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"The Market Is Rigged" - Michael Lewis Explains How HFTs "Screw" Investors Every Day

Tyler Durden's picture




 

It was almost excatly five years ago to the day, on April 10, 2009, that Zero Hedge - widely mocked at the time by "experts" - began its crusade against HFT and the perils of algorithmic trading (which of course were validated a year later with the Flash Crash). In the interim period we wrote hundreds if not thousands of articles discussing and explaining the pernicious, parasitic and destabilizing role HFT plays in modern market topology, and how with every passing day, markets are becoming increasingly more brittle, illiquid and, in one word, broken. Or, as Michael Lewis put it most succinctly, "rigged." With Lewis' appearance last night on 60 Minutes to promote his book Flash Boys, and to finally expose the HFT scourge for all to see, we consider our crusade against HFT finished. At this point it is up to the general population to decide if this season's participants on Dancing with the Stars or the fate of Honet Boo Boo is more important than having fair and unrigged markets (obviously, we know the answer).

For those who missed it, here is the full video again.

And broken down by segment: in the clip below, Lewis explains how an extra millisecond allows high-frequency traders to exploit computerized trading in the U.S. stock market. By "beating" investors to exchanges, Lewis argues that high-frequency traders can buy stocks and quickly sell them back at higher prices.

Billions have been spent by Wall Street firms and stock exchanges to gain the advantage of a millisecond. "Is it a scam?" 60 Minutes correspondent Steve Kroft asks. Bigger, Lewis says.

Lewis further explains, video below, how ordinary investors are affected and argues that high-frequency traders have created instability in the stock market -- for everyone.

 

A reoccurring metaphor Lewis uses in his book "Flash Boys" is one of "prey and predators."According to Lewis, the prey is "anybody who's actually an investor in the stock market."

 

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Mon, 03/31/2014 - 08:20 | 4610014 NoDebt
NoDebt's picture

I watched 'The Walking Dead'.  It was largely the same subject matter.

Glad it finally hit the MSM, though.  Kudos to the Tylers who have been presenting this for as long as I've been here.  

Mon, 03/31/2014 - 08:23 | 4610027 philipat
philipat's picture

I'm sure the SEC will now be right onto it. When they switch over from the Porn channels.....

Mon, 03/31/2014 - 08:31 | 4610047 SWRichmond
SWRichmond's picture

So now that the story is public, and now we all "know" that HFT causes "instability", we know we can blame the coming crash on HFT and not on the failure of the command-control economy, right?

Mon, 03/31/2014 - 08:33 | 4610051 GetZeeGold
GetZeeGold's picture

 

 

How did you find out?

Mon, 03/31/2014 - 08:33 | 4610056 SWRichmond
Mon, 03/31/2014 - 08:41 | 4610077 SoilMyselfRotten
SoilMyselfRotten's picture

1200+ trading days without a loss and its rigged? What???

Mon, 03/31/2014 - 08:45 | 4610093 BLOTTO
BLOTTO's picture

Our whole life is rigged.

Mon, 03/31/2014 - 08:57 | 4610143 Bearwagon
Bearwagon's picture

Not the whole life, but we've been conditioned to simply ignore the part that's not. Much to the same effect, admittedly.

Mon, 03/31/2014 - 09:15 | 4610207 SafelyGraze
SafelyGraze's picture

you are saying that dancing with the stars is rigged?

take that back.

hugs,
kelly monaco 

Mon, 03/31/2014 - 10:22 | 4610439 Freddie
Freddie's picture

Free John Corzine!   Stop his persecution!

Mon, 03/31/2014 - 11:09 | 4610610 Keyser
Keyser's picture

So, what is Michael Lewis' handle on ZH? Inquiring minds want to know. 

 

Mon, 03/31/2014 - 11:14 | 4610629 eatthebanksters
eatthebanksters's picture

Who's kiding who?  Nothing will change...did they implement the Volker Rule? The same people who made more money with out that rule being implemented make money with HFT.  Pols are not going to slaughter a golden goose.  Sad as fuck, but true.

Mon, 03/31/2014 - 13:02 | 4611030 MillionDollarBogus_
MillionDollarBogus_'s picture

Does that mean I have to sell my beloved Perini Navi, and distribute the proceeds to Joe the plumber investor, and his cohorts? 

Mon, 03/31/2014 - 13:42 | 4611176 FEDbuster
FEDbuster's picture

Tax the fuckers.  Put a $1. per trade tax on every purchase and sell order filled, and a dime for every order placed that doesn't fill.  That would slow the motherfuckers down.  Put the money into a bankster fraud victim reimbursement fund.  

Mon, 03/31/2014 - 14:39 | 4611426 GoinFawr
GoinFawr's picture

Zh has convinced me that you have described exactly what will soon happen... to you, rather than any of the MF'ers, who will greasily slide into some contrived asterix-ey exception.

'There can be only one!' (price setting retail skimming quote stuffing bid spoofing frontrunning head faker HFT)

Mon, 03/31/2014 - 15:04 | 4611513 BC6
BC6's picture

Notice the feigned approval and endorsement of The Squid at the end? Yeah, Squid, you are for fair and honest markets. What a fucking joke.

Mon, 03/31/2014 - 16:54 | 4611870 Quus Ant
Quus Ant's picture

Why tell the truth if you're going to bury it, ZH?

This story:

http://www.zerohedge.com/news/2014-03-31/4-trillion-fake-euro-bonds-seiz...

deserves more views.  Vatican seizes 4 Trillion after a visit from the thief in chief.

Tue, 04/01/2014 - 05:26 | 4613226 StandardDeviant
StandardDeviant's picture

Yeah, that'll work.

Look up "Tobin tax" and "Sweden".

Mon, 03/31/2014 - 11:17 | 4610645 Four chan
Four chan's picture

And while congress that headless chicken attempts to peck away at mary barra over ignition keys,

nary a word on hft's who have driven the entire stock market off the road,

is heard in those halls of the bought and sold a long long time ago.

