Smart Guys, Derivatives, and Markets: Alpha Geeks, Neel Gets A Job, CDS Clearing House, Prime Mortgage CDS, Diane Swonk, Richard Russell

Geeks trump alpha males as algos dominate Wall St – By Phil Wahba and Emily Chasan – … The days of swashbuckling backslappers on the floor of the New York Stock Exchange have given way to an era of trading dominated by analytical technical whizzes … While street smarts and an ability to socialize were crucial to successful floor traders, today’s trader needs math and computer science, and quite possibly a PhD … – Reuters

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Pimco hires former TARP chief Kashkari – Neel Kashkari, the first head of the government’s $700 billion financial rescue program, will join Pacific Investment Management Co. as a managing director and head of new investment initiatives, the company said Monday. … The hire will help cement Pimco’s status as one of the firms closest to the Treasury Department and Secretary Timothy F. Geithner. … – AP Washington Post

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Where else could Kashkari have gone? – Felix Salmon – … There’s no shortage of jobs for the likes of Neel Kashkari, and yet he picked the one which conflicted most egregiously with his attempt to serve his country. His decision to join Pimco right now means that no one will ever look at his decision to join Treasury quite the same way again. … – Reuters Blogs

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WARNING: A Centralized Derivatives Clearing House Will Create Invisible and Deadly Global Risk – John Carney – … Rather than actually reducing risk, the risk would simply be shifted to the clearing house. Worse, instead of having a diversity of market participants individually responsible for monitoring their own counter-party exposure, we would be stuck with a centralized, monopolistic monitoring that would likely increase risk. The clearing house would almost certainly be viewed as too big to fail by market participants … – Business Insider Clusterstock
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Dealers to Create Prime Mortgage Credit-Default Swaps – By Jody Shenn and Sarah Mulholland – Wall Street banks have agreed to create credit-default swap indexes tied to U.S. prime-mortgage securities, in a move that may risk driving down prices for the bonds after a record rally. The benchmark contracts, similar to ABX index swaps linked to subprime loans, may begin trading as soon as the first quarter of 2010, Michael Gormley, a Markit Group Ltd. spokesman, said today in an e-mailed statement. – Bloomberg

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Markit plans CDS index for US prime mortgages – … The index, tentatively called ABX.PRIME, will launch in the first quarter of 2010, said Markit, which also administers benchmark credit default swap indexes on corporate and emerging market debt and on subprime mortgages. The company also plans to launch a new total return index, likely to be called IOX, which is based on pools of mortgages that are guaranteed by Fannie Mae (FNM.N). … – Reuters
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