Mark Fisher of MBF Asset Management has been analyzing the recent flash crash in U.S. markets.He says computers took his job away on the trading floor.They process 20,000 orders in a millisecond.If the flash crash had happened at 10:30 in the morning instead of in the afternoon,it would have been a complete disaster,with the European markets being still open.
The computer types are making a lot of money.It's games,arbitraging back and forth.In times of stress,people cut back their trading,thinning volume dangerously.At that point,anything can and will happen.The Chicago Mercantile Exchange puts the market in suspension for a few seconds;it works.It's like at the Indy 500 putting out a yellow caution flag.Indeed,the Securities and Exchange Commission is planning to institute such brakes on erratic trading.
With regard to the Euro Zone debt problem,in Mr.Fisher's view,it will never work out with the Euro.You've got the Germans,working a 40-hour week,bailing out a different culture.Wait till you see the German elections.
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