Frontrunning the signals: As arbitrage between sophisticates

This paper presents a model in which some sophisticated investors do not wait for receipt of a signal before purchasing an asset. Its critical innovation is an arbitrage equation for frontrunning. Some sophisticates who will receive information in the next period arbitrage against similar sophisticates who will act on that information in that next period when the information is received. The costs of such frontrunning are borne totally by unsophisticated traders—with no gain or loss to sophisticates. Nor does the frontrunning produce any information discovery. Thus, this paper describes a financial-market anomaly: of inefficient financial transactions with gains to no one.

This paper develops a model, whose key feature is a special form of frontrunning, in which sophisticated traders purchase assets in advance of a signal that will be uniformly received by all sophisticates. The price of the asset before receipt of the signal then exactly equalizes the returns to two strategies. One strategy is to buy now; keep the asset if the signal is positive/dump onto unsophisticated traders if the signal is negative. The other strategy is to wait for the signal; then buy the asset if the signal is positive/do not buy if negative. In the model the added transaction costs of buying the asset and selling it if the signal is negative are all absorbed by the unsophisticated traders. Yet, even though the unsophisticated traders are paying for all of the costs of the frontrunning, there are still no gains at all from this trading activity to the sophisticates. (In this paper we use “frontrunning” according to a general vernacular usage: as preemptive action that anticipates similar action by others; this is in the same spirit as—but much more general than—the more specific use of the term in finance as “trading before other traders, based on specific information about the direction in which other traders will trade in the future”).^*While the model in this paper is very special, it raises a question of considerable generality. There is a significant literature regarding the surprising rise in the Gross-Domestic-Product share of the financial sector [Philippon (1)]. Zingales (2) has been similarly concerned with excessive rent seeking in financial markets. Turner (ref. 3, p. 44) has said, further, that “financial activity [goes] beyond those [that] deliver true social value…. Numerous studies have shown that much active asset management adds no value but does add significant cost.” He has also described the huge increase in “intrafinancial” transactions. In casting light on a special case of such transactions, with no gains to those who instigate increased trading, this paper then poses the question, whether there are not many examples of this ilk: in which the returns to the arbitrageurs themselves are negligible, but the costs of this much ado about nothing are borne by unsophisticated others on the sidelines.This paper is based on a three-period barebones model with both sophisticates and unsophisticated traders and also with short-sale constraints. In period 2 the value of the asset is revealed to sophisticated traders; in period 3 its value becomes known to everyone. With transaction costs below a threshold, in period 1 some sophisticated traders will purchase the asset in anticipation of the signal that they will receive in the following period. If the signal in period 2 is positive, they will keep the asset; if it is negative, they will dump it onto the unsophisticated traders. The returns to sophisticates are exactly the same as in the corresponding model, in which trades can only occur in periods 2 and 3, after the revelation of the value of the asset to the sophisticates.The model in this paper thus describes a type of frontrunning absent from previous papers. The literature on frontrunning of which we are aware—notably including Lewis’ Flash Boys (4)—concerns the information advantage of the frontrunners. In those papers frontrunners obtain information in advance of their competitors. That is not what is happening here: These sophisticated frontrunners in period 1 do not have advance information relative to their fellow sophisticates, who will be their competitors in the next period if the signal is positive. Instead, they are making those early purchases (in period 1) to obtain a better price for the asset in anticipation that their sophisticated competitors will bid up that price if the signal is positive. In this case the price in period 1 will just settle at the margin at which the returns to two strategies are exactly equalized; that is, the returns to buy now/dump later in the event of a negative signal are exactly equal to the returns to wait for the signal/buy if positive.The returns to the sophisticates are totally independent of the existence, or nonexistence, of this equilibrium frontrunning. Why so? Because the returns to the sophisticated buyers are anchored: since the number of sophisticates in period 2 who hold the asset will be the same, irrespective of the purchases in period 1. Specifically, the exact same number of sophisticates will hold the asset if the signal is positive; no sophisticates will hold it if the signal is negative (since the period 1 buyers will dump it, and no one else will buy it). Hence the price of the asset in period 2 is anchored. But that means, in turn, that the unsophisticated traders will pay all of the transaction costs involved in the arbitrage.^†Our barebones model also yields some additional results: 1) prices in excess of fundamentals, which are greater with higher probability of a positive signal; 2) increases in losses with increase in the number of sophisticates; and 3) amplification of frontrunning with sequential signals.This paper proceeds as follows. Review of Literature reviews the literature. The Model presents a model of frontrunning. Transaction Costs analyzes the effects of transaction costs and calculates the losses to unsophisticated traders caused by frontrunning. Sequential Signals examines the effects of sequential signals. Conclusion concludes.     