Mon, 03/31/2014 - 10:24 | 4610444 Chupacabra-322
Chupacabra-322's picture

@ BLOTTO,

So true brother, so true.

Mon, 03/31/2014 - 11:01 | 4610585 john39
john39's picture

the economic rigging is obvious enough to anyone looking...  the other areas of rigging are harder to spot or understand because most lack the context, or the 'control group' to compare and contrast...  like having a giant blind spot, wth no easy way to discern that it exists.

Mon, 03/31/2014 - 14:08 | 4611303 Quus Ant
Quus Ant's picture

Right.  So why is this a good time for truth telling on 60 minutes of all places?  The other shoe is teetering dangerously close to the edge.

Mon, 03/31/2014 - 14:42 | 4611446 Theosebes Goodfellow
Theosebes Goodfellow's picture

Ain't that a fact. In a rigged market place, counterparties are a bitch, ain't they? So thanks, but for now, make mine stackable phyzz, please.

Mon, 03/31/2014 - 16:05 | 4611693 g speed
g speed's picture

bingo--time for the gov't to step in and convert that investment to "safe and secure" tres.

Mon, 03/31/2014 - 09:01 | 4610150 giggler321
giggler321's picture

I always thought it was because they hired a load of PHD's to come up with a spreadsheet that may or may not have errors, modelling the free market.  I actually saw it once, someone did some nice flash graphics:

sheet with no errors

 

 

Mon, 03/31/2014 - 09:21 | 4610226 Bindar Dundat
Bindar Dundat's picture

WOW!!

The obviously deranged  canadian looks like he is a prime suspect to comit suicide very soon.  I hope he does not have a multi shot nail gun around anywhere.  Poor chap needs treatment -- NOT.

Good work to ZH for pushing this and hats off to sixty minutes for going with the story.

 

 

Mon, 03/31/2014 - 08:42 | 4610084 Sudden Debt
Sudden Debt's picture

Well, there where 2 stories in 60 minutes.

 

1. Tesla

And that stock is green now

2. HFT

People don't give a fuck and the MSN isn't planning on following up on that story.

 

So it's more like a "we told you so and you didn't care" story without any consequences.

The fact that Tesla is already green says about everything you need to know about HFT because it was watched by a lot of investors and they simply don't give a fuck about the fraud.

 

Mon, 03/31/2014 - 09:26 | 4610240 caShOnlY
caShOnlY's picture

People don't give a fuck

It is so true that people really don't give a flying fuck until it affects them.  They think they are making money in the "market" that they will draw upon in the future.  When the dump finally comes and no sudden surge ensues then they will will want to kick, scream and see heads roll.  Until then the fox can play in the henhouse.

Did Teachers, Police, Fireman give a fuck when factories started shutting down?  think they will give a fuck when their paychecks are halved when this illusion of borrowing to prosperity comes to an end?

Sheep don't care about the wolf eating other sheep until the wolf has it in it jaws.

 

Mon, 03/31/2014 - 09:35 | 4610284 nickels
nickels's picture

"It's my nature" said the scorpion to the frog as they both drowned. Everything you need to know is in Aesop.

 

Mon, 03/31/2014 - 09:50 | 4610325 spine001
spine001's picture

I've been researching the psy hology behind the "people don't give a fuck" status quo and after three years of work I've come to the conclussion that the popular phrase amonv uz is not true. People do care, but they don't know what to do about it in practical terms so they end up giving up some quickly and others like us never only to mentally survive. The best analogy is we'd love to fly but we can't. It's gravity and there is nothing we  can do about it. Thus the real problem is that the people are not being offered a real alternative, at least not real in their minds to the current state of affairs.

Mon, 03/31/2014 - 10:24 | 4610443 Panafrican Funk...
Panafrican Funktron Robot's picture

"Thus the real problem is that the people are not being offered a real alternative"

I think the other part of the problem is in people not seeking available alternatives, and waiting for alternatives to be offered for them.  I have found that stuff I am being offered is usually not in my best interest; the best things in my life I have because I sought those things out and worked hard to get them.

This is not standard human behavior though, I actually have to fight against a natural tendency for biostasis. 

As far as practical steps, I would say instead of "write your congressman!" or "protest stuff!", both of which are ineffective tools, I would suggest simply getting/staying out of debt, and converting savings in federal reserve notes to money (phys gold).  These two steps alone will radically change our shared human interactions for the better.  

Mon, 03/31/2014 - 10:37 | 4610497 disabledvet
disabledvet's picture

You mean die here or die fighting Russians isn't a choice?

Mon, 03/31/2014 - 14:55 | 4611484 Theosebes Goodfellow
Theosebes Goodfellow's picture

@disabledvet: a) Die here? No sir, I'm on the "live forever or die in the attempt" plan and b) WTF do I have against the Russians?

Says Panafrican Funk: "I would suggest simply getting/staying out of debt, and converting savings in federal reserve notes to money (phys gold)."

Says Theo: Agreed, but add "grow a garden". Apart from the healthy physical activity, not starving to death is a great overall gameplan when  the SHTF, assuming said feces impacts said propeller. Even if we never have a TEOWAWKI moment, you'll be in better shape, have healthier produce and save money on your food bill. P.S., grow more than you need, your neighbors will thank you and you'll be building community goodwill.

Mon, 03/31/2014 - 16:42 | 4611820 disabledvet
disabledvet's picture

that was suppose to be a joke.
http://www.youtube.com/watch?v=4gpNqB4dnT4

we can't even laugh at absurdity in our love of State Sponsored Hedge Terror? (Go Putie Go! No Putie No!) Grow your own damn plants phucker. I'm building a wall. "Good fences make good neighbors." Now get off my computer hacker phuck.

I bought this thing...for three hundred bucks...at "Best Buy"...and quite frankly...I expected better.
Next time "i'm going to Better Buy."

Mon, 03/31/2014 - 09:58 | 4610347 mickeyman
mickeyman's picture

Hell, you knew I was a scorpion when you decided to give me a lift!

Mon, 03/31/2014 - 09:37 | 4610285 Rip van Wrinkle
Rip van Wrinkle's picture

"....and see heads roll."

