Job adverts explained Friday, February 29, 2008
Look familiar to you?
Shortly after SocGen won Best Derivatives House 2007, it was hit by its' enormous trading loss. Now, Peloton Partners is being forced to wind down its $2bn ABS fund, which had been named best new fixed-income hedge fund last month.
Peloton ABS was one of the big winners from the US subprime crisis, gaining 87 per cent last year after shorting sub-prime mortgages. This year they began buying distressed AAA mortgage assets. However, continued falls in the value of such assets have prompted margin calls and tightening of lending conditions by lenders.
According to FT.com, the fund was 4-5 times leveraged, normal for a credit fund, with 14 banks owed money, including Goldman Sachs, UBS and Merrill Lynch. The banks are allowing Peloton to lead the sale.
Inevitably, this public sale of assets will drive prices even lower but may allow other less leveraged firms to mop up assets cheaply.
Labels: credit crunch
My old firm, MF Global, is the latest to be hit by a large loss ($141m) as a result of unauthorised trading by a wheat trader in its' Memphis office. The news caused the shares to fall by over 25%.
Apparently the trader had shorted the market and was hit when unprecedented volatility in US wheat markets, with prices falling 11 per cent but then jumping almost 20 per cent to a record $13.34½ a bushel in just three minutes. This against a backdrop of prices rising by 25% on Monday.
The CEO commented that MF Global had relaxed system trading control limits because they made trading desks less efficient when many customers were placing orders - these have now been restored.
Whilst I don't have any insider information as yet on the specifics of how this happened, one can imagine a number of possible situations, including ones in which a trading desks feels its' profitability is being impeded by "unreasonable" controls. For instance,
- Limit restrictions may mean a desk can't accept all the customer orders coming in when the flow of orders are all in a particularly direction eg all buy orders. The desk may contend it can easily lay these off but the sequencing of order means they "temporarily" breach limits.
- In a phone broking environment, sales traders have to record orders manually. Whilst these should be immediately entered into systems during the call, sometimes when the phones are going crazy sales traders can revert to using their own paper blotters to jot down orders and resultant positions, thereby circumventing limit controls .
- Often orders can be processed without allocating them to an account pending client allocation instructions e.g. a client has 10 accounts and hasn't specified which account(s) to allocate the trades to. Time limits may operate on how long orders may be unallocated and likewise the number/size of unallocated orders may be limited. However, at busy times, it can be perceived as more important to get the order into the market and worry about the details later. In this situation a trader could enter orders for their own account but conceal them under the guise of unallocated client orders
UPDATE : MF Global shares continued to take a battering when the US market opened and at one point they were 50% lower than prior to the news at $14.22, before staging a rally. This will have financially hit many of the staff and Directors, many of whom hold shares and options, albeit many will probably see it as a buying opportunity.
Yoonew - A continuous options market on tickets Wednesday, February 27, 2008
Similar to Sean Park, I've long maintained that the arcane ticketing industry is ripe for capital market models and techniques to be applied. The growth of online secondary markets has been spectacular and has even been embraced by traditionalists like Ticketmaster who recently acquired Getmein in the UK.
The next wave of market evolution is building, which will be very familiar to anyone in capital markets, namely an options market. Several examples now exist in the USA, with Yoonew, being one of the latest. It offers a continuous market on US sports events, most notably the Superbowl.
In Yoonew's case the market actually culminates in physical delivery of the tickets to the event, rather than a cash payout. Hence, if you buy an option for a Superbowl ticket for a specific team then that contract will either result in you forfeiting your "single premium" if the team you select fail to reach the final or actually receiving tickets if they do. As a consequence of this structure, people selling options on teams have to be able to guarantee delivery of the event tickets by buying event tickets contracts in the Yoonew market which provide a ticket regardless of which teams reach the final.
For example, if you wanted to short Fantasy Seats for the New England Patriots in Super Bowl XLII in seating category B, you would first need to buy Super Bowl Tickets in seating category B. Purchasing tickets give you the ability to short contracts in one or both conferences. If you purchased 10 tickets, you could sell 5 contracts for every NFC team and 5 contracts for every AFC. Or you could short 10 contracts for every team in a given conference. With our Ticket Margin system you can short sell Team Fantasy Seats as long as you own enough tickets to cover the maximum number of short positions.
Operating a physical delivery constrains the number of contracts that the market can sustain - ultimately the size of the stadium is the limiter and so the market operator will set a threshold of underlying tickets it thinks it can supply to the market. This will dictate the maximum number buy orders for any given team.
There are a number of fascinating about this including
- the ability of sports fan to buy a futures contract on a Superbowl ticket that pays out if their team reaches the final
- the opportunity to hedge your position or arbitrage in other sports betting markets eg betfair may offer better odds of a team reaching the final
- the reliance on the central operator to deliver on the contracts, since if it went bust or failed to get tickets the punters would have little or no recourse
- the lack of a cash equivalent market whereby the end outcome is the price of a ticket, rather than a ticket itself
Gtalk gets meebo like chat widget Tuesday, February 26, 2008
Google have released a Gtalk chat widget that you can post onto any web page, which allows visitors to chat with you whenever you are logged into your gmail account. I've embedded it onto this blog on the left above the meebo widget.
Whilst it's not as slick as Meebo's widget [little customisation available and the visitor chats in a pop-up window, assuming they allow pop-ups in their browser], it works fine. Perhaps this is the start of Google edging into Meebo's space.
I also realised that the Gtalk widget doesn't provide a presence indicator unlike Meebome ie. meebome tells me if there are visitors on the page in real-time and provides me with the chance to initiate a chat, whereas the Gtalk widget only lets me respond to visitors if they start the chat.
Below is an extract from the SocGen Internal Interim Report into Kerviel's activities
Intermediary conclusions of the internal audit mission
The conclusions of the internal audit mission confirm the main characteristics of the fraud, as explained on January 24th 2008 by Société Générale's management.
The author of the fraud departed from his normal arbitrage activities and established genuine "directional" positions in regulated markets, concealing them through fictitious transactions in the opposite direction. The various techniques used consisted primarily of:
• purchases or sales of securities or warrants with a deferred start date;
• futures transactions with a pending counterparty;
• forwards with an internal Group counterparty.
The author of the fraud began taking these unauthorised directional positions, in 2005 and 2006 for small amounts, and from March 2007 for large amounts. These positions were uncovered between January 18th and 20th 2008. The total loss resulting from these fraudulent positions has been identified and amounts to 4.9 billion euros, after their unwinding between January 21st and 23rd 2008.
