Just recently I heard Andy Fastow speak at a local meeting of financial consultants. What I heard surprised me a bit. But I’m probably getting ahead of myself. Just as a reminder. He was the CFO of Enron, based in Houston and one of the largest capitalized companies at that time; and for his deeds received a nine year prison sentence. First he apologized to his audience and asked for forgiveness if he had financially damaged or otherwise harmed anyone. Second, he discussed the distinction between ethics and the law. He stated that the accounting practices he undertook and those under him while at Enron were deemed legal as well as ethical. In fact the accountants and lawyers at that time signed off. So I’ll leave it to you to find out why he went afoul of the law.
A trip to Havana seems as if life is not really what it seems to be. Maybe Cuba is the incarnation of living in Alice in Wonderland’s world. The city and the country appear to be in a time warp almost like the 1950s in the US. Although almost all Cubans exhibit genuine warmth, charm and civility, which parts of our own country once possessed and seem to have lost in our current period of social and political upheaval. For a moment it is almost possible while visiting the island 50 miles off the coast of Florida to relive the glowing period of American history when adult couples played bridge, men played golf at the club and drank highballs, usually prepared by the “little woman” before dinner. But the polite and truly caring society of Cuba has a more dismal physical and economic backdrop. Behind it all is an impoverished country rich in natural resources. Cuba, in many ways, has a third world or underdeveloped, crumbling infrastructure where wealth is essentially concentrated in the hands of the governmental elite and the military. But the two groups are synonymous since the military controls upwards of sixty percent of the Cuban... READ MORE
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The Financial Times recently used Prattle’s analytics to visualize the tone of Fed communications dating back to the late 1990s. Prattle quantifies the market impact of language. Their text analysis technology is primarily used to understand the impact of corporate and central bank communications. Prattle automates investment research by quantifying language, producing analytics that predict the market impact of central bank and corporate communications.
Just two weeks after Janet Yellen gave the Federal Reserve’s strongest signal yet that it is going to lift rates again, sentiment analysis of Fed communications over the past month indicates that the central bank is fast becoming more hawkish.
“The speed with which the aggregate trend rose in the last few weeks is remarkable,” says Evan Schnidman, co-founder and chief executive of Prattle, a data analytics company that turns central bank speeches into signals that can be traded.
“Four weeks ago, there was no rational way I would have been able to say it was likely the Fed was going to raise rates,” says Mr Schnidman. “Now they’re back to being almost as hawkish as they were leading into their last rate hike.”
The growth in the frequency of policymakers’ statements, press releases and testimonies since 1998, when the Fed began communicating about rate moves publicly under pressure from Congress, has allowed Prattle to score communications by sentiment — from dovish to hawkish — and mine that data for indications of potential rate moves.
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