Implications of the global financial crisis for the response to diseases of poverty within overall health sector development: the case of tuberculosis

The global financial crisis poses a threat to global health, and may exacerbate diseases of poverty, e.g. HIV, malaria and tuberculosis. Exploring the implications of the global financial crisis for the health sector response to tuberculosis is useful to illustrate the practical problems and propose possible solutions. The response to tuberculosis is considered in the context of health sector development. Problems and solutions are considered in five key areas: financing, prioritization, government regulation, integration and decentralization. Securing health gains in global tuberculosis control depends on protecting expenditure by governments of countries badly affected by tuberculosis and by donors, taking measures to increase efficiencies, prioritizing health expenditures and strengthening government regulation. Lessons learned will be valuable for stakeholders involved in the health sector response to tuberculosis and other diseases of poverty.     

Smoking and the risk of systemic lupus erythematosus

This study aims to study the association of smoking with the development of systemic lupus erythematosus (SLE). The study included 223 SLE patients (92 % women, mean age 47 years) and 1,538 population controls of similar age and socioeconomic status living in the metropolitan area of Finland. The history of smoking in patients and controls was obtained by personal interview. The prevalence of current and past smoking was more common in patients with SLE than in controls. In women with a history of daily smoking for more than 1 year, the odds ratio (OR) for SLE was 1.45 (95 % CI 1.07–1.97), in current daily smokers as compared to never smokers, the OR was 1.55 (1.00–2.40), and in ex-smokers versus never smokers 1.80 (1.15–2.83). The number of men with SLE, who had smoked more than 100 cigarettes during their lifetime was higher than in male controls (p?=?0.026). A history of smoking is significantly though modestly associated with the development of SLE.     

From the Cover: Conflict translates environmental and social risk into business costs

