Juggling Dynamite

Why has High Frequency Trading (HFT) become so profitable? Because it cheats and steals cash off legitimate market participants. If long-standing security fraud laws were enforced, it would be declared illegal. But in lawless times, where crooks control enforcement appetite and buy off the should-be cops around them, the bandits get away with grand theft. Some day we will look at this time in amazement that it was allowed to continue unchecked for so long. What started in the west is now spreading like a virus through Asia.

High-frequency traders, which over the past decade have taken over many traditional banking roles in the U.S. and European capital markets, are expanding in Asia. American firms including DRW, Virtu Financial Inc. and Jump Trading LLC are hiring, while local outfits such as Grasshopper Pte and Eclipse Trading have plans to expand. Meanwhile, international banks such as Morgan Stanley, Barclays Plc and Macquarie Group Ltd. are cutting trading jobs in the region.

“Everyone who’s a somebody in HFT is hiring,” said Nicholas Wells, managing director at NewtonChase, a recruiting firm in Singapore. “The race for talent is hot as they expand in Asia where there are new markets and HFTs aren’t in as much of the spotlight as in the West.”  Here is a direct video link.

Steve Eisman, now a fund manager at Neuberger Berman Group was profiled in “The Big Short,” (as the character Mark Baum, played by Steve Carell in the film).  In this morning’s interview on Bloomberg he opined that Europe still faces the risk of a financial crisis while the probability of such an event in the U.S. is very low compared with 2008. [Even if that is so, a banking crisis in Europe would infect global markets thanks to high inter-relationship and correlation between assets and institutions.]

He also explains that the asset management business from ETFs to Hedge Funds to the vast majority of funds and managers are long always and therefore offer investors, little if any ‘hedge’ or downside protection against losses.  [Which is a problem, since that is precisely the risk management that is most essential to financial success in real time over full market cycles, and is often what clients think they are paying for, until prices fall and they are left holding capital losses.]  Here is a direct video link.

Talk of climate change and reducing carbon and air pollution in our atmosphere may be a bit esoteric for the average bear, but lowering one’s monthly living expenses by a lot?  Now that’s self-interested savings that everyone understands.  This is happening.  See: Forget California: The northeast is emerging as the clean energy leader. “The revolution is here”:

“This guy, who was clearly blue-collar and someone who didn’t strike me as especially left-leaning, was boasting to another guy in the bar about how he had put solar panels on his roof and how much money he was saving,’’ Kelly-Detwiler said. “And I said to myself: ‘the revolution is here.’’’

And it’s beautiful,  as an added bonus.