naked capitalism Thu 2010-05-13 18:21 EDT

An Analysis of the Thursday Meltdown

...Contrast the reports at the Times and the Wall Street Journal, that the officialdom is pouring through the records and is still puzzled after a full three days on the case, versus this analysis produced by a lone sell-side analyst (who sadly must remain anonymous) roughly 24 hours after the implosion...``...it was not a sudden, random surge of volume from a fat finger that overwhelmed the market. It was a steady onslaught of selling that pressured the market lower in order to catch up with the carnage taking place in the credit markets and the currency markets...this episode exposed structural flaws in how a trade is implemented (think orphaned algo orders) and it exposed the danger of leaving market making up to a network of entities with no mandate to ensure the smooth and orderly functioning of the market (think of the electronic market makers and high freqs who can pull bids instantaneously as opposed to a specialist on the floor who has a clearly defined mandate to provide liquidity).''

Analysis; naked capitalism; Thursday Meltdown.

zero hedge Sun 2010-05-09 09:45 EDT

The Day The Market Almost Died (Courtesy Of High Frequency Trading)

A year ago, before anyone aside from a hundred or so people had ever heard the words High Frequency Trading, Flash orders, Predatory algorithms, Sigma X, Sonar, Market topology, Liquidity providers, Supplementary Liquidity Providers, and many variations on these, Zero Hedge embarked upon a path to warn and hopefully prevent a full-blown market meltdown. On April 10, 2009, in a piece titled "The Incredibly Shrinking Market Liquidity, Or The Black Swan Of Black Swans" we cautioned "what happens in a world where the very core of the capital markets system is gradually deleveraging to a point where maintaining a liquid and orderly market becomes impossible: large swings on low volume, massive bid-offer spreads, huge trading costs, inability to clear and numerous failed trades. When the quant deleveraging finally catches up with the market, the consequences will likely be unprecedented, with dramatic dislocations leading the market both higher and lower on record volatility." Today, after over a year of seemingly ceaseless heckling and jeering by numerous self-proclaimed experts and industry lobbyists, we are vindicated...absent the last minute intervention of still unknown powers, the market, for all intents and purposes, broke. Liquidity disappeared. What happened today was no fat finger, it was no panic selling by one major account: it was simply the impact of everyone in the HFT community going from port to starboard on the boat, at precisely the same time...It is time for the SEC to do its job and not only ban flash trading as it said it would almost a year ago, but get rid of all the predatory aspects of high frequency trading, which are pretty much all of them...HFT killed over 12 months of hard fought propaganda by the likes of CNBC which has valiantly tried to restore faith in our broken capital markets. They have now failed in that task too. After today investors will have little if any faith left in the US stocks, assuming they had any to begin with. We need to purge the equity market structure of all liquidity-taking parasitic players. We must start today with High Frequency Trading...

courtesy; day; dies; high frequency trade; Market; Zero Hedge.

Sun 2010-02-28 13:32 EST

GEAB N°42 is available! Second half of 2010: Sudden intensification of the global systemic crisis -- Strengthening of five fundamental negative trends

Marie-Helene Caillol

LEAP/E2020 is of the view that the effect of States' spending trillions to <<; counteract the crisis >> will have fizzled out. These vast sums had the effect of slowing down the development of the systemic global crisis for several months but, as anticipated in previous GEAB reports, this strategy will only have ultimately served to clearly drag States into the crisis caused by the financial institutions. Therefore our team anticipates, in this 42nd issue of the GEAB, a sudden intensification of the crisis in the second half of 2010, caused by a double effect of a catching up of events which were temporarily <<; frozen >> in the second half of 2009 and the impossibility of maintaining the palliative remedies of past years...The sudden intensification of the global systemic crisis will be characterised by the acceleration and/or strengthening of five fundamental negative trends: . the explosion of the bubble in public deficits and a corresponding increase in state defaults . the fatal impact of the Western banking system with mounting debt defaults and the wall of debt coming to maturity . the inescapable rise in interest rates . the increase in issues causing international tension . a growing social insecurity.

2010; available; fundamental negative trends; GEAB N°42; Global systemic crisis; strengthen; Sudden intensification.

Tue 2009-06-16 00:00 EDT

naked capitalism: Guest Post: The Rating Agency Scapegoating Catch 22

Guest Post; naked capitalism; Rating Agency Scapegoating Catch 22.

Fri 2008-10-10 00:00 EDT

naked capitalism: A Glimpse Into the Abyss

Ambrose Evans-Pritchard; ``a wild scramble for dollars as a $10 trillion pyramid of global lending based on dollar balance sheets delevers with a vengeance'' ``China is going into recession as well. This is going to catch investors off-guard'';

abyss; glimpse; naked capitalism.