 

And they won't realise it'll be their heads that will do the rolling. Dumb pricks.

Mon, 03/31/2014 - 09:46 | 4610310 ptoemmes
ptoemmes's picture

True, but maybe Mutual Funds, Insurance companies and the like who seem to also be getting ripped will care AND do something about it.  Short of investigating and prosecuting - unlikely - starving the HFT beast of money is hopefully be a decent bet.

 

To that end, maybe a separate top post on the IEX Group/Exchange mentioned in the report is in order.  I suppose there are some/few good hedge funds... I did, however, shudder when it was mention that Goldman "supported" that effort.  

 

Pete

Mon, 03/31/2014 - 10:16 | 4610410 Max Cynical
Max Cynical's picture

"People don't give a fuck"

My dad is 71 and he's all in. He suffers from the most severe case of normalcy bias I've ever witnnessed.

Mon, 03/31/2014 - 12:35 | 4610928 valley chick
valley chick's picture

+100  I feel your pain...I am married to one..for now.

Mon, 03/31/2014 - 17:47 | 4612009 Nikki Alexis
Nikki Alexis's picture

"It is so true that people really don't give a flying fuck until it affects them"

Yes... and that's why a few of the sheep see the ugly of Obamacare.  It's taking money our of their pockets.

Mon, 03/31/2014 - 20:56 | 4612516 Freddie
Freddie's picture

Anybody get a feeling this Michael Lewis book launch and story is manufactured?  I like him and I think he is pretty honest but this is how I see this going down.

Uncle O Sam obam has known since 2008 that the public is getting ripped off.  The public gets fleeced in the markets for tenbs of billions.   Then a clever Royal Bank of Canada trader figures out what EVERY hedge fund manager already knew.   They come up with a clever way to go around the HFTs and put them in a loop.  The reality is they just stop sending their orders to BATS. 

Small fish will be indicted, lawsuits where investors get a certificate for a free Big Mac, Uncle Sam Obama gets $3 billion in fines that go around the Treasury to his retirement plan and the DNC.  Attorneys suing the HFT firms get tens of millions in fees. Michael Lewis book goes to Number 1, the Canadian Asian guy who "figured it all out" along with his Mick telecom pal are Heroes!  Yeah!  In the background, the real face behind this exchange (Goldman) stays hidden. 

Meanwhile, the public aka small investors are still f**ked.

Mon, 03/31/2014 - 09:45 | 4610283 RaceToTheBottom
RaceToTheBottom's picture

I am not sure the best way from here? 

Pick each part of WS and analyse its corruption and cheating or

look at the beast from the top and recognise that a beast designed to cheat, will cheat.

It has to be the second one.  What does one expect when WS is designed to cheat?  Every facet of it's being is aimed at cheating, getting something over the others...  How can it not perform exactly like it is?

 

Mon, 03/31/2014 - 11:04 | 4610590 moneybots
moneybots's picture

"The fact that Tesla is already green says about everything you need to know about HFT because it was watched by a lot of investors and they simply don't give a fuck about the fraud."

 

It's funny that they suddenly care when their money has gone up in smoke.  Don't spoil the party is always the response when the market is going up. When the market crashes, there is always that priceless photo op of stunned floor traders looking up at the crashing ticker.

When the market crashes, people are blaming short sellers, as if it was their fault the market was going down.  However, they don't complain when short sellers are forced to cover in a rising market, which helps push the market up.

Mon, 03/31/2014 - 11:26 | 4610696 Buckaroo Banzai
Buckaroo Banzai's picture

Yes I had one eye on the TV while 60 Minutes was on in the bar where I was eating dinner.

I'm surprised that the 60 minutes on-screen talent (don't know his name, notice I didn't use the word "journalist") didn't actually start sucking Elon Musk's cock. Because that seemed to be the gist of the Tesla segment.

Mon, 03/31/2014 - 12:44 | 4610961 mccvilb
mccvilb's picture

Who cares if they're shaving pennies off a trade. The real money is made in changing the value of millions of shares with a mere 100 share trade, and executing or blocking the executions of large positions with instantaneous multi-exchange reversals and the sudden introduction of a lack of liquidity (accomplished by one entity or group controlling both sides of the trade across a dozen exchanges). Not to be left out is the wizard behind the curtain controlling the direction and phantom gains and losses in pre-market actions of entire sectors. HFT just made it that much easier for the GSCOs and JPMCs.

Don't look to the SEC for regulation in this century. Former SEC head Mary Shapiro took it upon herself to shepherd HFT through approval and into existence over a two year period; the SEC was fully aware of every aspect of the predatory nature of HFT beforehand. This 60 Minutes story is old news.

Mon, 03/31/2014 - 13:53 | 4611238 Shizzmoney
Shizzmoney's picture

RE

So now that the story is public, and now we all "know" that HFT causes "instability", we know we can blame the coming crash on HFT and not on the failure of the command-control economy, right?

#swish

The robots aren't problem; it's the humans who created them.

Mon, 03/31/2014 - 08:50 | 4610111 wmbz
wmbz's picture

The SEC knows full well who their masters are. They may drop a small fry or two into the cooker from time to time, but never the really big fish. Not going to happen, period. They are owned and well controled.

Mon, 03/31/2014 - 13:36 | 4611163 DaveyJones
DaveyJones's picture

you mean our government is corrupt? 

Tue, 04/01/2014 - 01:04 | 4613024 Vice
Vice's picture

WHAT?!?!

 

BUT "CHANGE"!!!

Mon, 03/31/2014 - 10:43 | 4610507 HungryPorkChop
HungryPorkChop's picture

The huge gapping hole that MSM left out is by continually manipulating an asset via algorighms it would seem they could drive the price of a stock up or down.  They could make an internet stock with no profit go to the moon or punish a commodity like silver and destroy the entire industry causing massive layoffs and destroying millions of lives.  Now when will this piece make it on 60 Minutes? 

