Topic: High Frequency Trading

MSNBC and Rachel Maddow reported on over 3,700 stock trades made by Donald Trump's trust, alleging conflicts of interest with companies like Dell, Apple, and Palantir. The analysis suggests these are not manual insider trades but rather the result of a high-frequency trading (HFT) algorithm managed by a family office. The "blind trust" is clarified to be a revocable trust managed by Trump's sons, allowing for active trading while the President publicly praises the companies involved.

Dvorak discusses Michael Lewis's new book, "Flash Boys," with a banker friend in Austin. The banker claims the book's focus on fiber-optic speed is "bullshit" and that the real money in high-frequency trading is made by identifying small-cap stocks that will naturally follow the movement of large-cap leaders like Unilever. He also predicts American banks will double in size despite "too big to fail" concerns.

Adam Curry and John C. Dvorak open the show from Austin, Texas, discussing the rainy weather coinciding with the start of South by Southwest (SXSW). They critique the commercialization of the festival, including high parking fees and corporate parties hosted by companies like Second Market. Curry recounts heckling a CEO about high-frequency trading and meeting a local artist named Johnny Feelgood.

The founder of High Frequency Economics argues that the European Central Bank (ECB) must print money to solve the Eurozone crisis. However, the Lisbon Treaty explicitly forbids the ECB from inflating the currency to bail out member states. This creates a philosophical and legal deadlock between Germany's fear of hyperinflation and France's desire for a bailout.

The New York Times reports on potential crackdowns on rapid computerized stock trading following the "flash crash." The hosts suggest that these high-frequency trading mechanisms, used by firms like Goldman Sachs, are currently propping up the market. They predict a market collapse if these systems are restricted.

Farid Zakaria's CNN program GPS is scrutinized for its ties to the Bilderberg Group and its promotion of global financial reform. The hosts discuss Dominique Strauss-Kahn's proposal for a Financial Activities Tax (FAT tax), which would target high-frequency trading. They suggest this tax is an attack on Goldman Sachs by international banking interests.

The discussion turns to "crop circles" in market data caused by high-frequency trading algorithms. These programs execute thousands of bids per second to manipulate stock prices. The hosts question the legality of these practices under SEC rules and advise listeners to stay out of the traditional stock market.

New information suggests the May 2010 "Flash Crash" may have been caused by code written in Erlang, a language that allows for recompiling and reloading code while a server is operating. This supports a theory that a programmer, possibly linked to Sergei Aleynikov, ran a "beta test" that accidentally crashed the market. The Erlang virtual machine's ability to execute old and new code simultaneously is cited as a key factor.

SEC Chairman Mary Schapiro and CFTC Chairman Gary Gensler testified before Congress regarding the 1,000-point market drop. They ruled out "fat finger" errors and terrorist hacking, instead focusing on a "confluence of events" involving high-frequency traders. The investigation highlights how these traders limited their participation during the crash, removing market liquidity.

A theory is presented suggesting the recent market crash was a "beta test" of high-frequency trading code conducted by freelance programmers. The narrative involves a programmer flying into Chicago to recompile code and "flip the switch" on a financial earthquake machine before fleeing to Russia. This theory posits that the crash was a demonstration of power by financial entities rather than a technical glitch.

Max Keiser, creator of the Hollywood Stock Exchange, is identified as the original patent holder for VST code, which was designed to combat market manipulation. The hosts explain that reverse-engineering this code resulted in modern high-frequency trading systems. Keiser reportedly lost his ability to reclaim the code after patent documents were destroyed in the World Trade Center on September 11, 2001.

The trial of former Goldman Sachs programmer Sergey Aleynikov for allegedly stealing high-frequency trading code is discussed. In a separate international story, Spanish magistrate Baltasar Garzon faces legal challenges for investigating disappearances from the Spanish Civil War. The hosts suggest Garzon is being targeted for attempting to expose historical death squads.

The hosts allege that Goldman Sachs uses corrupt "flash trading" computer models to manipulate market directions. They argue that the current market decline is a result of the inter-bank war between the "Goldmans" and the "Chases." Listeners are advised to exit the stock market immediately, as the hosts believe the entire system is a fake, manipulated Ponzi scheme.

A New York Times article by Alex Berenson details the arrest of Ali Nikoff for allegedly stealing high-frequency trading software from Goldman Sachs. The software allows the firm to bundle and execute trades before they hit the open market, effectively manipulating the system for profit. The segment highlights that Goldman Sachs uses free TARP funds to engage in these risk-free, billion-dollar trades.

Former Goldman Sachs programmer Sergei Alenikoff was arrested by federal agents at Newark Liberty International Airport for allegedly stealing secret high-frequency trading software. The software, referred to as the Doomsday Box, allows for rapid-fire trades that generate small margins at massive volumes, potentially creating a false sense of market liquidity.

A former Goldman Sachs programmer was arrested for allegedly stealing proprietary high-frequency trading code. The software reportedly allowed the firm to observe and front-run market trades, generating massive daily profits. Authorities expressed concern that the code could be used by "wrong hands" to manipulate global markets.