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• Round-the-clock stock trading, once considered a natural and inevitable next step in an increasingly technology-driven, global market, is now widely seen by U.S. traders and exchanges as undesirable and unnecessary.  The reasons range from the practical — pallid investor demand that’s kept liquidity low — to the parochial. Stocks remain a local market for investors.
• “The difference between stocks and commodities is that there are people all over the world wanting to buy wheat. [But] not everyone around the world wants to buy Chuck E. Cheese stock. At some level, it’s that simple,” said Ian Domowitz, managing director at Investment Technology Group, an independent agency research broker. 
• And even for well-known issues, like Apple Inc.’s  stock, regulatory barriers make it tough for non-U.S. investors to buy stocks while America is asleep.  “Actually, turning on the trading engine is very easy to do, but then there is a lot of back-office arrangements that have to be made,” said Peter Clifford, deputy secretary general at the World Federation of Exchanges in Paris.
• The idea of a 24-hour market started as an exciting realm of possibility in the 1990s, when stock exchanges enabled trading outside of the 9:30 a.m.-4:00 p.m. Eastern session, as part of efforts to fend off competition from other trading venues, such as electronic communication networks. But it never took off, even as multiple boom-and-bust cycles came and went in the following years.
• Few dispute the advantages of continuous trading, like the ability to act immediately on news — such as Microsoft Corp.’s earnings, or China’s inflation data. For non-professional investors, the convenience of selling stock at 11 p.m., after finishing daily chores or putting the kids to bed, could be useful. The required physical infrastructure is also in place, thanks to the ability of electronic networks to connect buyers with sellers.
• But if investors still can’t trade stocks as easily as they can bank at an ATM, it is largely because trading volumes remain thin outside regular hours, amplifying risks: Thinly traded markets are more volatile, and transactions there are costlier.  “It all revolves around liquidity — that’s the golden goose which provides efficient markets for investors,” said Bryan Harkins, chief operating officer at Direct Edge.  “Ultimately, exchanges are typically doing what brokers want … There is just not enough liquidity in the middle of the night and investors are not really demanding that. One way to look at it is, ‘Convenience is great, but I’d rather have a better price,’” he said.
• Trading in foreign exchange and Treasurys takes place 24-hours a day for the most part of a week. Commodity and stock index futures also can be traded virtually around the clock every trading day. But trading hours in the world of individual stocks are much shorter.
• Outside of the regular hours, NYSE Arca, the full-electronic exchange owned by NYSE Euronext, is currently open for business from 4 a.m. to 9:30 a.m., and then from 4 p.m. to 8 p.m., Eastern. Meanwhile, Nasdaq Stock Market, owned by Nasdaq OMX Group Inc., is open from 7 a.m. to 9:30 a.m. in pre-open and between 4 p.m. and 8 p.m. in the after-hours. Direct Edge currently opens at 8 a.m. in the pre-market and operates until 8 p.m. in the after-hours. Other exchanges and venues, such as Electronic Communication Networks, also offer trading beyond the regular hours for similar durations.
• Still, stock trading in the U.S. continues to be concentrated during the regular session. Direct Edge’s Harkins said more than 95% of its volumes are transacted between 9:30 a.m. and 4 p.m. although the exchange is open on either side of that window. And while other trading venues have attempted to widen the trading hours, he added, “I would say their success is modest at best.”
• Earlier this year, a Nasdaq spokesman told MarketWatch that about 2% of the volume on Nasdaq and NYSE was generated during off-hours.
• The risks linked with low volumes have prompted U.S. regulators to place some restrictions during extended-hours trading. One example is that investors in the after-hours marketplace must submit limit orders — which can only execute at the investor stipulated order price, or better — and can’t present market orders, which execute at whatever the best price is at the time.
• It’s not just the lack of demand that makes after-hours trading thin. The supply is also affected as several market-makers — firms that buy and sell stock for their own account or on behalf of clients — aren’t active during the extended hours.
• Liquidity during off-hours could improve, at least in theory, if investors outside the U.S. were able to trade stocks here during their day. But that has its own difficulties.  For cross-border stock trading to become possible, issues outside a stock exchange’s control — such as where the shares will be delivered, or who the custodian will be — first need to be addressed, said Clifford, the World Federation of Exchanges official.  
• But even if policy makers addressed those technicalities, he added, investors might still want to trade stocks in the most liquid market during their day — most likely their home market.  In other words, Hong Kong investors may not want to trade New York-listed stocks during the Asian day, any more than Americans would like to trade Hong Kong equities during the U.S. day.