The General Inspection department believes that, on the whole, the controls provided by the support and control functions were carried out in accordance with the procedures, but did not make it possible to identify the fraud before January 18th 2008. The failure to identify the fraud until that date can be attributed firstly to the efficiency and variety of the concealment techniques employed by the fraudster, secondly to the fact that operating staff did not systematically carry out more detailed checks, and finally to the absence of certain controls that were not provided for and which might have identified the fraud.
The Inspection General department has refrained from drawing any conclusions at this stage regarding the responsibility of the front office managers supervising the fraud's author, given the ongoing legal investigation which has not enabled it to interview all those concerned. At this stage of the investigations, there is no evidence of embezzlement or internal or external complicity (i.e. the existence of a third party who knowingly assisted the fraudster to conceal his positions).The investigations are continuing, in particular, to cover a wider area than the activities of the author of the fraud.
Separately FT Alphaville reports that the 75 alerts raised over the trading activities of Jérôme Kerviel at Société Générale were not unusual according to Daniel Bouton, chairman and CEO of SocGen. Hmmm, perhaps they weren't at SocGen and that was the problem!
He went onto say that "The role of the middle office is to ask questions, so it's not surprising he [Kerviel] was asked a lot of questions.'' Shame they didn't understand the answers since, according to the report, control procedures had been respected in many cases but "no initiative was taken to verify Mr Kerviel's assertions or to communicate the information to his superiors," even when his assertions lacked plausibility.
Hmmm. Perhaps the internal control manual failed to explicitly point out that having investigated and received answers to questions, you were supposed to apply a sense and reasonableness test to them.
Wall Street Journal is reporting that on 15 separate days last year, Citibank saw it traders lose over $100m but they also had gains of over $100m on 55 days.
In the context of Citibank profits, these days aren't individually catastrophic [Q107 - net income from Citibank capital markets was $2.62bn], but you can bet some traders experienced a few sweats.
Contrast that with Goldman Sachs, which according to the Alea blog
During the year ended in november 2007, Goldman Sachs Daily Trading Net Revenues were positive [ winner!], 212 days out of 264 or about 80% of the time.
In a report this week, the US Government Accountability Office has concluded that the use of multiple prime brokers by a hedge fund could pose risks to the economy since no single broker had a complete view of a fund and its' leverage. According to the report, hedge funds "often declined to share information about specific positions" with brokers.
I can certainly understand why the regulators might prefer the simplicity of hedge funds using a single broker. It would indeed allow a broker to better understand what the fund was up to and give the regulator a single broker to blame if things went awry. However, there are many reasons why a hedge fund chooses to use several brokers including
- to encourage competitive pricing between brokers and allow comparisons on service and price to be made
- to benefit from specialisms individual brokers can offer in particular products or stocks
- to avoid a broker being able to "take advantage" of knowing the positions and strategies of a fund via the prices quoted for assets and stock lending. Regardless of what "chinese walls" brokers claim to operate, all hedge funds are concerns about chinks in such walls
- concerns by a hedge fund about their counterparty exposure and concentration risk in using a single firm. For instance, when Refco went bust, a number of its clients found themselves unable to trade elsewhere for a short time until positions were released by the liquidators.
To advocate the funds should relinquish these benefits smacks of unfairly favouring one constituency over another to make a regulators life easier.
Labels: Hedge Funds
I've never been involved in the agricultural futures markets but it's hard to ignore the staggering rise in the prices of wholesale prices for foodstuffs some of which have more than doubled in a year. These increases have been exacerbated by rises in oil prices and freight costs, with the result that basic foodstuffs are becoming more costly.
Demand forces can can be identified in some cases eg Higher import demand by China and India have driven up the price of powdered milk, which in turn has driven up the price of fresh milk. However, the price of foodstuffs such as maize have been directly hit by the introduction of US Government subsidies aimed to encourage the production of bio-fuels using these commodities.
The subsidies were intended to stimulate a switch to bio-fuels, the hope being that this would provide triple benefits:
- answering environmental critics by lessening the use of oil
- boosting investment in bio-fuel technologies spurred by the growth in demand
- encouraging less dependence on oil
The size of subsidies have resulted in 4% of global maize production being re-directed to bio-fuels and away from foodstuffs. This has distorted the market and pushed up prices. Whilst Government intervention is not unprecedented in order to social and environmental objectives, aside from retail consumers, this action has directly hit food aid programmes. Faced with higher basic foodstuff prices, they face the choice of asking donors for more money to maintain capacity or reducing either the volume of food distributed or number of people fed.
One man's subsidy is another man's empty bowl.
|Today's Change||Year Change|
|Corn: CBOTAs of Feb 25 2008 20:51 GMT.||533.25|
|Wheat: CBOTAs of Feb 25 2008 20:51 GMT.||1,124.50|
|Soybeans: CBOTAs of Feb 25 2008 20:51 GMT.||1,469.25|
|Soybean Meal: CBOTAs of Feb 26 2008 09:12 GMT.||372.9|
|Cocoa: LIFFEAs of Feb 25 2008.||1,354|
|Coffee (Robusta): LIFFEAs of Feb 26 2008 09:07 GMT.||2,572|
|Coffee (Arabica): NYBOTAs of Feb 26 2008 08:50 GMT.||163.10|
|White Sugar: LIFFEAs of Feb 25 2008.||376.00|
|Cotton: NYBOTAs of Feb 26 2008 08:52 GMT.||79.25|
|Orange Juice: NYBOTAs of Feb 25 2008.||126.00|
|Cattle: CMEAs of Feb 25 2008 22:44 GMT.||94.83|
Visa IPO - its all thanks to you Monday, February 25, 2008
While many financial Goliaths have been hit hard by the credit crunch and would be apprehensive about tapping public markets for capital given widespread concerns about bad debts below the waterline (should that be above the bottom line), Visa have announced they are launching the biggest ever IPO in US history at approx $18bn, with half of the company shares up for grabs.
Following in the footsteps of their rival Mastercard who IPO'd a couple of years ago and whose shares have rocketed since, they are in the fortunate position of being a processor of transactions rather than a lender and hence don't carry the financial baggage of many institutions. Whilst some might argue it's not an ideal time to be raising money because of weaker markets, the banks which own Visa will welcome the payday to prop up their own capital bases [cash counts 100% towards capital unlike investments in other companies]. JPMorgan Chase will receive approx $4bn, Bank of America $2bn and Citigroup $1bn.