Sustainability science has grown as a field of inquiry, but has said little about the role of large-scale private sector actors in socio-ecological systems change. However, the shaping of global trends and transitions depends greatly on the private sector and its development impact. Market-based and command-and-control policy instruments have, along with corporate citizenship, been the predominant means for bringing sustainable development priorities into private sector decision-making. This research identifies conflict as a further means through which environmental and social risks are translated into business costs and decision making. Through in-depth interviews with finance, legal, and sustainability professionals in the extractive industries, and empirical case analysis of 50 projects worldwide, this research reports on the financial value at stake when conflict erupts with local communities. Over the past decade, high commodity prices have fueled the expansion of mining and hydrocarbon extraction. These developments profoundly transform environments, communities, and economies, and frequently generate social conflict. Our analysis shows that mining and hydrocarbon companies fail to factor in the full scale of the costs of conflict. For example, as a result of conflict, a major, world-class mining project with capital expenditure of between US$3 and US$5 billion was reported to suffer roughly US$20 million per week of delayed production in net present value terms. Clear analysis of the costs of conflict provides sustainability professionals with a strengthened basis to influence corporate decision making, particularly when linked to corporate values. Perverse outcomes of overemphasizing a cost analysis are also discussed.Large-scale natural resource extraction projects (including exploration and processing activities) profoundly transform environments, communities, and economies, and often generate social conflict (2, 3). Previous studies of resource extraction and conflict have highlighted the relationship between mining and hydrocarbon resources and broader civil conflict (4, 5) and individual cases of project level conflict (6, 7). In this study, we investigate the importance of company–community conflict in the context of regulation of the sustainability performance of mining and hydrocarbon companies. We estimate the cost of social conflict to companies, determine how companies interpret this conflict, and explain how they respond to conflict. Costs were understood broadly as the negative impacts of company–community conflict on a company’s tangible and intangible assets, including value erosion. Conflict is defined as the coexistence of aspirations, interests, and world views that cannot be met simultaneously, or that actors do not perceive as being subject to simultaneous satisfaction, and is viewed in this assessment as ranging from low-level tension to escalated situations involving a complete relationship breakdown or violence (8).There is growing appreciation that unmitigated environmental and social risks have the potential to negatively influence the financial success of large-scale developments in the extractive industries. A 2008 study of 190 projects operated by the major international oil companies showed that the time taken for projects to come on-line nearly doubled in the preceding decade, causing significant increases in costs (9), although this increase reflects project remoteness, scale, technical difficulty, and input price, as well as social conflict. A follow-up of a subset of those projects found that nontechnical risks accounted for nearly one-half of the total risks faced by these companies, and that risks related to company relationships with other social actors constituted the single largest category (10). A separate empirical study of 19 publicly traded junior gold-mining companies found two-thirds of the market capitalization of these firms was a function of the firm’s stakeholder engagement practices, whereas only one-third was a function of the value of gold in the ground (11).In its analysis of socio-ecological systems (SESs), the sustainability science literature has said little about the large-scale private sector as an important actor within, and regulator of, SES behavior. A review of the 450 sustainability science articles published in PNAS, for example, finds just 23 referring to “corporate,” “industry,” “private sector,” or “company” in their texts. An extensive word cloud produced by a historical review of 20,000 papers related to sustainability science (12) notes just five terms implying a focus on the private sector (“corporate social,” “corporate sustainability,” “social responsibility,” “industrial ecology,” and “supply chain”), with none of these terms invoking core company decision making, culture, or calculations. However, large-scale corporate actors are obviously of central importance to the “major questions” for research in sustainability science (13), and perhaps especially the questions: “What shapes the long-term trends and transitions that provide the major directions for this century?” and “What determines the adaptability, vulnerability, and resilience of human–environment systems?” (13).The relevance of private sector actors is particularly clear in the extractive industries where, given the evolution of technology and industrial structure in these sectors, large enterprises have become highly influential actors in SES dynamics. Dramatic events and disasters, such as the Deepwater Horizon in the Gulf of Mexico, make this clear. Such enterprises can also be critical actors in slower processes of SES change, such as those mediating the relationships among water, agriculture, livelihoods, mining, and climate change (14, 15). Companies in the extractive industries have, to greater or lesser extent, developed policies for sustainable development and used sustainability professionals to respond to the changes induced by their activities on SESs. It is therefore important to understand the drivers of company behavior to build adequate models of socio-ecological change.This study addresses one potential driver of company behavior: conflicts motivated by the social and environmental risks created by, and the impacts of, corporate activities. More specifically, the study understands social conflict as a means through which populations communicate perceptions of risk and which generate costs for companies. The study refers to risk from the perspective of the entity experiencing the risk (i.e., environmental risks are risks to the environment; social risks are risks to society, social groups, or individuals; and business risks are the risks to the business). We ask about the significance of the costs associated with community conflict to companies, how far companies are prepared to respond to these costs by seeking strategies to reduce the environmental and social risk that they generate within SESs, and the conditions that can induce regulatory and strategic change within the corporate sector itself such that it reduces any negative environmental and social impacts.Although the report addresses just one dimension of large-scale private sector activity, the purpose is to suggest the importance of paying far more attention to corporate behavior in studies of socio-ecological dynamics. Emerging research on large-scale land acquisitions, or “land grabs” (16), and the implications for land-change science (17) suggests the same need to attend to corporate actors in sustainability science. In addressing this theme, our primary purpose is to map out, explore, and identify (rather than test) particular relationships between large-scale business and SES dynamics. The intent of the research is to build SES theory in ways that treat corporate behavior as endogenous to these systems.Through in-depth confidential interviews with corporate finance, legal, and sustainability professionals, and empirical case analysis, we investigate the extent to which recognition of the costs of conflict has the potential to change the ways in which companies address the environmental and social risks of mining and hydrocarbon development. Case studies combined desk-based analysis of secondary materials with key informant interviews to confirm or supplement the analysis. Case studies were used to characterize the types of company–community conflicts affecting mining projects, the point at which conflict took effect within the project cycle, and the types of effects that conflict appeared to have on projects. Key informant interviews were used to address how large-scale mining and hydrocarbon companies interpret these conflicts, how they respond to them, the factors determining different types of company response, and the extent to which calculations of the financial costs of conflict change the ways in which companies respond.     