Mon, 03/31/2014 - 08:38 | 4610068 Pig Circus
Mon, 03/31/2014 - 15:31 | 4611589 Dr. Kenneth Noi...
Dr. Kenneth Noisewater's picture

Milliseconds are for amateurs.

Mon, 03/31/2014 - 08:44 | 4610091 WVHillbilly
WVHillbilly's picture

I actually watched this last night, probably the first time I've watched 60 minutes in several years, just because I saw this story on the commercials during the basketball games.

I told my wife "See, I told you I'm not crazy, that website I've been reading for a couple years now has been saying this (and much worse, which is sadly also most likely true), but it keeps getting swept under the rug...."

I'll just keep investing in lead, other metals and consumables for the time being.

Mon, 03/31/2014 - 10:39 | 4610501 disabledvet
disabledvet's picture

I really am crazy.

"Now let me go crazy on you...

Mon, 03/31/2014 - 12:03 | 4610826 carbon
carbon's picture

Tyler Durden THANKS AGAIN, THE BEST DAMN SITE THERE IS.

Mon, 03/31/2014 - 14:08 | 4611306 mccvilb
mccvilb's picture

Both the S&P and NASDAQ index are in positive territory, and yet of 5000 equities in the stock market, right now less than 1800 equites are positive. The indexes are another false flag tool of the tribe.

Mon, 03/31/2014 - 17:40 | 4611992 mccvilb
mccvilb's picture

Good choice. There's def a commodities market bias developing over a coming shortage of lead. Legumes too.

Mon, 03/31/2014 - 16:11 | 4611708 The_Dude
The_Dude's picture

Exactly.....this little scene just keeps coming to mind... "Welcome to the party, pal..."

http://www.youtube.com/watch?v=9OpIbiFmY60

Mon, 03/31/2014 - 17:34 | 4611976 stant
stant's picture

Markets rigged bitchez

Mon, 03/31/2014 - 08:20 | 4610017 buzzsaw99
buzzsaw99's picture

HFT is a tax on trading.

Mon, 03/31/2014 - 08:25 | 4610030 philipat
philipat's picture

And that should be reversed. There should be a Tax on each bid/offer...

Mon, 03/31/2014 - 08:28 | 4610037 Ghordius
Ghordius's picture

most of the EU is trying. the UK is resisting. just saying

Mon, 03/31/2014 - 08:40 | 4610075 fonzannoon
fonzannoon's picture

who cares that the casino scalps you for a few pennies? I give credit to ZH for exposing it, but that whole episode last night was total misdirection. The casino rakes the pot...astonishing. 

now everyone can scream "I told you the market is rigged" meanwhile Michael Lewis ignored to mention ZIRP, POMO, QE, 3:30pm Ramp, PM manipulation, politicians insider trading, SEC insider trading.... and all the other ways the market is actually rigged and how people lose a lot more than a few pennies on a transaction.

As ZH said this Michael Lewis story is 5 years old. No one gave a shit then, and no one gives a shit now.

 

Mon, 03/31/2014 - 08:55 | 4610134 NoDebt
NoDebt's picture

Hold on, let me think how this would affect me in the real world.....

"Hey, NoDebt, every trade you do, they chisel you for a couple pennies."

"Let me check how many trades I do in a year........ um, I can live with that."

Yep, you're right, Fonz.  I don't care.

Mon, 03/31/2014 - 09:01 | 4610158 Bearwagon
Bearwagon's picture

That never was a problem for people like you, and if it would have been, the EU would just have implemented a modest threshold, below which it would remain free. But you (and me and most other ZHers) are just uninteresting.

Mon, 03/31/2014 - 09:39 | 4610292 Spastica Rex
Spastica Rex's picture

Our local Indian casinos are packed, too.

Mon, 03/31/2014 - 10:04 | 4610367 natty light
natty light's picture

 

Comment by Ben Jones 2014-03-31 06:47:03

‘Another conspiracy theory becomes fact’

You should understand the role this guy plays for the establishment. I knew something was up when he was on NPR TWICE the same afternoon, talking about the “great financial crisis” and wall street. Boy he let em’ have it. And at the end, he calmly told the hosts that we can’t possibly put any of these people in jail! It would stifle financial innovation! If he wasn’t an establishment hack you would even know he existed.

 

 

 

 

ben jones runs the blog:

http://thehousingbubbleblog.com/?p=8299#comments

Mon, 03/31/2014 - 18:23 | 4612099 Blankenstein
Blankenstein's picture

 

+100 

 

"And at the end, he calmly told the hosts that we can’t possibly put any of these people in jail! It would stifle financial innovation"

 

There should be no doubt to whom his true loyalty lies.

 

 

 

 


Mon, 03/31/2014 - 10:20 | 4610429 gjp
gjp's picture

My thoughts exactly Fonz.  Penny shaving has been the business of finance forever, an annoying tax, and HFT is the latest 'innovation' in shaving, but still nothing compared to the self-dealing legalized-counterfeiting that is going to blow up the currency and economic system.  Misdirection indeed.

Mon, 03/31/2014 - 10:36 | 4610482 Chief Wonder Bread
Chief Wonder Bread's picture

I never could understand what all the fuss was about. Who f*cking cares? Thanks for putting it in perspective.

Mon, 03/31/2014 - 12:59 | 4611014 Captain Queeg
Captain Queeg's picture

Bravo, Fonz...

1) Oh, waaah, the poor RBC-Institutional-Trader-turned-IEX-Founder couldn't hit seven more keys to turn his MSFT market orders into limit orders. Oh, the humanity.

2) I would wager every dime I have that Einhorn, knowing the nature of the execution markets, NEVER enters/entered a market order (for Greenlight, anyway). 

3) Did CBS ever contemplate the cost of regulation/enforcement of HFT algo shops before they bought Lewis' story?

4) Any discussion at CBS of the benefits of a market run in pennies vs. eighths? Guess not.

Now, will CBS run a story about SEC & FINRA compliance/enforcement dicks taking jobs at Goldman et al. ? I'm guessing no.