Visa is not immune not financial downturns and ultimately its revenues are closely correlated to spending in the economy albeit, excluding Europe which will continue to operate as a separate business, it has geographically diverse exposure given it's worldwide operations. The challenges it faces from online payment services such as Paypal and others as more retail commerce moves online cannot be ignored, albeit relatively minor at this point in time.
You try living on this. Thanks to IDD and Paul Kedrosky for this.
Kevin O'Connell has been nominated 20 times for Best Sound Effects at the Oscars and never won.
The news that the UK has followed Germany's lead in paying an informant with access to Liechtenstein's biggest bank for account data is frightening.
This sets a horrifying precedent in condoning/rewarding a breach of confidentiality and sale of financial data. Imagine if the position were reversed and an overseas state gained access to the UK banking system or to Government records. There would be outrage and claims that the perpetrator should have been handed over to the authorities by the foreign Government.
Whilst commercial espionage undoubtedly occurs, for this to be publicly claimed as a triumph by HM Revenues & Customs is dangerous. Furthermore, one wonders whether defendents in any resultant tax evasion cases might well contest the charge on the basis of how the information was obtained ie illegally.
On 1st November 2007, the Markets in Financial Instruments Directive came into force. The main objectives of the Directive were to increase competition and consumer protection in investment services.
This EU legislation directly targeted Stock Exchange monopolies and allowed firms to independently publish pre and post trade data for European liquid shares. As a result, various outlets have emerged which offer competing venues for the publication of such information including Markit Boat and Chi-X. This has encouraged price competition and driven down prices, allowing new entrants to quickly build up market share from undercutting the Exchanges, for whom market data has been a key revenue.
Revenues arise from charging firms to publish the data and also charging for people to see the same data in real-time.
Ordinarily, market fragmentation would be harmful as it would increase search costs (need to look in multiple places). However, just as technology enabled the move away from "floor" based ("face to face") trading to screen based trading, so fragmented information can be instantly consolidated from multiple markets and re-assembled as a "virtual market". Firms such as Reuters have been able to offer new services to do exactly this.
In this environment, Exchanges have found their market data prices under intense pressure - publishers seek out the cheapest publishing venue, and consumers challenge the price of their data feeds from Exchanges which contain less comprehensive views of market activity.
Consequently, whilst the trend of consolidation amongst Exchanges might have suggested a strengthening of their role and a deepening of the liquidity they offer, it may be more accurately viewed as a defensive play with their primacy likely to decline thanks to technology.
UK Govt set ISPs impossible challenge Friday, February 22, 2008
So, the UK Govt is going to require ISPs to "take concrete steps" to curb illegal downloads of music and films or face being hit with legal sanctions from April next year. The Culture Secretary said this was a “clear signal” of the government’s determination to tackle rampant piracy, which the music and film industries blame for the slump in CD and DVD sales.
The music and film industry makes a significant contribution to the UK economy and so this may be both an economic and morale issue for the Govt. However, mandating ISPs to curb illegal downloads is the easy bit, especially when then Govt don't have to offer solutions as to how this might be achieved ["best left to the ISPs"!].
The challenges to this are immense. Firstly, one has to distinguish music and film downloads amongst the data, including streamed as well as downloaded material presumably.
Then, an ISP will have to determine which is illegal v legal. There are many sources of legal downloads such as iTunes, Amazon and Jamendo. Likewise the BBC, Sky and Channel 4 now deliver film downloads amongst others and some of these make use of torrent techniques.
It's been suggested that the volume of data downloaded marks out people illegally downloading. However, the increasing availability of TV programme legal downloads and music streaming services undermines this theory. Similarly, a few illegal downloads is presumably as illegal as many.
It's a pity that the Government will not have to provide practical examples of how to implement such a requirement to demonstrate the effectiveness of such a regulation. As a result, ISPs will simply find themselves the whipping boys and scapegoats without this requirement having any material impact on piracy.
MCC champion women’s cricket at Loughborough Thursday, February 21, 2008
I was delighted to read today that Loughborough University has been named as the country’s first women’s University Centre of Cricket Excellence (UCCE) thanks to additional funding from Marylebone Cricket Club. MCC’s investment of nearly £30,000 in the Loughborough centre takes the total Club spend on the six UCCE’s (collectively known as MCC Universities) past the £2 million mark since 2005, the year that it began funding the scheme.
As a graduate of Loughborough University and an MCC member, I am delighted by this announcement because of the important boost it will give to the development of the womens game. .
There's a High Court case reported today involving a gamber and greyhound race trainer who is suing William Hill, the bookmakers, for allowing him to rack up £2.1m of losses. He insists they should have refused to take the bets from a compulsive gambler.
Leaving aside that William Hill followed his request to freeze his account, and that he circumvented this by going into different shops and opening a new telephone account, his lawyer is arguing that William Hill manipulated the situation to make profits.
The case centres on the extent to which bookmakers are obligated to protect problem gamblers from their own habit, and may set new industry guidelines on “socially responsible’’ conduct, lawyers said.
Unsurprisingly, William Hill denies wrongdoing and says that it is not legally responsible for Mr Calvert’s losses, given that he was an adult participating in a lawful activity.
This case caught my attention for two reasons. Firstly, it follows a pattern of people blaming others for their own financial peril [sub-prime borrowers - banks shouldn't have lent us money] and then seeking damages for the consequences.
The second reason is going to be less obvious to most, which is that the outcome of this case will have direct consequence for many broking firms.
Spread-betting is an activity that has exploded in size within a decade with firms like IG Index and Cantors Spreads benefiting from this wave of interest. It has successfully been applied to sports as well as to financial markets, and has done more to educate the "common man" about trading than any Government campaign could have ever dreamt of. Ask any Sun or Mirror reader about buying/selling goals or corners or runs and they are likely to have a good understanding of how the process works. Similarly, they will be probably be able to quote you in digital odds [1.01 = 1/100, 1.02 = 1/50....].
Most outsiders don't realise that to offer a spread-betting service you actually need to hold a bookmakers licence, even if the subject of the bet is a financial instrument, market or indices - when we set up such a business at Man Financial [now MF Global] at the time when I was on its' Board, we had to make an application for a bookmakers licence to the local magistrates. Moreover, winnings/losses fall outside of the tax regime unlike even instruments like contracts for difference.