High-frequency trading and networked markets

Financial markets have undergone a deep reorganization during the last 20 y. A mixture of technological innovation and regulatory constraints has promoted the diffusion of market fragmentation and high-frequency trading. The new stock market has changed the traditional ecology of market participants and market professionals, and financial markets have evolved into complex sociotechnical institutions characterized by a great heterogeneity in the time scales of market members’ interactions that cover more than eight orders of magnitude. We analyze three different datasets for two highly studied market venues recorded in 2004 to 2006, 2010 to 2011, and 2018. Using methods of complex network theory, we show that transactions between specific couples of market members are systematically and persistently overexpressed or underexpressed. Contemporary stock markets are therefore networked markets where liquidity provision of market members has statistically detectable preferences or avoidances with respect to some market members over time with a degree of persistence that can cover several months. We show a sizable increase in both the number and persistence of networked relationships between market members in most recent years and how technological and regulatory innovations affect the networked nature of the markets. Our study also shows that the portfolio of strategic trading decisions of high-frequency traders has evolved over the years, adding to the liquidity provision other market activities that consume market liquidity.

The last 20 y have seen deep changes in the way financial markets operate (1). The adoption of the regulation about the national market system (“NMS”) for equity securities (2) from the Securities and Exchange Commission of the United States and a similar adoption subsequently taken by the European Securities and Market Authority have affected the structure and practice of trading of equity securities in US, European, and several other markets worldwide. The most evident change has been the proliferation of market venues in a given country or in a group of countries, usually addressed as fragmentation of markets. A related change has been the specialization of a number of market participants in high-frequency traders (HFTs). HFTs are professional traders able to use high speed in the generation, routing, and execution of orders (3). The amount of transactions performed by HFTs is today estimated to be around 50% in most markets (4). Typical response time of these traders to a market state or information can be as fast as a few microseconds. This exceptional time performance is often achieved by colocating technical infrastructures of HFTs near the computer infrastructure of large market venues. The influence of regulatory changes and technological innovations have changed financial markets into complex sociotechnical institutions (5–9).There is no shared view about how changes occurring in markets have modified the basis of financial asset trading. One view is that the presence of HFTs makes markets more efficient by decreasing the transaction cost per unit of transaction and by facilitating price discovery (10–13). Another view is that HFTs provide liquidity only under normal market conditions whereas their trading is not guaranteed in exceptional market states, making the markets more fragile and prone to flash or microflash crashes (14). There is also empirical evidence that HFTs competition is deteriorating liquidity provision (15) and that the interaction of HFTs with orders of large institutions is performed in a strategic way (16).The technical and regulatory changes observed in markets in the last 20 y are not minor but rather they deeply affect the strategic behavior of market participants (5). An example of this huge impact concerns market making and liquidity provision. Market making is the trading activity providing liquidity to the market (i.e., the trading activity allowing one to find quickly a counterpart for a transaction in a market). In the past market making was done by institutionalized figures (called specialists at the New York Stock Exchange and jobbers at the London Stock Exchange [LSE]) that paid fees to the market and had privileges and obligations for their role. Today, in most settings, market making is not institutionalized and it is freely strategically performed by specialized market participants. Technical innovations (e.g., the use of computer algorithms and the fast access and process of market quotes) and regulatory changes (e.g., market fragmentation and changes in the information production and dissemination) provide a changing environment deeply affecting the profile and ecology of different classes of investors and the way they perform their strategic choices. We believe this extraordinary transition into a changing financial market setting is a clear case study of evolution and adaptation of the ecology of market participants to new states of the financial world (17–19).Recently the empirical characterization of the trading decisions of investors (20) has made it possible to detect an ecology of investors (21, 22). In the present study, we analyze two different venues of stock markets in three different periods of time at the level of market members, i.e., at the level of those companies that are acting for their proprietary trading or are acting as brokers or dealers for the trading of customers. Our aim is to investigate whether the liquidity provision of the most active market members (notably the HFTs) presents a networked structure (i.e., it is provided under a framework of strategic decisions). With the term “networked structure” we mean that market members trading in a venue of a fragmented market in the presence of HFTs might establish statistically validated preferential or avoided trading relationships with specific market members. By using tools of complex networks (23), we detect a networked structure among market members and we document that this networked structure has evolved over the past 20 y from a poor and dynamically changing to a richer and dynamically more persistent network structure highlighting an ever-increasing strategic provision of liquidity.Financial transactions occurring in financial markets can be described in terms of trading networks (23). Examples are trading networks occurring in the Interbank market (24) and in equity markets (25). Specifically, we investigate the degree and persistence of pairwise trading relations between market members of two European stock market venues in 2004 to 2006, 2010 to 2011, and 2018. The first one is the electronic order book of the LSE during the time period 2004 to 2006 and the second one is the Stockholm venue of the Nasdaq OMX market during the years 2010 to 2011 and 2018. Nasdaq OMX is a subsidiary of Nasdaq, Inc. operating in European Nordic countries. The first set of data refers to a period when the high-frequency trading practice and its infrastructures were still developing and HFTs were expanding their share of trading. During those years, market fragmentation was still pretty limited due to the fact that the regulation about the competition between market venues was not yet issued by the European Securities and Market Authority. Market fragmentation and the diffusion of high-frequency trading expands in Europe starting from 2009 (15, 26) and the presence of market members performing HFTs became widespread in European financial markets at the same time. Since 2010, the Nasdaq OMX has provided to its market members the same technology used in the main US Nasdaq venue, including INET platform and colocation services, ensuring HFTs access to the order book within microseconds or less. Therefore, our three sets of data cover one period when the practice, regulatory framework, and technology of HFTs were still developing and two periods characterized by key regulatory and technical changes.Our analysis and statistical characterization of trading networks show that financial markets have continuously evolved into ever more complex sociotechnical systems (5–9) with a persistent networked structure which is present in the interaction of the different types of market members, making the liquidity provision a sophisticated strategic activity. In other words, since the first decade of this century markets have changed deeply and the ecological profile of market members has experienced a profound mutation. With our results we show that network-based studies are able to characterize the ecological fingerprint of some market members acting in this highly competitive sociotechnical system.     