Mon, 03/31/2014 - 09:02 | 4610161 assistedliving
assistedliving's picture

F&#%@ the EU; especially Londonistanovich that cesspool.  makes Washington/WS look like cherry blossoms.

well, maybe i got a little carried away there

Mon, 03/31/2014 - 08:34 | 4610059 disabledvet
disabledvet's picture

these are two good comments.

I agree with both of them. however as long as naked short selling is allowed so this will be. "they have no skin in the game either"...which to me is the crime...on both sides.

in other words...and this is probably what the book was/is about but I can't tell from this...these are "wash" trades..no actual shares are being purchased...thus giving the informational advantage to the long trader.

this is no guarantee that the result will be up or down...but if I can see your trading strategy before you can see mine this does...in the realm of milliseconds...."tilt the playing field" very much in favor of the longs.

throw in "Russian invasion" and "no recovery to speak of" and of course goes a long way towards explaining why commodities got crushed last year.

Mon, 03/31/2014 - 08:52 | 4610120 philipat
philipat's picture

Don't get me started. As for naked short selling on the COMEX..........................

Mon, 03/31/2014 - 10:32 | 4610476 chindit13
chindit13's picture

There is no such thing as "naked shorting" in futures markets.  If you don't understand why, then do yourself a favor and get a little education.  If people in Egypt 5000 years ago understood the concept of trading futures, it is probably about time you got up to speed.

Mon, 03/31/2014 - 10:44 | 4610522 disabledvet
disabledvet's picture

An education? REALLY? Listen...bitch...this clown wrote a book called "the Big Short" for a reason.

Have you ever even heard of Goldman Sachs you full retard phuck?

Now pardon me while I turn the music up a little louder while watching my City burn to the ground.

I've got a cash position burning a hole in my pocket.

Mon, 03/31/2014 - 11:14 | 4610623 FreeMktFisherMN
FreeMktFisherMN's picture

Explain the BIS' dedicated 'metals trader' and the ubiquitous dumps at odd hours and/or at 8:30 each morning, then? And the London fix for that matter. They get the momentum going with these raids when liquidity is optimal and they can clobber the bids down, and then margin calls and whatnot follow. The central and commercial banks work in concert; just read some of these quotes by past Fed officials about their concern about the price of gold.

I will say that one of the things that people miss is that the great thing about free markets is eventually they overcome all intervention and the reset happens. The problem is so many people have been dumbed down and don't get the concept of sound money. If people respected the role of the precious metals and recognized the pernicious effect of inflation the metals would be way higher right now and wouldn't go off the COMEX price. Eventually this kind of effect will happen as people either wake up enough such that the COMEX becomes irrelevant (IMO happening now as weak hands are being shook out and the metals are going into stronger hands) or Wall Street sharks devour each other as finally there is the musical chairs game of possession is 9/10 and everybody wants their phyzz as the profitable game of raiding the markets and manipulating ends.

And obviously the Chinese and Eastern nations who understand the long term value of gold and silver factor in majorly, too. So eventually the market will overcome all of this intervention is what I'm saying, and metals will be priced to reflect their real value. As of now the disinformation and keynesian propaganda is being spread and people go along with it and don't get how this is all contingent on the petrodollar and foreigners still extending credit, and the immorality of inflation which is theft.

Mon, 03/31/2014 - 12:04 | 4610832 Bay of Pigs
Bay of Pigs's picture

Fuck you chindit. The futures market is an epic disaster and complete clown show.

Do you wear big floppy shoes and a red wig when trading it?

Mon, 03/31/2014 - 09:45 | 4610300 Kayman
Kayman's picture

HFT is much more than a tax on trading.  You are interested in buying a stock, HFT electronically spys on you and buys the stock that you want before you, and then ultimately you end up buying that same stock.

In effect,  there has been a doubling of demand.  If/When this market starts to seriously slide down the hill there will be a doubling of the panic has HFT tries to get the hell out of the way.

Criminals aren't always wired for a broad perspective.  It's usually what can I steal from you right now.

Mon, 03/31/2014 - 11:19 | 4610657 FreeMktFisherMN
FreeMktFisherMN's picture

I'm against taxing anything, and HFT is no different. What is needed is an alternative bourse truly regulated by the free market and not bureaucrats. But the red tape and regs and hurdles to start a new bourse in the U.S. are too high and thus the NYSE system remains. I'm against insider trading regs, too, for that matter. In a true free market a stock exchange's reputation would hinge on integrity so people bring capital there to that marketplace, and people wouldn't put up with the lack of transparency.

People think they are protected by the SEC just like the FDIC, when it is the same wrong mindset. The FDIC leads to depositors not caring about the balance sheets of their banks as they have delegated the responsibility of due diligence to .govt.

Let the market work. And 'insider trading' by the way should not be illegal. People wouldn't put up with corruption, but also it is better to have transparency and have it out there earlier so people can make decisions better with more knowledge as opposed to these announcements that ping the stock everywhere in huge sigma moves at once.

Mon, 03/31/2014 - 17:24 | 4611948 iamrage
iamrage's picture

Yeah, and they didn't even get into the specifics about spoofing.

Mon, 03/31/2014 - 08:27 | 4610033 Ghordius
Ghordius's picture

a private levy on trading. ergo it's a monopolistic cartel. I don't like taxes, yet I call a spade a spade

kudos to the Tylers for their crusade against HTF "skimming", which has more that this deleterious effect, making out of what would otherwise be a deep, liquid market the shallowness of a puddle, the death ground of the muppets

Mon, 03/31/2014 - 08:36 | 4610065 eclectic syncretist
eclectic syncretist's picture

And in other old and tired news that might eventually make the mainstream someday, JPM was called to deliver more gold on the first trading day of April than they have available to sell. (must deliver 247,000 ounces against 214,000 ounces in inventory; http://www.cmegroup.com/delivery_reports/MetalsIssuesAndStopsReport.pdf).  Wonder how they'll pull it off this time?

Mon, 03/31/2014 - 09:06 | 4610178 BigJim
BigJim's picture

247,000 - 214,000 = 33,000 ounces. I find it hard to get excited about JPM having to shell out $1,300 x 33,000 = $43,000,000 (plus maybe 15%) as a cash settlement.

