Stock Market Controlled by Machines (Joe Saluzzi), A Must Listen Interview

50-70% of all trades being conducted by

algorithms at micro-second time intervals

Chris Martenson.com
Make sure to review "Crash Course"
2/4/2011

Joe Saluzzi, co-founder of Themis Trading LLC and outspoken exchange expert, is concerned with how high-frequency trading has brought the capital markets into uncharted - and dangerous - territory.

"Things have changed," he cautions. With 50-70% of all trades being conducted by algorithms at micro-second time intervals, real human traders are increasingly challenged to understand how our markets actually work. "No longer do the technical patterns - that have lasted for years and years, and are written about all over - work anymore."

In the following interview, Joe and Chris plunge into "dark pools" and other poorly-understood elements of our now-machine-dominated financial exchanges. The current system is fraught with risks of further "flash crash"-like disruptions, and at a fundmental level, feels a lot like sanctioned theft by the deep-pocketed institutions who can outspend on technology and speed. This is an important interview for anyone involved in trading (professionally or personally), as well as investors who want to know how today's markets truly operate.

In this podcast, Joe sheds light on why:

• The flash crash happened and why our vulnerability to future crashes is even higher now.
• How the majority of trades that happen on a daily basis are now conducted by machines that have no underlying concern or understanding for the companies who's securities they trade. The market has become volume for the sake of volume - which is not healthy.
• How the complexity and pace of the current technology driving trades has become so complex that it has effectively evolved beyond our ability to fully understand its risks.
•  Why the government agencies responsible for understanding and overseeing exchanges are woefully under-resourced and unprepared to be effective in this new era.
• How the average trader is destined to lose in today's market, while the big banks & HFT firms who can afford to win the arms race are making essentially-guaranteed profits.

Transcript of Podcast

Hello...anyone...anyone???

The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.

The SEC oversees the key participants in the securities world, including securities exchanges, securities brokers and dealers, investment advisors, and mutual funds. Here the SEC is concerned primarily with promoting the disclosure of important market-related information, maintaining fair dealing, and protecting against fraud.

Zero Hedge's Tyler Durden Talking Straight with Chris Martenson

Straight Talk with Tyler Durden:

The U.S. Is Free-Falling Into Bankruptcy

12/15/10
Chris Martenson.com
Chris Martenson (A Must Watch: Crash Course)
Adam's Blog

1. What led you to start Zero Hedge? Was there a particular story or moment? For many of our readers, you have become the CNN of the Great Collapse (this is seen as a positive thing). Is this what you set out to be?

Zero Hedge was started two years ago in the aftermath of the Great Financial Crash, as coined by Bill Buckler, when we realized there is a substantial vacuum in information distribution, and to a lesser extent, processing. The financial media world was (and to a great extent still is) dominated by journalists who were learning finance on the job and thus were incapable of putting the dots together on most stories under investigation.

Others took an even more inappropriate approach, and instead of covering the stories, took a major shortcut and began to cover the people who made up (literally) the headline news, and in abject adulation of these “universal masters” wrote op-eds, and shortly thereafter, books, that purported to explain the underlying narrative by covering the personalities.

The financial media learned that the way to mask its greatest weakness - its lack of understanding - was by redirecting the narrative to far more simplistic and digestible profile stories. To be sure, there have always been fringe reporters/analysts in the periphery of the media world who were great experts in one area or another, but rarely was there a medium that successfully meshed the macro with the micro, fusing topics between the equity, credit, FX, commodity, and derivative worlds, and, increasingly more importantly, the political arena.

Zero Hedge has attempted to fill this hole.

As for whether or not we have a bearish bias, that is debatable. We judge the prevailing sentiment by feedback from our readers, who constantly opine on any latest story, thus preventing an echo-chamber effect. Some may find it surprising that we have just as many bullish as bearish readers.

But more to the point, we pride ourselves in always providing a fact-based perspective that at least attempts to dig behind the headlines, which in our day and age are becoming increasingly more biased by outright propaganda. Instead of screaming that the end is nigh (which it may very well be; after all, we now live in a world in which the ultimate backstops are two perfectly human, and thus error-prone, individuals - Ben Bernanke and Jean Claude Trichet), we prefer to debunk prevailing lies and popular myths, borne out of either stupidity or laziness. It is not our fault if the end product of such an activity ends up revealing a less than optimistic result.

Ultimately, we strive, no matter what, to present the objective and verifiable truth. Which is perhaps why each week brings us new record numbers of readers: As we assumed on day one of Zero Hedge, Americans are not as stupid as the administration would believe they are, and are starved for the truth, unmarred by a political bias or corporate affiliations, two niches which we strive to fill without a conflict of interest, each and every day.

Complete Straight Talk (so worth the visit)

Zero Hedge (make the trip)

Chris Martenson on Tech Ticker: we’re “dangerously close” to entering a stage of ‘stagflation’

Tech Ticker

The Federal Reserve will announce it’s latest interest rate decision on Tuesday. Few are expecting the central bank to raise rates. Instead the attention, as it has been over the last year-plus, will be focused on the Federal Reserve’s wording. Will they signal another round of quantitative easing based on fears of deflation?

The theme of deflation has picked up steam among some of the world’s top investors, as we recently chronicled with the Wall Street Journal’s Gregory Zuckerman.

Yet many reading this must be thinking: What deflation? The price of gasoline, food, healthcare, education are all getting more expensive.

Ask Chris Martenson, inflation or deflation? The economic researcher responds, “Yes!”

“We’re seeing inflation in some areas and deflation in others,” he tells Tech Ticker in this clip. “We have powerful deflationary forces in play right now. It’s been well balanced, so far, by what the Fed has done.”

Martenson thinks we’re “dangerously close” to entering a stage of ‘stagflation’ that crippled the economy and market in the 1970s. “That really squeezes the workers even harder than any other condition you can experience," he says, because wages are stagnant while the price of goods and services rises.

With both fiscal and monetary stimulus winding down, Martenson is convinced a double-dip recession is imminent, if not already under way: "The early data is saying, 'weakness still is here' and we’re going to have to live with this for a while,” he says.

As a result, he’s convinced Fed chairman Ben Bernanke will go back into his 'tool box' in the near-term to try to help put the economy back on a path of inflation and growth. “All the signs are telling us that the Fed can go forward and expand their balance sheet and so far they’ve been able to get away with it,” he says.

But eventually, Martenson believes these actions to fight near-term problems will result in nearly insurmountable long-term dilemmas for the government.

Grandpa:

I encourage all to view Chris Martenson's Crash Course and encourage your high school age kids to put down the video game and spend a few hours viewing.  Mr. Martenson offers a concise video seminar on how our economy, energy systems, and environment interact, and how they will impact the future. Link to the Crash Course