Human cooperation in the simultaneous and the alternating Prisoner's Dilemma: Pavlov versus Generous Tit-for-Tat

The iterated Prisoner's Dilemma has become the paradigm for the evolution of cooperation among egoists. Since Axelrod's classic computer tournaments and Nowak and Sigmund's extensive simulations of evolution, we know that natural selection can favor cooperative strategies in the Prisoner's Dilemma. According to recent developments of theory the last champion strategy of "win--stay, lose--shift" ("Pavlov") is the winner only if the players act simultaneously. In the more natural situation of players alternating the roles of donor and recipient a strategy of "Generous Tit-for-Tat" wins computer simulations of short-term memory strategies. We show here by experiments with humans that cooperation dominated in both the simultaneous and the alternating Prisoner's Dilemma. Subjects were consistent in their strategies: 30% adopted a Generous Tit-for-Tat-like strategy, whereas 70% used a Pavlovian strategy in both the alternating and the simultaneous game. As predicted for unconditional strategies, Pavlovian players appeared to be more successful in the simultaneous game whereas Generous Tit-for-Tat-like players achieved higher payoffs in the alternating game. However, the Pavlovian players were smarter than predicted: they suffered less from defectors and exploited cooperators more readily. Humans appear to cooperate either with a Generous Tit-for-Tat-like strategy or with a strategy that appreciates Pavlov's advantages but minimizes its handicaps.     