If it keeps happening quarter after quarter maybe we'll be getting somewhere.

Mon, 03/31/2014 - 15:26 | 4611575 AbbeBrel
AbbeBrel's picture

Not sure if this particular puddle has been tested on the waterfall,

I remember the tornado of criticism over "naked shorting" during the fall of 2008, which vanished and was not seen or heard blowing in the wind again in 2009.

The question I have about HFT is : how will it perform during the elevator ride *DOWN* in a market reversion to the MEAN mean...

Disclaimer : homework not done on this question.   Je m'en fous until the time comes, but it *IS* a question.

Mon, 03/31/2014 - 08:27 | 4610036 greatbeard
greatbeard's picture

>> is a tax

Yes, but it's privatized, so that's ok.  Why filter it through the governement?  Cut out the middle man and allow the well connected to tax the commononer directly.

Mon, 03/31/2014 - 09:43 | 4610298 Spastica Rex
Spastica Rex's picture

Private government is better than public government?

Yeah, well. I’ve said it many times - a whole bunch of people would prefer we return to the era of kings and queens, and I think we're well on our way.

Mon, 03/31/2014 - 10:47 | 4610536 disabledvet
disabledvet's picture

This "private Government" seems bigger than the last one.

We better stay tight with the Rush-in's this go around.

Mon, 03/31/2014 - 13:57 | 4611259 Crash Overide
Crash Overide's picture

Government is a tax on money, money is a tax on ones soul.

 

Mon, 03/31/2014 - 08:21 | 4610019 ParkAveFlasher
ParkAveFlasher's picture

Yes but, what does Kim Kardashian have to say about all of this?  And, why hasn't Oprah weighed in?

Mon, 03/31/2014 - 08:33 | 4610055 mrdenis
mrdenis's picture

Oprah "weighed in "....was that a slip ?

Mon, 03/31/2014 - 14:24 | 4611377 ParkAveFlasher
ParkAveFlasher's picture

No.  SNAP

Mon, 03/31/2014 - 10:43 | 4610517 williambanzai7
williambanzai7's picture

Can we ask Bieber what he thinks?

Mon, 03/31/2014 - 13:53 | 4611235 DaveyJones
DaveyJones's picture

Can we ask Lohan what she drinks?

Mon, 03/31/2014 - 08:21 | 4610022 B2u
B2u's picture

End HFT.....NOW!

Mon, 03/31/2014 - 08:21 | 4610023 NDXTrader
NDXTrader's picture

I was stunned that a major, corporate network put this on the air. Having Lewis publicize it at least gives a sliver of hope that something will be done. Most importantly it caused my wife to say that maybe I wasn't crazy after all

Mon, 03/31/2014 - 08:39 | 4610072 weburke
weburke's picture

with controlled npr running -911 controlled demolition- stories, one might imagine press freedom exists, but no.

Mon, 03/31/2014 - 10:47 | 4610358 Ignatius
Ignatius's picture

"I was stunned that a major, corporate network put this on the air."

From time to time they're forced -- or benefit -- from showing a little leg.

USA Inc., is an out of control criminal enterprise.

Mon, 03/31/2014 - 08:22 | 4610025 B2u
B2u's picture

Has anyone checked with "The View"?

Mon, 03/31/2014 - 08:29 | 4610034 Waterfallsparkles
Waterfallsparkles's picture

I agree.  I think the HFT computers are pre programed on where they want the stock to go for the day.  You can see them systematically push a stock up all day to the level they want it.  Then play ping pong all day in a very narrow price range.  Also the Morning pre market ramp on no volume to give it an extra boost to the price they have determned.

I also think that the HFT computers cannot short because of the posibility of not enough shares to borrow.  So they just pump, pump, pump.  That is probably why no one has stepped in to change it because it fits into their goal of getting the Market higher.

Mon, 03/31/2014 - 08:42 | 4610081 disabledvet
disabledvet's picture

dangerous game if that's the case. "if you try this in the commodity space" well, you see the result.

Plus debt too?
Bwhahahahaha.
Now the Fed had killed you.

"you're banking a lot" (en toto) "on an economic recovery" that so far barely registers on the needle.

definitely is disinflationary as you're really pushing the technology curve here too. Certainly goes a long way towards explaining Tesla.

Mon, 03/31/2014 - 08:52 | 4610116 Market Rage
Market Rage's picture

There's something to this.  I think it goes further than that.  I follow ES, and sometimes I think the action is pre scripted.  Crazy I know, but I trade better when I try and figure out what "they" are going to throughout the trading day.  Today the obvious play is to short somewhere in the first 30 minutes.  They know this, so anyone that does will probably get their ass handed to them.  On days like today you may have to wait until after lunch for any kind of quality fade.

Mon, 03/31/2014 - 09:52 | 4610329 Waterfallsparkles
Waterfallsparkles's picture

End of Month.  Have to keep everyones Brokerage statement looking good.  Or heaven forbid they might just sell.

Mon, 03/31/2014 - 10:49 | 4610542 disabledvet
disabledvet's picture

Oh you love this stuff. "Have your little paper flowers and underground velvet."

We all just know these things.

Mon, 03/31/2014 - 10:00 | 4610355 Kayman
Kayman's picture

Waterfallsparkles

I should have read down further before my comment above.  Maybe shorting is nearly impossible.... but who knows.

Maybe we have the New New normal and prices only go up...

Mon, 03/31/2014 - 08:26 | 4610035 Its_the_economy...
Its_the_economy_stupid's picture

But, BUT, BUT WAIT!!!!!

HFT ads LIQUIDITY ot the market place!!

 

That's a good thing.

Mon, 03/31/2014 - 08:37 | 4610067 Ghordius
Ghordius's picture

The Flag is the last refuge of the scoundrel. Liquidity is the second last

Mon, 03/31/2014 - 08:42 | 4610078 Pool Shark
Pool Shark's picture

 

 

For those who haven't already done so read the article I_t_e linked to earlier:

http://www.nytimes.com/2014/04/06/magazine/flash-boys-michael-lewis.html?hp&_r=0

It's a fabulous primer on exactly how HFT started and how it works, as well as the origin of IEX.