• “Everybody needs to take some rest,” said Peter Cardillo, chief market economist at Rockwell Global Capital, a boutique investment banking firm. “If you had a super bull market all the time, I think people would enjoy it, but if you have a super bear market, they wouldn’t.”

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• An Illinois farmer made so much money this year he made loan payments on one tractor a year in advance and exchanged some older ones for newer models. An Iowa farmer upgraded his combine and also paid off debt, while an elderly Oregon farmer poured into retirement funds a bundle of his $2 million take from a well-timed sale of much of his turf and equipment.
• While much of America worries about the possibility of a double-dip recession, such stories of prosperity are cropping up as U.S. farmers enjoy their best run in decades, thanks to high prices for many crops, livestock and farmland and strong global demand for corn used in making ethanol.
• Farm profits are expected to spike by 28 percent this year to $100.9 billion, and the amount of cash farms have available to pay bills also is expected to top $100 billion — the first time both measures have done so, according to the U.S. Department of Agriculture. All the while, crop sales are expected to pass the $200 billion mark for the first time in U.S. history, and double-digit increases are expected in livestock sales.  ”We’re just experiencing the best of times,” said Bruce Johnson, an agricultural economist at the University of Nebraska in Lincoln. “It’s a story to tell.”
• ……..most of the talk about U.S. farming remains bullish, with analysts widely trumpeting “the new normal” in U.S. agriculture: Demand in China, India and other developing countries for U.S. agricultural exports — and hunger for corn for ethanol — has been keeping prices high and farming profitable.

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Weak data on November retail sales and an earnings miss from Best Buy on Tuesday poured ice-cold water on the whole “strong holiday shopping season” meme.

All the upbeat commentary about Black Friday, Cyber Monday and the like was always specious, according to Howard Davidowitz, CEO of Davidowitz and Associates. Like Barry Ritholtz, Davidowitz says Black Friday data, particularly, can’t be trusted and is annually hyped by the retail industry to encourage consumers to get out and spend. 

In his own inimitable style, Davidowitz explains why the consumer is in “terrible shape” and why “it’s going to get worse,” citing the following:

• Crushing Debt Load: Consumer debt is 117% of disposable income.
• Help Not Wanted: Even November’s “strong” report included more people dropping out of the labor pool (315,000) vs. those who found work (278,000), according to the Labor Department’s household survey.
• Reverse Wealth Effect: Household net worth fell 4% in the third quarter, a drop of $2.4 trillion, according to the Fed. That’s the biggest drop since 2008 and would be hard to overcome even if wages were rising sharply, which they’re most certainly not.
• Housing Bust Rolls On: Residential housing remains depressed, which is putting tremendous pressure on Americans’ net worth and sense of financial confidence. Davidowitz, among others, sees more downside for housing prices and another increase in foreclosures in 2012.

Longtime viewers will note “it’s going to get worse” is a familiar refrain for Davidowitz, going back to at least 2009.   In the accompanying video, I asked what it would take for him to feel like things are getting better. As he’s wont to do with most subjects, Davidowitz answered that question with a stinging critique of President Obama. 

Barring a Supreme Court ruling that Obamacare is unconstitutional and/or victory in November by any “sensible” Republican — Davidowitz thinks both Mitt Romney and Newt Gingrich qualify — there isn’t much about 2012 he’s looking forward to, as you’ll see in the accompanying video.

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Ok this one below might have some more of the ‘hyperbole’ angle to it

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• The Federal Reserve on Tuesday left monetary policy on hold but said financial market turbulence posed threats to economic growth, leaving the door open to further easing next year.  The Fed characterized the economy as expanding moderately despite an apparent slowing in global growth, though it added that unemployment remains elevated and housing activity depressed. ”Strains in global financial markets continue to pose significant downside risks to the economic outlook,” the central bank said in its post meeting statement.
• Offering no new guidance on its evolving communications policy, the Fed repeated that it expects inflation to settle at levels at or below those consistent with its price stability mandate.  (key word “below”)

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EDIT: perhaps some of the sarcasm was not apparent – see the post at 3:40 PM for the next venture.

