There is a bit of nuance to the cashflow. That $100 bn cashflow was used for something else before AI: mostly share repurchases and M&A. Now it's being redirected to capex. That removes some of the support for the stock prices; there's no longer a multibillion dollar bid every year for GOOG / META / MSFT etc. stocks.
But you're right that this shouldn't affect lenders, unless we see a lot more borrowing (which is coming, BTW: ORCL and GOOG just issued $10+ bn debt each for AI data centers).
Andreas Antonopoulos' books Mastering Bitcoin and Mastering Ethereum are fantastic. I'd recommend starting with those to get a good handle on the basics.
1. New information comes to light, the stock crashes, and you realize you were wrong and the stock is a dog. You no longer want to own it at the strike price. Oops. You effectively bought it above your updated estimate of its worth.
2. The stock keeps rising and rising, you collect the option premium but you could have made a lot more money if you just bought the damn thing outright.
These are more subtle failures than the usual "Oh my God, I blew up my account!" but they're real.
It's perfectly fine to keep doing what you're doing if you're comfortable with this risk. There is no strategy without a downside.
The US has too much retail space. Per capita, it has 5x as much as Europe (23.5 sq ft in the US vs 3-4 sq ft in most European countries) and 8-10x as much as Asia (2-3 sq ft). We may be looking at a permanent decrease as a result of this pandemic. But even if it goes down by 20%, the US will still have way more than anywhere else.
I think we'll be better off when we use the excess retail space for something else whether it's apartments, warehouses, or offices. But the transition will be painful.
In that vein, I recommend "The Search for General Ts'o", a documentary about Chinese food in America. It's quite funny and launched me on a quest for the best General Ts'o recipe. I won't spoil the joy of the hunt for you but I assure you, it's out of this world.
The Karowe mine is unusual in its high proportion of large diamonds. The only similar mine is Letseng in Lesotho. Both Karowe and Letseng have very low grade ore (in terms of carats per tonne) but high proportion of large stones. DeBeers discovered Karowe but never developed it because it was judged uneconomical; Lucara took a big bet that the quality of the diamonds would offset low yield.
I wouldn't extend the ratio of large diamonds found at Karowe (or Letseng) across the whole industry. They are fairly unique mines.
Reading this must make China feel they made the right decision in banning Facebook. Not that they care about liberal v. conservative, but having their population manipulated by a cabal of Ivy Leaguers is a non-starter. The Chinese will run their own manipulation program, thank you very much.
Other governments may be starting to come to the same conclusion.
Futures on FTSE China A50 index trade on Singapore Excbange and are available to US investors via Interactive Brokers (ticker XINA50). They are quite liquid. Have fun!
It is possible that a block would be sold within 350ms, but how likely is it? That's a function of block size. If you have 100 shares, you'll get it done 100% of the time. 1,000 shares? Somewhat less than 100%. 100,000 shares? Rarely.
These guys are ginormous. $100m block is about a 0.01% position for them. You can't just put a limit order on IEX (or any other exchange for that matter) when you're dealing with this magnitude. You need a team of specialists working full time disguising the order and parceling it out to multiple venues, and it will usually take days to get it done.
The other way of moving a block this size is by finding a natural counterparty and negotiating a deal directly with them. The trade will then get booked through a broker-dealer for reporting and settlement purposes. Those kinds of negotiations take days, too, and you can't avoid showing your hand. Plus, it's not a very scalable solution.
I don't understand this article at all. The pension fund uses block trades. Who takes the other side of those trades and how are they compensated?
I suspect that an equity desk takes the block, parcels it out into lots of small pieces, and works the market to get it off their books. Of course, they charge for that service, both in commissions and spread. So effectively, instead of paying HFT firms for providing liquidity, they're paying an investment bank equity desk. Does this really save money? If it does, why all the hoopla about HFT if you can avoid them by going through an equity desk?
Don't tell me that they just put their block on IEX and the tooth fairy fills it without price impact. That would be some serious magic.
I bought a low-end Mac mini last year, upgraded it with 16 GB memory from Crucial, installed a Samsung SSD with Fusion Drive and bingo: reasonably fast desktop system for less than $900. I guess you can do it for $800 now.
The stock 5400rpm drive is unusable, but it's an easy fix if you're willing to open the box. With Fusion Drive, even a small SSD will make a huge difference.
You are assuming that HFT profits come at the expense of investors. In fact, they were taken from insiders.
I'm old enough to remember trading on US stock exchanges in the mid 1990s when prices where quoted in 1/8s and 1/16s and NYSE specialists were the only ones with visibility into order book. Think about it: you as an investor had no idea of the depth of the order book, but the specialist who took the other side of the trade from you had it in front of him. The specialists were minting money. They would lose money maybe one day per quarter, and their ROEs were ludicrous.
HFT and ECN trading killed them. Labranche, Van der Moolen, Susquehanna, Spear Leeds, all gone. Goldman Sachs bought Spear Leeds for $6 billion in 2000 (it is now no more); Labranche specialist business fetched only $25m when it was sold to Barclays in 2010. Van der Moolen went bankrupt in 2010.
Investment bank trading desks, true champions of customer front-running, are shrinking fast. Cash equity trading has become so tough for the banks that they are starting to think of it as a cost center, a loss leader to promote their equity underwriting business.
These were multi-billion dollar businesses, with tens of thousands of middlemen living high on the hog from the spreads and front-running. They're all (mostly) gone. Good riddance.
If you want to relive the old days of trading before HFT, go execute a large trade on Karachi Stock Exchange. Put the order in and watch in amazement.
I would like to see the data showing total revenues of specialists, market makers, bank trading desks, brokerages, and HFT traders, over time. I would bet they have been going down for two decades. This is undeniably a good thing for investors.
But you're right that this shouldn't affect lenders, unless we see a lot more borrowing (which is coming, BTW: ORCL and GOOG just issued $10+ bn debt each for AI data centers).