones than it expected.
Since the end of the “game changing” tablet craze fizzled, the ipod died, and the iwatch was mocked, Apple has depended on recycling its iPhone to make it piles of dosh. Fortunately that had paid off, despite a shrinking smartphone market.
However it does not look like that will last – the Bank of America cut its estimate for fiscal 2016 iPhone shipments by 10 million to 220 million, pointing to a weakening among Apple’s suppliers.
Raymond James also lowered its estimate for 2016 iPhone shipments to 224 million from 229 million, also pointing to lacklustre expectations at Apple suppliers. Baird Equity Research trimmed its 2016 iPhone forecast to 234.7 million from 243.8 million.
While this might seem a lot of smartphones and arguably sold to people who do not need them, having bought a similar model a year earlier, Apple’s inflated share price depends on the market thinking it is going to continue to grow.
Sales, shares of Apple have fallen 4.4 percent over the past month and are down about 18 percent from record highs in April.
Apple supplier Imagination Technologies said softness in the overall semiconductor industry and smartphone market meant its operating profit would be lower than expected for the rest of its fiscal year.
Dialog Semi also cut its outlook, citing softer-than-expected demand for chips used in mobile phones such as the iPhone.
Reflecting increasing bets by Wall Street against Apple, short interest edged up to 1.9 percent of its outstanding shares at the end of November from 1.3 percent midway through the month, according to Nasdaq data.
Morgan Stanley said it expects iPhone unit sales to drop six percent in the 2016 calendar year as higher prices in markets outside Americas, excluding China, and maturing smartphone penetration in developed markets weigh on upgrades and new user growth.
The maker of extremely expensive business management software, and which no-one knows what it actually does, SAP reported a 19 percent rise in third-quarter operating profit.
This was much bigger than the cocaine nose jobs of Wall Street predicted and has created a bit of a stir.
SAP said third quarter operating profit, excluding special items, rose to $1.84 billion.
SAP’s Chief Financial Officer Luka Mucic said it was expecting to make an operating profit of 5.6 – 5.9 billion euro at constant currencies. This is flat growth to a rise of as much as 5 percent from 5.6 billion euros last year. Not great but better than Wall Street predicted.
Mucic said that the double digit growth in cloud and software revenue was mainly driven by excellent results in mature markets. We guess teenage markets are too interested in slouching around the house with their mates to buy SAP and pre-school markets don’t have a chequebook.
SAP’s Chief Financial Officer Luka Mucic said in a statement, adding that he expected continued volatility and economic challenges in emerging markets. Markets which hide in shrubberies and emerge are always more tricky than those who stand in the middle of the square and shout “look at me”.
SAP, whose customers include the world’s biggest multinationals, specialises in business applications ranging from accounting to human resources to supply-chain management.
The outfit has to take on fast-growing newer competitors such as Workday and Amazon.com’s web software unit.
SAP said its cloud subscriptions and support revenue more than doubled to 600 million euro in the third quarter.
Third-quarter total revenue of 4.98 billion euros was slightly ahead of the average expectation of 4.93 billion.
The cult power of Apple to turn back an ever growing tide of effluent has been demonstrated once again by its CEO Tim Cook.
Russia’s favourite CEO should have been terrified as stocks in China fell like a free-fall team of elephants who have forgotten to pack their parachutes. After all Apple is banking on Chinese interest in its shiny toys to make up for the fact that the rest of the world has worked out that they can get better for much cheaper.
Cook however proved he had the power to make the problem go away by actually talking to shareholders and telling them that everything will be OK.
Cook took the rare step of commenting on the health of Apple’s business midway through a financial quarter. He wrote that iPhone activations in China had accelerated over the past few weeks and that the App Store in China had its best performance of the year over the past two weeks.
“Obviously I can’t predict the future, but our performance so far this quarter is reassuring. Additionally, I continue to believe China represents an unprecedented opportunity over the long term,” Cook wrote.
In two hours they reversed those losses to trade up 2.25 percent at $108.12, adding around $85 billion to Apple’s market capitalisation from its earlier low.
This is a little weird given that any iPhone activations would have happened long before the Chinese sharemarket crashed. However owning shares in Apple is a religion based on faith and not common sense.
The Tame Apple press rushed to find analysts to back up Cook’s pronouncement and sure enough there were a few who agreed. This seems to prove to us that it is probably better to ask the cat financial advice than Wall Street Analysts.
Fortunately there are some on Wall Street who were a little more sensible. After the rebound, Apple’s stock was still down about 19 percent from its record high close set in February.
Cowen and Company analyst Timothy Arcuri said that no one has seen the extent of any Apple slowdown in China. Last week Gartner report said smartphone sales in the country fell for the first time ever in the previous quarter.
In short, Cook and Canute have something in common. No amount of pronouncements will stop the rising tide.
Nvidia has reported a surprise rise in second quarter revenues and gave a better than expected revenue forecast for the current quarter.
