The New Prohibition

House Approves a Crackdown on Gambling

http://www.nytimes.com/2006/07/12/washington/12gamble.html?hp&ex=1152676800&en=81196cb4efd083b7&ei=5094&partner=homepage

Did you really think we want those laws observed?" said Dr. Ferris. "We want them to be broken. You'd better get it straight that it's not a bunch of boy scouts you're up against... We're after power and we mean it... There's no way to rule innocent men. The only power any government has is the power to crack down on criminals. Well, when there aren't enough criminals one makes them. One declares so many things to be a crime that it becomes impossible for men to live without breaking laws. Who wants a nation of law-abiding citizens? What's there in that for anyone? But just pass the kind of laws that can neither be observed nor enforced or objectively interpreted – and you create a nation of law-breakers – and then you cash in on guilt. Now that's the system, Mr. Reardon, that's the game, and once you understand it, you'll be
much easier to deal with.-Atlas Shrugged

HedgeStreet cuts volume 90% - The press release pros drop the ball

http://home.businesswire.com/portal/site/google/index.jsp?ndmViewId=news_view&newsId=20060711005532&newsLang=en

The headline actually says they now have $100 contracts, up from $10 previously. This is a strange shift for a company that already has issues with liquidity across most of their contracts. Bigger contract sizes are discouraging for most small investors, and HedgeStreet doesn’t currently have enough contracts trading to go after the bigger guys who would want to trade larger sizes.

"We've…designed contracts specifically intended to provide members…new profit opportunities and greater flexibility," said Bill McIntosh, VP Marketing for HedgeStreet. "The $100 payout and the narrower range lead to increased leverage -- for example, in crude oil, a $1 increase in the underlying asset equates to a $10 payout."

Mr. McIntosh seems to think that larger contract sizes offer greater flexibility for traders– they don’t. And also that trading larger sizes is the same as an increase in leverage, which is isn’t. Just like if I’m holding 100 shares and they go up $1, I’ll make a $100. But if I’m holding 1,000 shares I’ll make $1,000. That’s just more shares not more leverage.

The release also mentions a simplified fee structure, which is the only good news here but is buried at the bottom.

NFP Forecast Divergence

Previously the CME NFP auction came out to be nearly even with the Economics estimates for the number. This is what was expected with the useful information being the potential distribution of the number. This month the numbers are not even close.

May
Economists' Consensus – 200,000
CME Auction – 200,500
Actual – 126,000

June
Economists' Consensus – 170,000
CME Auction – 171,000
Actual – 75,000

Very close both times, although neither hit the real number.

July
Economists' Consensus – 175,000
CME Auction – 205,000
Actual - ???

With the numbers differing significantly we'll know 8:30 am tomorrow which was more accurate.