Liquidity plays a big part in how you design, trade and ultimately monetize strategies. A few months ago, we had discussed the illiquidity in MIDCPNIFTY futures (Midcap Select Index Futures, Part II). This week, we have a post up on Zerodha Varsity on the options side of things: Perils of using the Last Traded Price (LTP).
Without liquidity, everything else is theoretical.
Markets this Week
More here: country ETFs, fixed income, currencies and commodities.
Links
Research
How to Use Martingale Betting Systems to Fool People (SSRN)
A significant contribution of this paper is the demonstration, through statistical analysis and historical simulations, of how a trading system can seemingly generate a 20% annual return with nearly 80% probability, despite its reliance on randomly generated trading signals.
Unveiling the Role of Short-Selling Frictions in Cross-Sectional Momentum (SSRN)
A strategy involving long positions in winners with low short interest and short positions in losers with high short interest yields significant momentum returns.
Does U.S. immigration policy facilitate financial misconduct? (SSRN)
We argue that employers have leverage over employees on an H-1B visa because such visa holders must maintain H-1B-eligible employment in order to legally reside in the U.S. We posit that companies relying on H-1B visas to hire workers in accounting roles have an increased ability to misreport their financial statements due to the greater costs H-1B employees face if they are unexpectedly fired for not following the demands of their bosses or for blowing the whistle on misconduct.
Investing & Economy
Selling itself as the new American dream, crypto exposes the vulnerable to fraud and scams, and loads risk onto the poor (aeon)
Lithium-ion batteries that power most EVs are their single most-expensive component, typically representing some 40% of the price of the vehicle when new. The race is on to replace them with cheaper alternatives. (economist)
India
The SC slaps contempt notice on Patanjali Ayurved for misleading ads (livemint, livemint). There should be an advertising code for all ayurvedic & homeopathic products. None of them should be marketed as “medicine” and shouldn’t be allowed to claim a “cure” for anything.
The SC criticized the Central Government's failure to specify the range of rates within which private hospitals and clinical establishments can charge for their treatment services. Rule 9 of the Clinical Establishment (Central Government) Rules, 2012 mandates that hospitals and clinical establishments display rates for services provided and charge fees within the range determined by the Centre in consultation with state governments. (livelaw)
Extreme Poverty: A historic fast-paced decline from 12.2% poor in 2011-12 to only 2% now. (livemint)
India's Oct-Dec quarter GDP grew 8.4% (reuters), boosted by fall in subsidies (reuters)
With handouts, piped water and cooking gas, India's Modi woos women voters (reuters)
India regulator moves to curb inflows into small- and mid-cap funds (reuters)
There exists an economic case for a regime of MSPs backed by law (livemint)
Out of a 1.4 billion population, only about 0.3% contribute to 80% of the income tax collected. (Indus Valley Annual Report 2024)
RoW
The wealthy have different houses, different cars, different lifestyles from the rest of us. These days, they also want to breathe different air. (newrepublic)
Bad commercial real estate loans have overtaken loss reserves at the biggest US banks after a sharp increase in late payments linked to offices, shopping centres and other properties. (ft)
Is the Media Prepared for an Extinction-Level Event? (newyorker)
If Americans’ appetite for trucks and S.U.V.s falters, then Ford and GM will be in real trouble. In the coming years, these companies must cross a bridge from one business model to another: They must use their robust truck and S.U.V. earnings to subsidize their growing electric vehicle business and learn how to make E.V.s profitably. If they can make it across this bridge quickly, they will survive. But if their S.U.V. profits crumble before their E.V. business is ready, they will fall into the chasm and perish. That’s why the flood of cheap Chinese electric vehicles poses such a big problem: It could wash away Ford and GM’s bridge before they have finished building it. (nytimes)
China’s small businesses say shrinking market demand is their biggest pain point, while payment delays are also compounding the challenges facing their daily operations (scmp)
Leaked files from Chinese firm show vast international hacking effort (washingtonpost)
Swedish bankruptcies rose in February to the highest level for that month in three decades, as housing construction has screeched to a halt and restaurants are facing lower demand amid rising prices and borrowing costs. (bloomberg)
Why South Korean women aren't having babies (bbc)
A.I.
Romantic chatbots collect huge amounts of data, provide vague information about how they use it, use weak password protections, and aren’t transparent (wired)
Klarna AI assistant handles two-thirds of customer service chats in its first month (klarna)