As such, the outcome of the case would have a direct bearing on spread-betting firms and might open the way for financial investors to seek recourse to their broker for their losses. Clearly, one might need to demonstrate comparable circumstances or compulsions to qualify, but it would be of great concern to every firm if such a precedent were set.
The papers also happened to report as an after thought that the former greyhound trainer is also awaiting trial on unrelated firearms and drugs charges at Newcastle Crown Court.
Labels: spread betting
Scribd makes a play for pdfs on the web Wednesday, February 20, 2008
Regardless of whether you have Adobe Acrobat or Acrobat Reader, clicking on a weblink to a pdf ends up being a tortuous process while you wait for the app and related document to load up in your browser. It's no different when someone sends you a pdf as an attachment.
Let's face it, the skinny format of pdf is now putting on weight as befitting its age. This is why I think Scribd's latest move is very smart.
Up until now, I've paid little heed to this free online service that allowed you to publish docs to the web. Initially all published docs were made public and privacy within a chosen group was not an option. So unless you wanted to broadcast to the world it simply didn't work. By and large, unless it was a white paper or marketing doc, do many folks have docs to regularly publish [excluding blogs].
However, they have now done two things to catch my attention. Firstly private publishing is now included as standard in the free service. Hence, if I want to send a doc to someone, I can do so as a published scribd doc and simply send them the link.
But as importantly, if you wish to publish a pdf, Scribd has introduced iPaper, which is a very slick, fast and bloat free way of making the doc available. With no install required [other than a flash player], the document can be view directly inside the browser and is rendered in a very slick fashion. Removing the need to send the 150mb pdf file, you can simply publish the pdf via Scridb and allow your invitees to view the doc inside their browser effortlessly. Book view is undoubtedly the most visually impressive way to inspect items.
Offering embedding code which enables you to direct place documents inside a web page for immediate viewing is similarly smart.
Definitely one to watch.
Perhaps I'm not in the user target market, but I confess that I don't get Pinger, despite their catchy video and explanation of why I should use it.
In essence, via this service I can leave a free voicemessage which can be heard by the intended recipients once they have been notified via a text message which prompts them to dial in to listen. This is instead of a) calling them b) sending them a text c) emailing them d) leaving them a voicemail.
I appreciate that this may be helpful where
a) the recipients are overseas and can instead listen to the calls via a local number at their expense instead of me making an international call/voicemail/text
b) I am sending a long message (of up to 5 mins) to a group that can't be sent in as a group text message
Is this really a high volume market that is relevant to many people? Moreover, as they don't charge for the service, how do they make a living?
Scrybe launched its' beta in November 2006 with great fanfare via a youtube video that simply wowed viewed with the promised sophistication of the app. I was amongst those excited by what was promised and blogged about it here and here.
Ok. It's now Feb 2008. You might think they would have opened the site up by now. But no, I'd still heard nothing after signing up for their beta.
Concerned that they'd simply opened up and not told me or I'd missed it I checked the site. As it was all those months ago. Even their last blog entry was Nov 2007 2007 saying
We are working on our biggest update to Scrybe. The beta feedback is now tapering off and I think we have most of the valuable insights we need. Some of the changes were smaller and were rolled out into earlier updates. Some of the changes require a larger effort. Right now we are focusing on the hard to do things.
Sorry. Feedback tailing off? Bored senseless beta users perhaps. Biggest update? Impossible update perhaps given that it's now Feb and 4 months have elapsed. Chaps, don't you think releasing something would be a great idea. As I suggested here, you had the early advocates in the palm of your hand with that video - why did you waste it?
If I am missing something please let me know.
I offer the heading in jest, but confess to a wry smile when I read in an Marylebone Cricket Club ["MCC"] circular to members, which I received today from Lords, that there are over 3,500 members of the club aged over 72 and who were elected at least 27 years ago.
The same circular advised that there is now an estimated 20 year wait for new candidates for club membership to be admitted to full membership.
In case you're a cricket fanatic like myself, I've created an ical enabled calendar of matches at Lords that you can subscribe to and thereby incorporate the match dates in your own online [google calendar, airset...] or Outlook calendars without having to rekey the information.
Simply use the ical link below http://www.airset.com/services/iCal/public/15699/TheLordsCricketCalendar2008.ics
I will endeavour to maintain it to take account of any changes to the fixture list, but always check the official Lords site for safety.
Amongst all the news of bank write-downs and concerns about further losses, one approach that would have avoided the mess seems to have been completely ignored, albeit Credit Suisse evidently toyed with the idea.
The simple but perhaps radical approach would involve allowing traders to price their own positions - at a stroke, no more losses other than realised losses when traders actually closed positions with others, or when a book was transferred between traders. At the same time bank staff morale would soar, as every trader would become a profitable hero in an expensive suit earning a big bonus. Lastly, much of the processing undertaken by the middle and back office would disappear - trades resulting in a realised loss would simply not be undertaken by traders.
Obviously such a pricing approach would probably mean that most assets would fall under a level 3 classification - mark to model.
I concede there may be some practical, funding and ethical problems, but this simple policy could easily restore the financial health of banks. I commend it to Alistair Darling, Chancellor of the Exchequer for the UK.
PS - just joking
Cornering the market whilst getting a monkey off your back Tuesday, February 19, 2008
Once upon a time in a village, a man appeared and announced to the villagers that he would buy monkeys for $10 each. The villagers seeing that there were many monkeys around, went out to the forest, and started catching them. The man bought thousands at $10 and as supply started to diminish, the villagers stopped their effort. He further announced that he would now buy at $20. This renewed the efforts of the villagers and they started catching monkeys again.
Soon the supply diminished even further and people started going back to their farms. The offer increased to $25 each and the supply of monkeys became so little that it was an effort to even see a monkey, let alone catch it! The man now announced that he would buy monkeys at $50 ! However, since he had to go to the city on some business, his assistant would now buy on behalf of him.
In the absence of the man, the assistant told the villagers. “Look at all these monkeys in the big cage that the man has collected. I will sell them to you at $35 and when the man returns from the city, you can sell them to him for $50 each.” The villagers rounded up with all their savings and bought all the monkeys. Then they never saw the man nor his assistant, only monkeys everywhere!
One blogger lost in the Jungle Monday, February 18, 2008
When Amazon's S3 online storage system went offline yesterday, one of the Mashable journos reporting the news declared
As the S3 storage service is used by services as large as Twitter, this could have had some fairly serious ramifications if it had happened in the middle of the day.