Individual disease risk and multimetric analysis of Crohn disease

Rare dominant genes with high penetrance can be identified by linkage without inbreeding, whereas rare recessive genes with high penetrance are most efficiently recognized by autozygosity mapping of homozygotes in pedigrees with preferential inbreeding. On the contrary, complex inheritance is characterized by common genes with low penetrance, for which family studies and inbreeding are inefficient. Here, we develop the Fisherian theory for diallelic cases and controls, show that it compares favorably with Bayesian estimates, and evaluate their currently low power for discriminating cases and controls in Crohn disease (CD). Significance is enhanced by inclusion of composite likelihood, but identification of causal loci is delayed by low recognition of gene function. Clearly, association mapping is not yet optimal, and so strenuous effort is justified to develop a more inclusive gene map and association tests more powerful than single markers and the current use of composite likelihood. Because of its relatively high heritability and the correspondingly large number of detected causal loci, CD presents an ideal test system to determine the power and flaws of competing methods of whole-genome case/control association analysis in publicly available data. Until such a test is exploited by competing statisticians, their Herculean efforts will be inconclusive, and the costly advances from increased sample size will be suboptimal and disappointing.     

Solvent oriented hobbies and the risk of systemic sclerosis.

OBJECTIVE: To examine whether those participating in solvent oriented hobbies (SOH) are at greater risk of developing systemic sclerosis (SSc), and if the association is modified by the presence of the anti-Scl70 antibody. METHODS: Patients with SSc and controls were recruited from a university hospital rheumatology clinic. Recreational hobby and occupational histories were obtained along with blood samples. Cumulative scores were created for participation in SOH. Logistic regression was used to calculate odds ratios associated with SOH exposure after adjustment for sex, age at diagnosis, and occupational solvent exposure, and to examine the association between SOH exposure and the presence of anti-Scl70. RESULTS: Solvent exposure based on hobbies and occupations was determined for 178 cases (141 women, 37 men) and 200 controls (138 women, 62 men). Overall participation in SOH was not associated with SSc. However, odds of high cumulative SOH exposure was 3 times greater in those patients with SSc testing positive for the anti-Scl70 antibody compared to patients testing negative (OR 2.9, 95% CI 1.1, 7.9), and twice as great as controls (OR 2.5, 95% CI 1.1, 5.9). CONCLUSION: While patients with SSc did not participate more often in SOH than controls over all, odds of high cumulative SOH exposure was greater among patients with SSc testing positive for anti-Scl70 compared to those testing negative and compared to controls. These results provide further evidence that environmental agents may play a role in the development of Ssc.     

Fracture risk associated with systemic and topical corticosteroids

OBJECTIVES: To study the fracture risk associated with the use of corticosteroids in any formulation and administration. DESIGN: Case-control study. SETTING: Community-based study in Denmark. Subjects. Cases were all subjects with any fracture sustained during the year 2000 (n = 124,655). For each case, three controls (n = 373,962) matched on age and gender were randomly drawn from the background population. Adjustments were made for concurrent diseases (lung diseases, rheumatic disorders), use of other drugs (inhaled bronchodilators), contacts to hospitals and general practitioners, and social variables. RESULTS: An increased risk of any fracture, hip, spine, and forearm fractures was present with use of more than 2.5 mg of prednisolone or equivalent orally per day. For inhaled corticosteroids a limited increase in the risk of any fracture was present in users of more than 7.5 mg prednisolone equivalents per day (equivalent to 1875 mug of budesonide per day). However, no increase in the risk of hip, spine or forearm fractures was present in users of inhaled corticosteroids. For other topical corticosteroids (dermal, rectal, nasal, local application in the mouth, the eyes or the ears) no increase in fracture risk could be demonstrated even at high doses after adjustment for confounders. CONCLUSIONS: Ingestion of more than 2.5 mg of oral prednisolone equivalents per day is associated with an increase in fracture risk. No increase is associated with inhaled corticosteroids except at daily dosages above 7.5 mg of prednisolone equivalents. No increase in fracture risk is associated with other forms of topical corticosteroids.     

Association between IFNA genotype and the risk of systemic lupus erythematosus

Systemic lupus erythematosus (SLE) is characterized by multisystem inflammation and production of autoantibodies, which can generate immune complexes and may cause tissue damage through the recognition of an autoantigen. Although many factors have been proposed, such as genetic factors, environmental factors, hormonal action, viruses, and dysregulation of cytokine production, the cause of this disease is not well understood. It has been reported that the levels of interferon (IFN)- in the sera of some SLE patients are elevated and that IFN- induces maturation of monocytes into highly active antigen-presenting dendritic cells (DCs). We analyzed the association between IFN- genotype and the risk of SLE to clarify whether IFN- plays a central role in susceptibility to SLE. The results showed that no IFN- genotype was significantly associated with the risk of SLE.     

