Monitoring
hyper-automatization
“While
the humans are now taking four-day weekends, the robots do not rest
and, as we showed earlier today, they have (in conjunction with the
Fed) commandeered the entire Treasury market where liquidity has
fallen to financial crisis lows according to Deutsche Bank. What this
means (as Jamie Dimon will also tell you) is that events like last
October’s Treasury flash crash are likely to occur more frequently
going forward and when you combine the rise of the machines with
shrinking dealer inventories and throw in the possibility that the
dealers aren’t even coming to work anymore, you paint a rather
disturbing (if hilarious in a surreal kind of way) picture of a
market that’s been stripped of the human element and now runs on
malfunctioning algos which are themselves slaves to Fed doublespeak
and Tesla rumors.”
“Essentially,
Matthew [Duch] is worried that no one is home at bond desks and
thinks that may be a very bad thing when (not 'if') the machines
decide one day that some random data point or unduly hawkish/dovish
soundbite out of an FOMC voter is cause for all the algos to chase
down the same rabbit hole sending ripples through a fixed income
market devoid of any real liquidity.”
“So
while it's 'pretty quiet out there' now save for the hum of the
machines, expect it to get a lot louder on the Tuesday morning when
the humans return to their desks and find out everything collapsed on
Monday.”
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