Hmmmm. Not quite sure that Twitter going off line could give rise to "serious ramifications". Or is it simply any excuse to hype and slip in reference to this dull service that is beloved by the technorati?
C-charge net catches more than chelsea tractors Wednesday, February 13, 2008
Having read about the increase in the London congestion charge yesterday, I had assumed it was targeted at large 4x4 and luxury high end cars.
So I was shocked to see some of the cars ensnared by the change - VW Golf3.2, Honda Accord, VW Passat 3.2, Ford S-Max 2.3 and Vauxhall Zafira 2.0.
Leaving aside the necessity of some people needing a people carrier to ferry around large families (a better alternate than using 2 cars), these examples hardly qualify as the "Chelsea tractors" the Mayor claims to be targetting.
I'm curious how people will learn into which category their car will fall, as it's clearly not obvious in many cases. When they do learn their family hatchback/estate is ensnared, I bet a few people will be emitting a lot of verbal pollution.
Radio 4's Today programme featured a report this morning about a study on repossessions. The study highlighted that 50% of 1,2000 repossession cases examined came from mortgage providers that held only 6% of the market, classifying them as "sub-prime" lenders.
Lehman subsidiaries accounted for 10% of repossessions in the sample from a book representing only 1% of mortgages by account volume. The biggest UK institution in the sample was Bradford & Bingley, but Northern Rock which had been thought to have a "clean" mortgage book was also found to have a large share of the sample.
Fantasy cricket becomes a reality Tuesday, February 12, 2008
Indian is the commercial powerhouse of modern day cricket accounting for 70% of global revenues.
The country is fanatical about the game and is set to vent its passion on a new "domestic" twenty 20 tournament format featuring many of the World's greatest current players, lasting 44 days.
Eight teams each have budget range of $3.3m-$5m to spend on a 16 man squad, featuring a max of 8 foreigners of which a max of 4 may be on the field together. To encourage youth development, four of the squad must be under 21 and all players have to be signed for 3 years.
Indian broadcast rights we're sold for $500m and overseas right are anticipated to fetch $250m. With an average fee per player of $250k for 6 weeks work, it has enticed many of the elite players.
The format is already an entertainment spectacle. Now teams construction will be too with some sensible constraints to level the playing field.
Many sports employ similar constraints (american football, speedway) to attempt to equalise teams. It's a shame football doesn't but then top clubs are focussed on the international rather than domestic competition.
Kicking off in April, it will be a fascinating tournament and another welcome boost to cricket's popularity amongst all ages.
Delicious is an online bookmarking site that I use, as do many others. Unfortunately I've got so many bookmarked sites I can rarely remember what I have stored. Whilst the site allows you to apply tags to pages, hence permitting you to classify them, I am inconsistent in how I classify and hence two similar sites can end up with very different tags. This makes finding stuff tricky, but this is compounded when I can't remember the name of the site and so have to trawl through the links.
I've often wished for a visual thumbnail wall of my delicious sites, simply because I find it visual prompts of what the site looked like a quicker way of locating what I am looking for. Sadly, I've yet to find such a service.
In the same way, hunting for photos or images of my own or online tends to be very hit and miss. Classifications of tags work to some extent, but the reality is that nothing beats viewing the images. So I'm always on the lookout for tools to enable rapid browsing of images. On my laptop/desktop I use Picassa, the Google application which is excellent.
Well, today I found PicLens. It's a free browser plug from Cooliris, which provides astonishingly good image browsing facilities on the web. Clever use of zooming, panning and 3D style presentation not only improves your ability to scan, but is also visually stunning. It works on many photo/images sites inc Flickr, Photobucket and Picassa Web albums, as well as Google Image search.
Check the intro demo here.
According to today's FT, Spanish Banks are having to turn to the European Central Bank for funding to compensate for the more challenging conditions in wholesale markets. Unlike UK counterparts [Northern Rock aside], they can lodge mortgage backed securities as collateral for their ECB borrowings which other lenders are shunning or imposing high "haircuts" [discount attributed to collateral provided to cover a loan, similar to mortgage sum compared to house value].
This is significant for two reasons. Firstly it places UK banks at a competitive disadvantage to their European rivals since they can use their collateral more effectively - might even given rise to an arbitrage opportunity for European banks of taking in mortgage backed at a high haircut and then lodging it at a lower rate with the ECB. Secondly, it distorts the price in the market by removing some supply that would otherwise have come to market.
Labels: credit crunch
Yesterday 8m of the 12m crackberry addicts worlwide found themselves cut-off from their communication lifeline as the USA Blackberry service went offline.
An essential part of the armoury for many workers, it is especially widely used in financial services companies - "no corporate blackberry, not significant!"
For RIM, it's obviously great to have become so essential so quickly but it does expose any failings in your service to critical view, as evidenced by its position as one of Canada's most valuable software companies. However, one wonders whether this second outage in a year will result in a backlash or even a search for alternate, "more reliable" equivalent services.
DAB is the radio of the future, except for GCAP Monday, February 11, 2008
Whilst not a substitute for those on the move, the increasing role of broadband for radio stations is evident in Gcap announcement that it is withdrawing from DAB radio, with the closure of its two national DAB stations and the sale of its interest in Digital One, the transmission “multiplex”, to its partner Arqiva for a "nominal" sum on which it was losing £3m pa. It is also abandoning its Xfm stations in Scotland, Manchester and South Wales.
According to the announcement by the Gcap CEO, Fru Hazlitt, the consumer uptake of digital radio had been slow and the costs of broadcasting on DAB had been too high. For context, this restructure comes against the backdrop of a hostile approach for Gcapmedia by Global Radio.
GCap claims it now has 1.7m broadband listeners as well an audience of 15m for its FM stations. Unlike DAB which requires access to physical infrastructure in the geographic locations one wishes to operate, "radio" via broadband can be transmitted globally for no incremental cost over providing it to one's traditional local audience via broadband. Oddly enough, I remember friends in the radio industry telling me how hard it had been convincing radio executives to make the investment in putting output over the internet - they simply didn't see there being any take-up in broadband, since anyone sitting at a PC all day was surely working, perhaps forgetting that radio in the workplace was not an uncommon phenomena.
However, if one judges the ipod/mp3/pc as a competitor for traditional radio in listening hours, then streamed radio over broadband supplemented by podcasts makes sense. Of course, broadband delivered radio also opens up listeners to a choice of global radio stations rather than the former geographically restricted choice - check out Winamp or Windows Media Player radio sections for evidence.