Mon, 03/31/2014 - 09:49 | 4610322 silentboom
silentboom's picture

Do you have a more reputable source?  I noticed that was a NYTimes article.

Mon, 03/31/2014 - 09:04 | 4610168 Comte d'herblay
Comte d'herblay's picture

No, because the next step up from a Liquid is Vapor or Gas.

 

 

Mon, 03/31/2014 - 08:29 | 4610038 holdbuysell
holdbuysell's picture

This is über bullish for Virtu's IPO, right? /s

Mon, 03/31/2014 - 08:29 | 4610039 WTFUD
WTFUD's picture

SkullBuggery

Mon, 03/31/2014 - 08:29 | 4610040 Wahooo
Wahooo's picture

Move along sheeple.

Mon, 03/31/2014 - 08:30 | 4610042 Pumpkin
Pumpkin's picture

I was absolutely shocked to see all this on MSM.  I didn't watch every bit of it, but I didn't see any mention of the 'do overs' in the market today.  That alone, is why I will never put another penny into the market.  After seeing this, I wonder if there is going to be more suicides.

Mon, 03/31/2014 - 08:30 | 4610043 Cacete de Ouro
Cacete de Ouro's picture

I know just the man to head the HFT Investigation: Bart Chilton.

/sarc

Mon, 03/31/2014 - 08:34 | 4610058 SilverIsKing
SilverIsKing's picture

Don't you mean Bart Shill'ton?

Mon, 03/31/2014 - 08:32 | 4610050 Kina
Kina's picture

Tax them 5c per trade.

Mon, 03/31/2014 - 08:49 | 4610107 Ewtman
Ewtman's picture

.5 cents would be enough to stop them. Not likely to happen any time soon though.

Mon, 03/31/2014 - 08:33 | 4610052 holdbuysell
holdbuysell's picture

The paranoia in me says that if this is now being exposed via the MSM, what's really going on now...i.e. What's next?

Mon, 03/31/2014 - 08:56 | 4610136 Waterfallsparkles
Waterfallsparkles's picture

I think that the reason they are shining a spotlight on it now is because it can work in reverse just they way it worked to push stocks to an all time high.

Just one person sells and it creates an avalanch of sell order from the HFT computers.

The Street wanted on the way up but certainly do not want it on the way down.

Mon, 03/31/2014 - 10:05 | 4610374 Kayman
Kayman's picture

Waterfallsparkles

You have a devious mind.  You could be a successful criminal banker.

Mon, 03/31/2014 - 11:13 | 4610620 Waterfallsparkles
Waterfallsparkles's picture

Thanks.  I think?,  that is a compliment.

Mon, 03/31/2014 - 10:51 | 4610546 disabledvet
disabledvet's picture

They just took down a triple 7.

"Gotta say something."

Mon, 03/31/2014 - 14:10 | 4611317 Crash Overide
Crash Overide's picture

I have a feeling HFT is being setup as a patsy...

We all know the fraud and asset class rigging is far and wide, maybe they are getting ready to crash it all and start a war.

Mon, 03/31/2014 - 09:45 | 4610309 Legolas
Legolas's picture

What's next?

 

Calamity.  Most likely to involve the loss of lives and records.

 

Mon, 03/31/2014 - 09:47 | 4610313 silentboom
silentboom's picture

It's just more crys for regulation.  Regulation and funny money causes the problems and then we solve it with regulation and funny money.  Call in the SEC, the CIA, the DHS, ABC123.  I'm sure they will solve it all for us!

Tue, 04/01/2014 - 12:20 | 4613960 GoinFawr
GoinFawr's picture

Yes, because the actual DEregulation spree that's been goin on since Reagan (obvious to practically anyone who can fog a mirror) was on the cusp of totally solving any problems relating to fraud, if only it had gone all the way...right.

Is that what you're claiming, seriously? (perhaps you could argue the point that by making fraud legal it made it 'disappear'; which isn't at all the same thing as justice, IMO)

So because any new regulations brought into law in this overtly corrupt  and rigged political environment will squarely and unconscionably target the middle class, and no one else, that 'proves' that any and all publicly monitored and enforced regulations are a waste of time universally and throughout eternity forever and eve, amen...?

If that is what you are saying: Pull the other one.

Mon, 03/31/2014 - 08:34 | 4610054 philosophers bone
philosophers bone's picture

Exhibit A for reasons to "clean house" at the SEC, CFTC, other regulators.  And take away "self-regulation", as these greedy organizations will always accept their own twisted logic and justifications in their own favour when in a conflict of interest.  But don't stop there.  Any executive or director, and any of the programmers, of any company that used HFT and who were aware of its techniques and its effects should be aggressively charged, fined, jailed and banned. 

 

Mon, 03/31/2014 - 08:39 | 4610071 ArkansasAngie
ArkansasAngie's picture

But ... but ... it wasn't illegal.  Fraudulent intent isn't illegal if the method of defrauding isn't illegal.

Horse manure.  It's how they hold themselves above the law.

I bitterly want REAL change.

Mon, 03/31/2014 - 14:23 | 4611374 Herd Redirectio...
Herd Redirection Committee's picture

Lawful, and yet, unjust.  That is the story of the world today.

Mon, 03/31/2014 - 10:16 | 4610412 Kayman
Kayman's picture

philosophers bone

"More regulation" is always code for hiring more useless government employees.

How about do your job or get fired.

Mon, 03/31/2014 - 08:35 | 4610061 economists_do_i...
economists_do_it_with_models's picture

Even as far back as 1987, people were calling for a separate exchange for electronic/computer trading, and another traditional exchange for human traders.

Nothing is ever going to be fair as long as the regulators are controlled by the big banks.

Mon, 03/31/2014 - 08:35 | 4610062 ak_khanna
ak_khanna's picture

The stock, bond, commodity and currency exchanges have been reduced to gambling dens whereby the more powerful traders with deep pockets move the markets to maximize their own profits at the expense of the remaining not so powerful players. The big boys have enormous money power to move the markets in the direction which results in maximum profits for themselves. They effectively use the media to lure the other players in the market to a position where they would incur maximum loss.