It was all down to a strong demand for its graphic chips used in gaming and cars.
Nvidia’s revenue increased 4.5 percent in the quarter ended July 26, while the cocaine nose jobs of Wall Street had predicted revenue to decrease about eight percent.
The outfit predicted sales would fall in the third quarter, but the decline was less than Wall Street expected.
Nvidia gets most of its cash from its graphic chips made for PCs. There were fears the fall in PC sales would hurt Nvidia just like it did Intel and AMD.
The outfit said gaming revenue rose 59 percent, helped by strong sales of its GeForce series of gaming chips.
Nvidia has also been making chips that allow people to play graphics heavy games over the internet and chips used in a car’s dashboard display and in self driving cars.
Automotive revenue rose 76 percent and accounted for only 6.2 percent of total revenue.
The company said eight million cars on the road were using its chips and that it was working with more than 50 companies for its DRIVE chip for self driving cars.
Revenue in Nvidia’s enterprise business fell 14 percent. The business, which makes chips used for software such as AutoCAD, accounted for 16.2 percent of total revenue.
The outfit’s total revenue rose 4.5 percent to $1.15 billion in the second quarter. Analysts had expected $1.01 billion.
Net income fell nearly 80 per cent to $26 million in the quarter because of higher costs and a bigger tax bill.
Nvidia forecast revenue to fall to $1.16-$1.20 billion in the current quarter from $1.23 billion a year earlier. Analysts had expected a fall to $1.10 billion.
Software King of the World Microsoft has surprised the cocaine nose jobs of Wall Street by making piles more money than expected.
Microsoft reported that sales of its hardware and cloud-computing services helped to offset a decline in the company’s core Windows business and that it was going to party like it was 1999.
While sales of Windows to computer manufacturers to install on new PCs fell 19 percent in the quarter, that decline was offset by higher revenue from its Surface tablet, back-end server software and cloud-related offerings.
The company said its commercial cloud-related revenue for the quarter more than doubled, and was now running at $6.3 billion a year.
Microsoft’s overall revenue rose six percent to $21.7 billion, above Wall Street’s average forecast of $21.1 billion.
If the US dollar had not been so strong revenue would have risen nine percent, Microsoft said. Still you can’t have everything. Besides a huge pile of Microsoft cash is sitting in off-shore bank accounts waiting for the day that the dollar will be worthless again.
A futures trader was arrested in the United Kingdom today on US wire fraud and commodities fraud and manipulation charges in connection with his alleged role in the May 2010 “Flash Crash”.
The US government claims that Navinder Singh Sarao, 36, of Hounslow caused the Dow Jones Industrial Average to plunge 600 points in five minutes using weaknesses in the computerised share buying process.
Needless to say the US is requesting his extradition after he was charged in a federal criminal complaint in the Northern District of Illinois on Feb. 11, 2015, with one count of wire fraud, 10 counts of commodities fraud, 10 counts of commodities manipulation, and one count of “spoofing,” a practice of bidding or offering with the intent to cancel the bid or offer before execution.
Sarao allegedly used an automated trading program to manipulate the market for E-Mini S&P 500 futures contracts on the Chicago Mercantile Exchange.
Sarao’s alleged manipulation earned him significant profits and contributed to a major drop in the US stock market on May 6, 2010, that came to be known as the “Flash Crash”.
He is said to have used a “dynamic layering” scheme and placed multiple, simultaneous, large-volume sell orders at different price points. This created the appearance of substantial supply in the market.
Then he modified these orders frequently so that they remained close to the market price, and typically cancelled the orders without executing them.
This caused prices to fall and Sarao allegedly sold futures contracts only to buy them back at a lower price.
When the market moved back upward as the market activity ceased, Sarao allegedly bought contracts only to sell them at a higher price.
The buyout negotiations between Intel and Altera are bogged down because no one can agree on a good price.
Word on the street is that the negotiations have broken down completely, however that is unlikely at this point.
Altera’s shares are worth $43.33 on the Nasdaq and Intel had offered $50 per share. That represented a 50 percent premium to Altera’s price before news of the talks was first reported on March 27.
It seems that the people causing the problem are Altera which is refusing to do a deal. Wall Street analysts have said that this puts pressure on its board.
However if the deal does not go through there are going to be some very angry investors. Particularly if the board and management can’t show a plan that would create a value at or above what Intel is offering, they are going to have to justify why they are saying no.
Intel is also under pressure because of a widespread belief that it needs to buy the smaller Altera. Altera would appeal to Intel for its line of programmable chips, increasingly used in data centres and customised for functions such as providing web-search results or updating social networks.
The deal was expected as part of a chip industry consolidation which started after NXP Semiconductors’ $12 billion merger of Freescale Semiconductor was announced last month.
If the Intel deal had gone through, the takeover would have been Intel’s largest acquisition, topping its $7.7 billion purchase of security software maker McAfee in 2011.