Combined oral contraceptive use and the risk of systemic lupus erythematosus

Objective

To assess whether the risk of incident systemic lupus erythematosus (SLE) is associated with the use of combined oral contraceptives (COCs), because studies of the link between exogenous hormonal exposure and the risk of SLE have produced conflicting results.

Methods

We conducted a population‐based nested case–control study among women ages 18–45 years, using the UK's General Practice Research Database. All incident cases of SLE from 1994–2004 (n = 786) were identified in the database and matched with up to 10 controls (n = 7,817) among women without SLE at the time of the case's diagnosis.

Results

The adjusted rate ratio (RR) of incident SLE associated with any use of COC was 1.19 (95% confidence interval [95% CI] 0.98–1.45), whereas with current use it was 1.54 (95% CI 1.15–2.07). The rate was particularly increased in current users who had only recently started COC use (RR 2.52, 95% CI 1.14–5.57) compared with longer‐term current users (RR 1.45, 95% CI 1.06–1.99). The risk appeared to be particularly elevated with current exposure to first‐ or second‐generation contraceptives (RR 1.65, 95% CI 1.20–2.26), and increasing with the dose of ethinyl estradiol (RR 1.42, 1.63, and 2.92 for ≤30 μg, 31–49 μg, and 50 μg, respectively).

Conclusion

The use of COCs is associated with an increased risk of SLE. This risk is particularly elevated in women who recently started contraceptive use, suggesting an acute effect in a small subgroup of susceptible women.     

Quantifying the semantics of search behavior before stock market moves

Technology is becoming deeply interwoven into the fabric of society. The Internet has become a central source of information for many people when making day-to-day decisions. Here, we present a method to mine the vast data Internet users create when searching for information online, to identify topics of interest before stock market moves. In an analysis of historic data from 2004 until 2012, we draw on records from the search engine Google and online encyclopedia Wikipedia as well as judgments from the service Amazon Mechanical Turk. We find evidence of links between Internet searches relating to politics or business and subsequent stock market moves. In particular, we find that an increase in search volume for these topics tends to precede stock market falls. We suggest that extensions of these analyses could offer insight into large-scale information flow before a range of real-world events.Financial crises arise from the complex interplay of decisions made by many individuals. Stock market data provide extremely detailed records of such decisions, and as such both these data and the complex networks that underlie them have generated considerable scientific attention (1–20). However, despite their gargantuan size, such datasets capture only the final action taken at the end of a decision-making process. No insight is provided into earlier stages of this process, where traders may gather information to determine what the consequences of various actions may be (21).Nowadays, the Internet is a core information resource for humans worldwide, and much information gathering takes place online. For many, search engines such as Google act as a gateway to information on the Internet. Google, like other search engines, collects extensive data on the behavior of its users (22–25), and some of these data are made publicly available via its service Google Trends. These datasets catalog important aspects of human information gathering activities on a global scale and thereby open up new opportunities to investigate early stages of collective decision making.In line with this suggestion, previous studies have shown that the volume of search engine queries for specific keywords can be linked to a range of real-world events (26), such as the popularity of films, games, and music on their release (27); unemployment rates (28); reports of flu infections (29); and trading volumes in US stock markets (30, 31). A recent study showed that Internet users from countries with a higher per capita gross domestic product (GDP), in comparison with Internet users from countries with a lower per capita GDP, search for proportionally more information about the future than information about the past (32).Here, we investigate whether we can identify topics for which changes in online information-gathering behavior can be linked to the sign of subsequent stock market moves. A number of recent results suggest that online search behavior may measure the attention of investors to stocks before investing (33–35). We build on a recently introduced method (33) that uses trading strategies based on search volume data to identify online precursors for stock market moves. This previous analysis of search volume for 98 terms of varying financial relevance suggests that, at least in historic data, increases in search volume for financially relevant search terms tend to precede significant losses in financial markets (33). Similarly, Moat et al. (36) demonstrated a link between changes in the number of views of Wikipedia articles relating to financial topics and subsequent large stock market moves. The importance of the semantic content of these Wikipedia articles is emphasized by a parallel analysis that finds no such link for data from Wikipedia pages relating to actors and filmmakers.Financial market systems are complex, however, and trading decisions are usually based on information about a huge variety of socioeconomic topics and societal events. The initial examples above (33, 36) focus on a narrow range of preidentified financially related topics. Instead of choosing topics for which search data should be retrieved and investigating whether links exist between the search data and financial market moves, here we present a method that allows us to identify topics for which levels of online interest change before large movements of the Standard & Poor’s 500 index (S&P 500). Although we restrict ourselves to stock market moves in this study, our methodology can be readily extended to determine topics that Internet users search for before the emergence of other large-scale real-world events.Our approach is as follows. First, we take a large online corpus, Wikipedia, and use a well-known technique from computational linguistics (37) to identify lists of words constituting semantic topics within this corpus. Second, to give each of these automatically identified topics a name, we engage users of the online service Amazon Mechanical Turk. Third, we take lists of the most representative words of each of these topics and retrieve data on how frequently Google users searched for the terms over the past 9 y. Finally, we use the method introduced in ref. 33 to examine whether the search volume for each of these terms contains precursors of large stock market moves. We find that our method is capable of automatically identifying topics of interest before stock market moves and provide evidence that for complex events such as financial market movements valuable information may be contained in search engine data for keywords with less-obvious semantic connections.     