The markets continue to rise till all short positions in the market are covered and the majority of traders move to the long side. Once this is done the market falls till all long positions are closed and short positions undertaken. Then rinse and repeat. The price mechanism has little to do with the actual demand, supply, fundamentals or state of the economy.

www.marketoracle.co.uk/Article40231.html

Mon, 03/31/2014 - 08:47 | 4610094 philosophers bone
philosophers bone's picture

Yes and it is somewhat depressing to realize that some of these "moves" don't take place in a trading session or two, but over years, perhaps decades, and the "market mover" has the power to print endless currency.  It will presumably end at some point.  If more and more of us simply try to "ignore" it, it may hasten it.  Pretty tough to truly ignore all markets, unless you have no assets.

Mon, 03/31/2014 - 08:41 | 4610064 Ralph Spoilsport
Ralph Spoilsport's picture

Well done ZH. The groundbreaking articles on HFT led me here in the first place. What a ride - I've enjoyed my crash course in Finance for a tech guy.

Mon, 03/31/2014 - 08:39 | 4610069 Bangin7GramRocks
Bangin7GramRocks's picture

I still have a hard time understanding how the guy from Goldman goes to jail for taking the code designed to break the law. It's like someone steals my homemade nuclear bomb and they jail him and give me my bomb back and say sorry for the inconvenience.

Mon, 03/31/2014 - 08:43 | 4610088 yellowsub
yellowsub's picture

Your analogy would be true if you owned the justice system.

Mon, 03/31/2014 - 08:52 | 4610122 NoDebt
NoDebt's picture

And YOUR statement would be true if we had a justice system.  We have a LEGAL system, not a justice system.  Two different animals.

Mon, 03/31/2014 - 09:04 | 4610165 Bearwagon
Bearwagon's picture

Of course we have a legal system. It is very simple, and says: He, who has the gold, makes the rules. Period!

Mon, 03/31/2014 - 09:27 | 4610254 Bangin7GramRocks
Bangin7GramRocks's picture

True! I just read a story on Huffington Post about a DuPont heir monster who raped his own toddlers and got probation. The judge said he "wouldn't fare well in prison". What the fuck has happened to my country?

Mon, 03/31/2014 - 09:33 | 4610274 Bearwagon
Bearwagon's picture

That's not your country anymore, it has been stolen - right under your nose! (And I don't mean to say that I am any better off in that regard.)

Mon, 03/31/2014 - 14:25 | 4611380 Herd Redirectio...
Herd Redirection Committee's picture

Two tier legal system.

Can you afford a lawyer?  No?  Yes?  OK, you are subject to the law, and the courts, and the prison system.

Can you affod a TEAM of lawyers?  Yes? OK, you are above the law, the courts, and the prison system.  Please pay your fine, and move along.

1st world style corruption.

Mon, 03/31/2014 - 08:39 | 4610070 Blano
Blano's picture

I don't see the video, only pics.

Mon, 03/31/2014 - 08:40 | 4610076 Manipuflation
Manipuflation's picture

Speaking of rigged markets, who's not signing up for Obamacare by midnight tonight besides me?

Mon, 03/31/2014 - 08:46 | 4610097 Blano
Blano's picture

(Blano waves hand wildly)

Mon, 03/31/2014 - 08:41 | 4610079 FreeNewEnergy
FreeNewEnergy's picture

Saw the story on the TV last night (yes, I pay for cable, mea culpa). Lewis was succinct and the reporting top notch. My takeaway was that if trades are being front-run by the HFTs, how much higher is the entire stock market than it would be if trades were able to clear at the correct offered prices?

Math majors, step up! I'm guessing stocks are maybe 2X their true value due to HFT. Without these algos and HFTs would there have been an uninterrupted rally for five years without a meaningful (10-15% - I think there was one, in 2011) pullback?

The day they outlaw HFT is the day to short the market.

Meanwhile, the MSM will gloss over this. "Nothing to see here, move along, muppets."

Mon, 03/31/2014 - 08:41 | 4610080 22winmag
22winmag's picture

HFT is a symptom, not the disease.

 

Mon, 03/31/2014 - 08:42 | 4610082 boooyaaaah
boooyaaaah's picture

 

ZU do you

Need a new banner to march under?

What about naked shorting per Deepcapture.com

 

Only a prime broker can naked short

Bernie. Madoff. Was a prime broker

So is GS. et. Al

But they can borrow unavailable shares for trusted hedge funds. 

 

All in the name of Market Liquidity.

Mon, 03/31/2014 - 08:45 | 4610087 MsCreant
MsCreant's picture

There was a guy on there, a canadian, who they were claiming "discovered" that HFT was going on. Supposedly he figured it out because he could never get an order to fill entirely at a given price. Then supposedly he talked to others who had the same problem and figured it out. Then supposedly he went to all the big instituions to explain to them that he had figured it out. Now this guy has started his own exchange designed to foil the HFTs. 

What a sack of shit. This guy is backed by Goldman Sachs bitchez. Goldman is helping to fund his new exchange. This whole 60 minutes thing is a piece of manipulative crap. DON'T BUY INTO CRAP. You are being bullshitted to sleep. ZH is being polite about this because at least word is getting out. But the whole piece is a manipulative LIE, LIE, LIE.

[She sits down in the corner, frothing at the mouth, breathing heavy, ready to weep].

[She gets up again and looks you all in the eye]

It's a lie. That fucker did not just discover this shit and golly gosh, tell others about it too. Such a fucking LIE, LIE, LIE.

Mon, 03/31/2014 - 08:56 | 4610138 Freddie
Freddie's picture

I went to their web site last night.  IEX??  They have a video that is part ObamaCare and part civil rights video plus there is a plug for MIC in it too.  Total joke.  They will just figure out a new way to screw the public like Goldman always does.

Do NOT follow this link or you will be banned from the site!