Explaining the October Flash Crash in the British Pound

For better or worse, that statement applies to the financial world as well. It is said today that 75% of all financial market volume is automated, though there are lower and higher estimates out there depending on the report.
The bottom line is that algorithmic trading is the dominant market player – and this has benefits and drawbacks for average investors. On the upside, markets are less volatile and presumably more rational because they are driven by computers instead of fallible humans.
On the other hand? Sometimes algos just go rogue and do something unpredictable.
When the British pound flash crashed earlier this month, it was exactly this latter thing that happened.
Explaining the October Flash Crash in the British Pound
The following infographic from Top 10 Forex VPS shares a play-by-play breakdown of how the British pound crashed a whopping 8% in just two minutes.
It’s interesting because it helps give a sense of how the piping works behind these trading algorithms. It’s also a cautionary tale of algos gone wild, showing how market momentum can be swung in a particular direction even without your average market participants being involved.

This post was published at GoldSeek on 25 October 2016.

Why the Jobs Aren’t Coming Back

The candidates in the current campaign – or any campaign – are all promising to ‘bring back good jobs’ to ‘create good jobs.’ When asked how they would do that, they are all a little light on details.
About a year ago, Joe Biden was in Michigan to celebrate the opening of a new manufacturing plant that made ‘small metal clamps’ used in all kinds of industries to hold wiring, hoses. Etc. in place. The largest market is the auto industry but they are sold to hundreds of other manufacturers. Depending on size, shape, and material, these parts sell for a few pennies or less. You have to make a lot of these parts to have any substantial billing numbers.
This new plant is fully automated and runs 24/7/365 with just 14 people. Joe was quite happy saying ‘manufacturing is returning to America.’
However, there is a backstory. That plant had been around for years. It had employed 600 people on two shifts. Then, the Chinese began to undercut the pricing, and the plant was no longer profitable and closed. Two years later, it reopened as a fully automated plant and regained the business because it could now manufacture cheaper than the Chinese.
There are several stories inside the main story.

This post was published at Wolf Street by James Murray ‘ October 25, 2016.

Richmond Fed Confirms Weakest Economic Trend Since 2008

For the first time since 2012, the Richmond Fed business surveyr has been in contraction (below 0) for 3 straight months (and 4 of the last 5). Worse still, the six-month average of the business survey has not deteriorated this fast since Q2 2008. While the underlying components were mixed, inventory levels dropped (bad for GDP), average workweek tumbled (bad for incomes), and new orders re-plunged.
This is the worst drop in the six-month average of the Richmond Fed survey since Q2 2008…

This post was published at Zero Hedge on Oct 25, 2016.

What Wall Street Expects From Apple Today, And Why It Is So Critical For The Entire Tech Sector

In the past two quarters, AAPL found itself in an unfamiliar position. The world’s largest company by market, has been – over the past few years – also the biggest contributor to S&P500 and tech sector earnings, and as long as AAPL’s earnings were rising every quarter, this was not a problem. However, starting in Q4 of 2015, Apple found itself in the unenviable position of posting earnings which declined from a year ago. The drop was so acute