Individual risk assessment in MDS in the era of genomic medicine

Assessment of risk for patients with myelodysplastic syndromes has evolved from pure morphological bone marrow assessment to a series of validated prognostic scoring systems whose ‘risk’ assessment is of death (overall survival) or disease progression (AML transformation). The revised International Prognostic Scoring System (2012) improved the precision for prognosis but did not consider patient-specific factors such as comorbidity and performance status, which have a clear impact on outcome, particularly in lower-risk MDS. The improved understanding of MDS biology predominantly through genomic mutational analysis, flow cytometry and gene expression profiling poses a question regarding incorporation of these parameters into the existing scoring systems. Although some gene mutations have clear prognostic significance (e.g. SF3B1, TP53), there is no definitive and reproducible evidence that this additional knowledge will change management. Although incorporation of some of these novel data into risk assessment may be imminent, the IPSS-R remains the gold standard tool for everyday practice.     

Individual fracture risk and the cost-effectiveness of bisphosphonates in patients using oral glucocorticoids

OBJECTIVES: There are few data on the cost-effectiveness of bisphosphonates with oral glucocorticoids (GCs). An individual patient-based pharmaco-economic model was developed. METHODS: Data were obtained from a cohort of oral GC users aged 40+ (n = 190 000) in the UK General Practice Research Database. Individualized fracture and mortality risks were calculated specific for age, sex, daily and cumulative GC dose, indication and other clinical risk factors. UK costs of medication and direct costs of fracture were obtained from National Institute for Clinical Excellence and used to estimate costs per quality-adjusted life-year (QALY) gained and fracture prevented for bisphosphonates in patients treated for 5 yrs with GCs. RESULTS: With the use of 5 mg GCs daily, the cost per one QALY gained with bisphosphonates was 41k UK pounds (95% confidence intervals 22-72k) in women aged <60 [men 40k pounds (29-54k)], 17k pounds (13-24k) in women aged 60-79 [men 43k pounds (31-60k)], 5k pounds(3-6k) in women aged 80+ [men 35k pounds (25-46k)]. With 15 mg GC, these figures were 17k pounds (14-21k), 13k pounds (10-16k) and 15k pounds (9-26k) in women and 22k pounds (17-26k), 34 pounds (23-53k) and 33k pounds (27-42k) in men, respectively. When stratifying by overall fracture risk and life expectancy at the start of GC therapy, cost per QALY increased with decreasing life expectancy. Patients with rheumatoid arthritis had comparatively better cost-effectiveness, given higher fracture risk and better life expectancy. CONCLUSIONS: The cost-effectiveness of bisphosphonates varied substantially. Bisphosphonates can be considered cost-effective in patients with higher fracture risks, such as elderly patients (with a life expectancy over 5 yrs), and younger patients with a fracture history, low body mass index, rheumatoid arthritis or using high GC doses.