At first glance, this is a setback for DAB albeit Channel 4 still seems to have aspirations in that space. It will take away some content that might have enticed more people to switch to DAB. However, it may also compel Offcom, the regulator, to make the licence arrangement more enticing if there is to be choice in the sector and thereby bring in more new entrants with different formats.
Connected events or simply co-incidence? Following the public announcement of Project Rainbow, which is consortium effort to create a new competitor to the existing derivatives exchanges, the US Dept of Justice has expressed its concern about exchanges owning clearing infrastructure, with the resultant ability to block new entrants from accessing the latter.
Project Rainbow’s backers include Barclays, Deutsche Bank, Goldman Sachs, JPMorgan, MF Global, NewEdge and UBS and are proposing to trade popular contracts on their own exchange. However, a key barrier to the success of such a venture, as Eurex and Liffe both found in the US, is an inability to clear trades in the same clearing house as the incumbents.
Firms prefer to use a single clearer because positions and related collateral required to support "open interest" can be netted, thereby making trading more asset efficient. Where open interest is split across different clearer, margin has to be lodged in each location and no offset is possible.
Were Rainbow able to get access to the CME clearing house, it would dramatically increase the likelihood of them being able to shift liquidity from the incumbents because brokers will be able to open a contract on either exchange and close it on the other.
The DoJ has now asked the US Treasury to investigate the matter. The US regulator, CFTC, is supporting the status quo even though customers are demanding open access to the clearing infrastructure. This will be an interesting battle pitching domestic interest versus international players, with the added spice that the former head of Goldman Sachs, Hank Paulson, is the current US Treasury Secretary.
Disclosure - I was previously a board director at MF Global, one of the backers of Rainbow.
BBC iPlayer - Online streaming from the BBC Sunday, February 10, 2008
When the facts change, it's ok to change your opinion.
The BBC recently upped their advertised of their iPlayer on TV with the tagline "Making the unmissable, unmissable". I'd downloaded the player when it first was launched and neither the content available or the player itself was compelling to me. Yet when my wife asked me to check if a programme she'd missed was available, I was pleasantly surprised by what had happened to the service.
It's now possible to watch a streamed version of programmes within the browser as an alternate to downloading. Whilst a show can only be watched in the browser for up to 7 days after the programme aired, unlike the downloaded version which can be retained for 30 days, the immediacy of the streamed service is the killer. No more waiting around and then forgetting you've downloaded the programme, simply browse the catalogue and watch straight away.
I happened to stumble across this excellent programme on the Dead Sea Scrolls that I would have otherwise not spotted and only began watching because it was immediately available.
Worth tuning in again to the iPlayer service - a superior service has been resumed.
SocGen's Kerviel - "hang on, I'll just write an email" Friday, February 08, 2008
Highlights of recent snippets from the FT to emerge from the Soc Gen saga
- At the end of the year Kerviel had made €1.4bn ($2bn, £1bn) in hidden profits for his bank, a sum equivalent to more than half the revenues of SocGen’s entire equities division
- On Friday 18th Jan compliance officers raised the alarm over a €30bn trade on Dax futures because it was far too large for the supposed counterparty, a medium-sized German brokerage called Baader. Kerviel produced apologies for booking it to the wrong counterparty and provided a false email to attribute it to Deutsche Bank
- Kerviel was able to enter false hedging contracts to make it appear as if he was taking minimal risks. By logging into the system under different names, he then cancelled the fake contracts before they were settled, replacing them with new ones. “He was always rolling one transaction into another. If he was ever caught, he just said it was a mistake and would start putting the trade somewhere else,”
- He created false e-mails by reproducing the format and header of e-mails he had received from clients, to rebuff any questions from the bank’s internal controls team
- SocGen’s human resources department alerted Mr Kerviel’s boss that he had not been on holiday for eight months except for four days in August, he was asked to take some leave. But Mr Kerviel told them December was the anniversary of his father’s death and he did not want to be alone, persuading his boss that he could wait until January. “With hindsight, this was a mistake,” admits Mr Martineau. Most investment banks require traders to take at least two consecutive weeks’ holiday a year, which limits the scope for concealing their positions.
- SocGen decided to close the €50bn position built up by Mr Kerviel as quickly as possible. It took one of the bank’s top traders three days to do so. Erick Tripoli, proprietary trading manager at Van der Moolen, the Dutch market maker said “It was horrible. Someone was selling a massive position by volume, not by price. When we heard it was SocGen, we just laughed, as no trader would do such a bad job.”
New definition of "posh" Thursday, February 07, 2008
Whilst I was sitting in a restaurant today, a lady at an adjacent table told her lunch companion that her home area was becoming quite "posh", which she justified because a lot of footballers were moving in!
According to a study by a former Fidelity fund manager now at Uni of Boston, the opportunity cost for US pension funds of switching fund managers could be as high as $20bn pa.
Fired managers tend to outperform hired managers by 30bp after one year and 100bp after five years.
These foregone returns are not recouped. Moreover, this apparently excludes transition costs.
Perhaps this is unsurprising. Losing a mandate normally prompts internal actions to resolve the problems and improve performance. Moreover, as everyone allegedly know past performance is no guide to future success in investment performance.
Jeff Randall, former BBC Economics Editor, and now a columnist in the Daily Telegraph, is usually enjoyable to watch and read. He had a direct and blunt style that he uses to great effect in exposing key issues. This often discomforts politicians who find themselves "naked" despite their attempts to conceal problems by suggesting the problems were too complex to be held accountable for.
Sadly, he played to the gallery last night in true ITV style last night in a documentary on the debt mountain in Britain. A series of cases were reported in which individuals/families had run up huge debts that they now found themselves unable to pay. In one case, a family had their home repossessed. In other, an ageing wannabe model was spending £1,700 more than her monthly income inc £150 per week on hairdressing and considerable sums on clothes shopping, all charged to her credit cards. She had amassed a current unsecured debt of £41k, which came as a shock to her when it was pointed out on the programme.
The culprit for the cases - the banks. It was apparently their fault that these people had overstretched themselves by making credit available to them. These unfortunate people were victims of bank negligence, or so it was alleged. Indeed, one man featured acknowleged living his life to the full and spending on nights-out and clothes but said it was the bank's fault for lending him the money i.e. they shouldn't have put temptation in his way.
