Thing One: The Never-Ending Knightmare: Knight Capital, the firm that lost $440 million from mistaken trades earlier this week, is learning the value of smoothing out the kinks. After rushing to create a robot platform capable of taking advantage of a new venue for trading stocks, the company let its new system loose Wednesday, before working out all the bugs, The New York Times reports.
The result? A disaster that pushed Knight to the brink and renewed calls for closer regulation over super-speedy computer-based too-little-too-late trading platforms. The company’s stock slid more than 60 percent after the debacle Wednesday, and it may be looking to be saved by a rival firm or JPMorgan Chase, The Wall Street Journal reports.
In an ironic twist, all of this comes after Knight’s CEO, Thomas Joyce, gave Nasdaq quite the tongue lashing after trading glitches led to delays and hundreds of millions of dollars in losses during Facebook’s highly-anticipated IPO. But the fact that his company is now responsible for a similar problem may be the least of Joyce's worries; the CEO's net worth shrunk by $9.5 million over the last week, according to Bloomberg.
Thing Two: Jobs Day Jitters: It’s time for that highly-anticipated event that occurs every month: Jobs day! Today the Labor Department will tell us how many jobs the economy added last month and what share of Americans looked for work but couldnt find it. Pundits will proceed to talk about what it means for Romney’s campaign or Obama’s chances of staying in the White House, or Michael Phelps’ medal count, etc.
If economists’ predictions are correct -- note: they are not always correct -- it appears that things will be better than last month, but not all that great. A survey of economists by Bloomberg estimates that employers added 110,000 jobs in July and the unemployment rate held at 8.2 percent.
No matter the number, you, dear reader, should be wary. Thanks to seasonal adjustments -- or the way the Labor Department accounts for regular fluctuations like teachers that are off for the summer -- it will be hard to get a sense of any long-term trends from today's report, The New York Times notes.
Thing Three: Mario Do-Nothing: Mario Draghi, the president of the European Central Bank, said that the bank would only take action to try and stop the financial crisis engulfing the region once European countries themselves began to use their bailout funds to stabilize the markets, according to the Wall Street Journal.
Investors were none too pleased. That could be because, as famed bond investor Bill Gross noted, Draghi’s downer press conference was sort of a “kick the can” moment, which is exaclty what European policymakers have been doing for 2.5 years, according to Bloomberg. All this just one week after Draghi promised he would “do whatever it takes” to save the Eurozone. Of course, that’s before he felt the pressure from Germany, the pupetteer that really pulls all the strings for the Eurozone economy.
And it seems that (not-so) great central banks think alike. Draghi's move comes after the Federal Reserve said on Wednesay that it would maybe consider doing something in the future to boost the economy, but couldn’t be bothered right now even though unemployment is stuck above 8 percent.
Thing Four: Libor Hits Other Banks: Bob Diamond can rest a little bit easier. Other banks are getting swept up in the Libor scandal now. The Royal Bank of Scotland confirmed that it got rid of some of its employees over misconduct that they discovered thanks to an investigation into Libor manipulation, according to Reuters. Bank of America also disclosed that its facing investigations into its role in the Libor scandal, according to Dow Jones.
Meanwhile, no one, at least on television, seems to care. Major nightly news programs on ABC, NBC and CBS have given almost zero air time to the scandal.
Thing Five: BofA, Fannie Mae Are Speaking To Each Other: Bank of America and Fannie Mae are getting closer to a deal to resolve a fight over some mortgages that have gone bad. BofA and Countrywide Financial -- which BofA now owns -- sold billions of dollars worth of mortgages to Fannie Mae from 2004 to 2008 during the housing boom. Now that those loans have gone sour, Fannie Mae would like the bank to buy them back, according to Reuters.
The two sides may be far from reaching a deal, and, if they don’t, the dispute could be decided in court, according to the Financial Times. Still, the fact that they’re even talking may be a sign of maturity considering that BofA initially responded to Fannie’s claims by refusing to sell the mortgage giant new loans.
Thing Six: The London Whale Wasn't A Free Willy: JPMorgan Chase’s London Whale may have had some help taking his risky positions. Bruno Iskil’s boss, Javier Martin-Artajo, pushed him to put a higher price on some positions than they would have gotten in the open market, the WSJ reports. The revelation comes from a series of emails and voice communications reviewed as part of the bank’s internal investigation into Iskil’s $2 billion trading loss in May.
Thing Seven: Guess Who's Back: You’re welcome, AIG. The mostly government-owned insurance giant posted a boost in profit thanks in large part to tax benefits the company was able to take advantage of as it returned to profitability, according to Reuters. The company, which was bailed out by taxpayers in 2008, is expected to use some of its more money to buy back part of the Treasury Department’s stake.
Thing Seven And One Half: Women And Children Whenever: Men will probably save themselves first in a shipwreck, according to a new study. Yes, despite what Kate Winslet will have you believe, that age-old adage “women and children” first is probably just a Titanic-sized lie. Turns out, male passengers as well as the captain and crew are the most likely demographics to survive a shipwreck.
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Calendar Du Jour:
Economic Data:
8:30 a.m. ET: Nonfarm Payrolls for July
8:30 a.m. ET: Unemployment Rate for July
10:00 a.m. ET: ISM Services for July
Corporate Earnings:
NYSE Euronext
Proctor and Gamble
The Washington Post Company
Viacom
Heard On The Tweets:
@LaMonicaBuzz: Was just about to note irony of $FB's new 2012 low being $20.12. But stock has since fallen to new new low of $20. Teenage wasteland soon?
@yoyoha: Look forward to Chick-fil-A introducing their Only Some People Are Allowed to Be Happy Meal
@EddyElfenbein: What's the big deal? Knight Capital only lost $10 million. Oh wait. Make that $10 million a minute. Yeah, that's sucks. http://dealbook.nytimes.com/2012/08/02/knight-capital-says-trading-mishap-cost-it-440-million/?hp
@neilbarofsky: Outside of badminton, we can't afford to continue to rely on utopian view of human nature. People suck.
@eisingerj: As if to prove my point about the lack of social cost to financial malfeasance, the NYT publishes Steven Rattner on finl reform.
-- Calendar and tweets rounded up by Khadeeja Safdar.
And you can follow us on Twitter, too: @markgongloff and @byKhadeeja