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• Eleven firms, including the social-gaming start-up Zynga, are expected to launch as publicly traded companies next week, in potentially the busiest IPO week in four years. Zynga leads the pack as the latest in a wave of social-media initial public offerings. Also drawing attention is Jive Software, a social business-software-platform company, and Michael Kors Holdings, the luxury fashion company.
• If all firms push ahead with their IPOs, it would make next week the busiest since November 2007, when 13 companies made their public trading debuts in a single week, according to Scott Sweet, senior managing partner at IPO Boutique.  Sweet noted that next Thursday will be particularly crowded, with six deals expected to launch.
• Zynga’s position among those on deck is a key reason. The San Francisco–based tech company, which is offering 100 million shares at a price range of $8.50 to $10, is set to raise as much as $1 billion. That would make Zynga’s offering the biggest Internet IPO since Google Inc.’s  launch in 2004, according to Renaissance Capital. 
• In a sign of the growing prominence of social-media IPOs, Jive Software also is expected to enjoy a strong debut. The Palo Alto, Calif.–based company makes software to help businesses set up their own social networks. It had total revenue of $54.8 million for the nine-month period ended Sept. 30 — up 73% from the same period last year. Net losses totaled $38.1 million for the recent nine-month period.  Jive is offering 11.7 million shares at a price range of $8 to $10. The stock is expected to begin trading Tuesday.
• Another relatively high-profile IPO for next week is that of Michael Kors Holdings, the fashion design company, which is offering 41.7 million shares at a range of $17 to $19.
• Other companies expected to go public are five oil or energy companies: Bonanza Creek Energy, Sanchez Energy Corp., Mid-Con Energy Partners, Inergy Midstream and Laredo Petroleum.  Also going public are Luxfer Holdings, a materials technology company; FusionStorm Global, which offers information technology hardware, software and services to businesses; and GSE Holding, a maker of containment products in mining, waste management and environmental protection.

• For its IPO, Zynga said it plans to sell 100 million shares at a price range between $8.50 and $10 per share. Underwriters have been granted an additional 15 million shares to cover over-allotments.  The company said in its updated filing with the Securities and Exchange Commission on Friday morning that it expects to have about 699.4 million total shares outstanding following the debut, which includes Class B and C shares that won’t be offered to the public.
• That would give the company a total market value of about $7 billion — if the offering was priced at the high end of its expected range. Previous valuation targets leaked to media outlets had the number around $10 billion.
• Scott Sweet of IPO Boutique said Zynga’s anticipated valuation is “significantly lower” than previous estimates. He pointed to the recent debuts of Groupon and Angie’s List— both of which are trading at or below their IPO prices just weeks following their debut.  “Certainly the weakness post-IPO of Groupon and Angie’s List has cast a pall on the sector,” Sweet said in an e-mail.  (why Angie’s List is being compared to these other companies is beyond me….)
• Even so, a market cap of $7 billion would put Zynga relatively on par with Electronic Arts, one of the largest video game publishers in the market. Sweet also noted that neither founder Mark Pincus nor key venture capital backer Kleiner Perkins are selling shares in the offering, which he said would likely be a “big selling feature” for the deal.
• Zynga makes games played primarily over Facebook. Popular titles have included “CityVille,” “FarmVille” and “Mafia Wars.” The company said in its filing on Friday that it now has about 227 million average monthly users, which play the games for free and purchase items through micro-transactions within the games that makes up the bulk of the company’s revenue.
• For the nine months ended Sept. 30, Zynga claimed total revenue of $828.9 million — more than double the $401.7 million in revenue from the same period last year. Net income for the recent period was $30.7 million, down from $47.6 million in the comparable period thanks to a sharp rise in marketing and R&D expenses.
• Zynga plans to trade on the Nasdaq under the ticker symbol “ZNGA.” It plans to use the proceeds from the offering for general corporate purposes and possibly acquisitions. About $83.6 million will go towards satisfying tax withholding obligations related to the vesting of restricted stock units.

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