Personal responsibility seems to be something easily dispensed with today, with blame-shifting an acceptable practice. No matter that these individuals chose to spend without regard for their income or ability to repay.
To be fair to Jeff Randall, for many years he has criticised lax credit conditions because of the problems that were being stored up for the future. However, it shouldn't be forgotten that most people were keen that the economy and prosperity at least gave the appearance of improving. Had the banks tightened credit they would have been castigated for holding back the economy.
The dramatised analogy of the hangover from the great party being caused by the bartender was sadly omitted from the programme.
Konnects - a poor LinkedIn clone Wednesday, February 06, 2008
I received an invite this morning to a LinkedIn clone this morning, the main difference being this one is evidently a recent networking site that has yet to build up a sizeable user population.
As ever, there were many options for me to harvest my contacts from a variety of sources like webmail accounts, Outlook and Social Networks, before sending out invites to them to join me on Konnects. Unlike the more established LinkedIn, there were hardly any existing Konnects users amongst my 3,000+ contacts. Of course, I could have sent invites to them but this site had nothing to offer over LinkedIn.
Sure, you could create a blog, but why do that on this site when there are many dedicated sites that exist for that very purpose. Sadly, there was no option to embed an existing blog that I could find.
More irritating was that to be able to view the profile of the person who invited me, I was required to fully set up my profile on the site inc professional details etc. - sorry, couldn't be bothered. I can understand that the site will improve with more complete profiles on there and hence they have to encourage people to fill out their info, but at this point, the site hasn't even engaged with me to demonstrate it can offer me value. I found this a frustrating user experience and too high a barrier when first browsing the site.
But just to demonstrate the insecurity of the site, I couldn't find any way to close my account. Looking in the Help Section showed why
In other words, "we are going to make it hard for you to leave, not to mention create work for ourselves in the process!" Dumb.
Konnects lacks any delight factor, and certainly offers no edge over LinkedIn. From what I've seen so far I would recommend to steer clear.
UPDATE : The contact form to close an account doesn't work!
Its raining cash Tuesday, February 05, 2008
Great quote in the FT from Mickey Gooch, chairman and chief executive of GFI, on the record breaking volumes in the market which is generating bigger commissions for brokers
“We are in the business of selling umbrellas and it’s raining with no sign of a let up.”
Whenever I am asked for availability for proposed meetings, I continue to make use of the excellent web application TimetoMeet that allows me to graphically detail times I can offer on a web calendar from which they can select or add their own suggestions if none suit. It's especially invaluable when the number of attendees is 3+.
Whilst there are many similar services now available e.g. timebridge, I've found irritations or restrictions with them that drag me back to TimetoMeet. The free service is great but the premium version has some important features worth paying for including synchronising your own ical feeds with the service. Hence I can see my existing calendar entries from within TimetoMeet when I am offering times.
Only one thing would make it better, which is something Timebridge do, namely whenever a meeting time is fixed via the service, it automatically removes this time slots from on other pending meeting invitations. i.e. you may offer several independent groups the same set of times to choose from and when a time is fixed with one group, it can no longer be available to the others.
If you have to arrange meetings with anyone, give it a try next time and see how beneficial it is in time saved.
Spot the ball competition result announced Sunday, February 03, 2008
From the Fail Blog
January broke many Exchange and Clearing firm volume records thanks to the huge volatility in the markets, especially in the latter part of the month when a roller coaster ride kicked in on many indices. The most notable thing about trading though is that index derivatives and program trades now represent such a large portion of activity. Part of this represents traders taking directional bets on the market rather than specific stocks.
Mondovisione illustrated how significant program trading was when reported that
NYSE indicated that during Jan. 22-25, program trading amounted to 25.2 percent of NYSE average daily volume of 6,135.3 million shares1, or 1,548.1 million program shares traded per day.
Program trading encompasses a wide range of portfolio-trading strategies involving the purchase or sale of a basket of at least 15 stocks with a total value of $1 million or more.
In all markets, program trading by member firms averaged 3,837.5 million shares a day during Jan. 22-25. About 40.3 percent of program trading took place on the NYSE, 0.7 percent in non-U.S. markets and 58.9 percent in other domestic markets, including Nasdaq, the American Stock Exchange and regional markets.
The crazy thing about equity program trading is the process used by many fund managers to trade. It often amounts to creating a spreadsheet detailing the characteristics of the program e.g. number of stocks, sector weights, countries which is then emailed to one or more counterparties. Questions on the trade and related responses are similarly emailed before quotes are received and a decision made. Underlying stock details are then emailed across to the winning bidder and each side uploads it into their respective systems to record and process downstream.
Bidroute is a venture set up some months ago by some highly respected folks in London, whom I know well. It set out to remedy the current deficiencies by providing a platform that would be "ebay for program trades". Delivered inside a browser environment, a fund manager simply has to load details of the program and invite offers from counterparties they nominate. All questions and bids are hosted centrally, thereby providing a single focal point for the process [efficiency] and transparency to participants. Moreover, it definitely demonstrates the hunt for best execution.
However, as with any new venture that challenges current practices, it faces enormous obstacles. Upcoming brokers are keen to participate but the top brokers don't like the idea of transferring opaque business into a transparent environment where they might suffer margin erosion from a competitive auction. Hence they are not "encouraging" clients to participate. Similarly, inertia on the part of fund managers combined with dumbness, means that some firms fail to spot the opportunity to consolidate all those emails in one central place and perceive it as adding to their workload by introducing yet another "destination" that a spreadsheet has to be loaded to.
Most staggering has been the admission by some fund managers that they only send their program trades to one of the big brokers to be priced believing they get a fair price. How this qualifies as satisfying best execution criteria, heaven alone knows.
You would think that this is a no-brainer for fund managers, assuming the commercials were ok. Seems common sense is not so common.
Kasian over at Seeqpod has a mantra of "playable search is the future". Well, Gimado evidently agrees with him.
The site invites you to search for an artist and presents you with a list of tracks found that you can either listen to on the site or download. The site doesn't host or distribute tracks, it is a search engine, but it's not hard to see why the record labels whince when piracy is made this easy by a site. Moreover, I suspect that the sites that are hosting the content are unwittingly assisting the piracy rather than deliberately participating.
Whilst it is not as slick as Seeqpod [no saved playlists, video or discover features] it is astonishingly fast and has no user sign-up requirement. Use with care.
Amazing skills. Thanks to Fred Destin for the spot.
