Some 33% of US stock trading activity takes place outside of exchanges. Four years ago, only 20% of trading did. What does that mean? Now, only two-thirds of trading actually sets the price of a stock that zips along the ticker, down from 80% in 2007. Where has all the trading gone?

Call it high frequency trading or automated market making or any number of other monikers, but trading isn’t happening on the exchanges. Instead, they might be traded within a dark pool, through a crossing network, or absorbed within the platform of a broker-dealer. The prices in these venues, however, don’t make it to the tape, and we are left with a question: is that a good thing? Read the rest of this entry »

High Frequency Trading (HFT) and the market’s shift to the edge

Thank you, New York Magazine. A glance through the movie listings for that week in 1975 revealed Serpico, The Godfather Part II, The Man with the Golden Gun, The Sting, The Taking of Pelham 1, 2, 3, Young Frankenstein, Blazing Saddles, American Graffiti, Fellini’s Amaracord and Satyricon, Scenes from a Marriage, Murder on the Orient Express, among others from Cassavetes, etc.

–Video of Robert Lustig discussing sugar and its toxic effects: via NYT

pale horse and the last fiesta

We’re in for 5-10 yrs of penury, pain, injustice, polarization, unrest & possibly a kind of new Dark Age.

Umair Haque, via Twitter

A frolic among the perspectives from the prognosticators of all things economic will yield a single, resonant theme. It won’t surface through facts and figures. Ranging controversies between the statistics will moot themselves in the face of it. Both left and right will agree, even while denying it. They’ll say, this time it’s different.

Ask Bill Gross or Peter Schiff. Surely the Heritage Foundation and perhaps the Brookings will also chime in. No doubt, a bleating chorus will rise to reinforce it from all sides of our bicameral incarnation of the people. The American economy has breached its balance. It’s no entropy that we face, but a new normal. Unemployment will remain intractable. The budget-busting entitlement programs will ruin us. And the shifting balance of global competitiveness will drive jarring and untold consequences upon our economy, culture and civilization. SELL!

Would it were so simple. Read the rest of this entry »

Yvon Chouinard, one of the founders of Patagonia, produced this clip of Johnny Cunningham climbing Ben Nevis, a notoriously difficult waterfall ascent in Scotland, in 1976. The loose bass-line and shimmering cymbals that follow Cunningham from road to ferry to sheep-field and talus-strewn mountainside belie the jagged and unpredictable climb to come. And somehow he filled out the day with a visit to the Glencoe Malt Whisky distillery.

The BBC ran a documentary on the beauty of maps nearly a year ago. The series was unavailable in the US, but it’s up on youtube and sequenced as a playlist in its entirety.

The whiz-bang technology in markets today means that when things go wrong, they go wrong very fast

Bart Chilton, CFTC Commissioner, on the flash crash and the perceived instability of trading outside of exchanges: via Reuters

It is more of a business to interpret the opinions than to interpret the text, and there are more books on books than on any subject: all we do is gloss each other…

Our opinions graft themselves onto each other. The first serves as stock for the second, the second for the third. And so we climb up, step by step. It thus transpires that the one who has honor often has more honor than he deserves, since he has climbed only one speck higher on the shoulders of his predecessors.

Montaigne: via Essays

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