I wrote about Notch-Up just over a week ago and commented that
It has been well positioned, since there's no downside to the individual in participating. However, I'm sure the person that sent me the invite may have been motivated by a 10% finders fee on any interviews resulting from people they introduce. Moreover, I suspect this may kick off a wave of spam unless there are some inbuilt restricters in the service to avoid duplicate invites being sent.
Oh well, it seems I was spot on with the forecast. However, the real accelerator to the explosion in user numbers was when Notchup added the ability for members to send invites to their LinkedIn network as described here in BusinessWeek.
Member growth timeline
- 200 initial members and stalled
- Add LinkedIn contact import
- 5,000 invites with 24 hours
- 70,000 invites issued within four days
- 900,000 invites issued within another week
In a real life example, Andrea may invite Jenny to an event and she declines but when her friend Cathy invites her, she agrees. When handled by an intermediary, how is it to know who Jenny is receptive to, if indeed she is receptive to anyone? Is there a right answer on how to handle this?
Separately, I find LinkedIn's decision to block NotchUp from import contacts smacks of hypocracy, no matter what their T&Cs say. As a LinkedIn user, I am regularly presented with pages of theirs inviting me to import my contacts from Outlook, Gmail, Yahoo and AOL services. LinkedIn has specifically grown on the back of this harvesting facility, yet seeks to deny others the same ability.
LinkedIn point out that users have the ability to download their contacts in a csv file and then do as they will with them. So, they have no objection to the principle of those contacts being my data but wish to make my life as a user more inconvenient by forcing me to go through several steps. Had others not been more generous in allowing the direct "harvesting" of data by LinkedIn, I wouldn't have bothered importing contacts to their service.
Obviously LinkedIn isn't alone in this hypocracy - Facebook is equally bad in making it easy to import contact info but almost impossible to export. It's a shame that equal access isn't mandatory.
Finetune is broken Saturday, February 02, 2008
I often make use of Finetune's station to provide background music in the evening - it provides an excellent and large choice of genres as part of its' free music streaming service.
Sadly, in the last 24 hours something has gone awry - the Adobe Flash player it uses no longer loads up any content. The player controls are visible but no music regardless of which area of the site I use. I've not applied any PC upgrades but am encountering the same issue in both IE7 and Firefox 2. Doing a quick google blog search for similar reported probs has only thrown up one other post but no answers or suggestions. Anybody any ideas?
UPDATE : 24 hours later it is working again. The PC had been turned off in standby mode since I last tried so I know nothing was updated/changed on the PC in between checking Finetune. Who knows what caused or resolved it but I'm glad it's back.
According to a Daily Telegraph report today, Scientists believe they have tracked down the cause of the eye colour of all blue-eyed humans on the planet today.
“They have all inherited the same switch at exactly the same spot in their DNA. From this we can conclude that all blue-eyed individuals are linked to the same ancestor,” said Prof Eiberg, who reports the work in the journal Human Genetics.
Yahoo - Microsoft's made a bid Friday, February 01, 2008
Microsoft has just announced it had offered to buy Yahoo in a deal that values Yahoo at $44.6bn. This is a cheap price relative to where Yahoo used to trade but given the recent misfortunes of Yahoo and their gloomy forecast, it could look very tempting to shareholders.
Heck, this will rattle the blogosphere wires.
BA is going to launch a service between City Airport and New York in 2009 and will offer a 15-minute check-in before flights in both London and New York.
The double daily service will use Airbus A318 jets, the smallest aircraft made by Airbus, which were certified last year to use the restricted short runway at City airport. BA said it had ordered two A318s, which would be equipped with only 32 business class seats, that convert into fully flat beds.The convenience of City airport for the City and Docklands will undoubtedly provide a competitive threat to the all-business class services launched in the last couple of years by the start-up carriers Eos and Silverjet, albeit one suspects they will remain the cheaper option.
One wonders if paranoid bankers will dare travel on the service given that they are guaranteed to be surrounded by preying eyes/ears from competitors. Conversely, grabbing one of only 32 available seats will undoubtedly carrying some bragging rights over colleagues "forced" to travel to/from Heathrow.
I reckon that BA will find itself with full flights each day, but they'll have to take care not to overbook given that there are no alternates in easy reach and these passengers are not going to respond well to being bumped. Likewise, any flight delays are going to leave passengers at City stranded.
Despite the sophistication of spam filters, they are barely holding back the flood of emails which offer a range of services or which aim to entice people to fall victim to some scam. Estimates of the proportion of email deemed to be spam range from 25%-50+% of all email sent.
Spam filters scan for words and phrases as well as referencing "dynamically" maintained blacklists of addresses, with some claiming to use "holistic" techniques that can see through to the underlying intent of the message.
Unfortunately, what can you do if your email address is deemed to be a spam originator, perhaps as consequence of its' misuse by spammers who hijack addresses for the purposes of mascarading as non-spam addresses i.e. identity fraud of sorts? This assumes you even realise that your address is now treated as a spam account.
To my knowledge there is no central authority to whom one can appeal and restore one's reputation amongst spam filters. So what can you do, without going through the major upheaval of changing email address?
Well, a bit of digging highlighted that it's not actually an email address per se that is blacklisted but the IP address from whence emails originate. This is because email address can be easily spoofed, whereas an IP address can't. For many people, the relevant IP address will be that of their ISP since many users get allocated an IP address each time they connect to the ISP rather than having a static IP address. Hence, problems with your emails are more likely to be an issue at your ISP. So in the first instance, this is who to turn to.
There are numerous registrars of spam blacklists and you should check if you appear on them. I've listed a couple below
These provide facilities to check if your IP address is classified as a source of spam and if so there are facilities to delist your IP address. If your IP address relists, it can be because your machine has been infected by a virus that is surreptitiously sending out spam or because there is a similar problem at your ISP.
Yesterday Google reported an unexpectedly sharp slowdown in the number of “clicks” people make on its online adverts on social networks, leaving Google out of pocket thanks to the guaranteed minimum payments it makes to a number of social networks that carry its advertising, principally MySpace.
This was despite a number of initiative pursued by Google to reverse the decline, all of which had failed according to Sergey Brin, but they remained hopeful they could turn things around.
This pushed shares down by 9%, which have fallen by 25% since January 1, contributing to the nervousness on the markets about its core revenue engine - advertising services.
To date the only people making money from social networking are the owners of the platform - not quite the commercial eco-system hoped for by many. Seems that people just use them for socialising.