The principal daily news bulletins of the main Stream Media (BBC, CNN, ABC, TF1 etc), invariably include a reference to the international stock markets – FTSE, DowJones, CAC etc. They normally report closing positions and any major swings – up or down.
The implication is that these are indicators of the health of the economy – markets down, we are doing badly, markets up, we are doing well.
They are important because the markets are FREE, are they not? Well let’s see.
The Plunge Protection Team arrived in 1987, created to ‘manage’ market movements. The Big Bang in 1986 had paved the way for a silicon takeover, which duly came in the form of Algorithmic Trading – automated stock purchases carried out by computers without human involvement.
Riding on the back of algo trades came High Frequency Trading (HFT), now accounting for over 70% of equity market trades. This is not just about buying and selling, but, by making and cancelling thousands of bids in milliseconds, manipulating prices – driving stocks and the market up or down on virtually no volume.
A famous example of HFT was when the Dow was driven down over 1000 points (the Flash-Crash) in minutes – and then back up again. The market lost and regained $1 trillion in seconds – fortunes were made and lost. All without human intervention.
But, other than the initial rules written into the coded algorithm, how do these programmes (mini-robots) decide what to buy and sell? Where do they get their information?
Typically News Analytics is used to scan the news on the basis of certain criteria. A good example is the Dow Jones service called Lexicon. What Lexicon does is to ‘read’ on-line news stories, package them up into a different format and send them to algorithmic (computer) clients – who then use them as the basis of buy or sell decisions. (Affecting our pensions, salaries and savings.)
The next question is – where do the news stories come from. Enter Narrative Science, a programming approach which enables a robor (computer) to write articles based on what it has scanned: other articles, stories, corporate reports, congressional reports, tweets – yes, even tweets.
Well, at least the tweets represent the views of real humans – or do they? It was reported over a year ago that the US Air Force was seeking software that would enable it to create an army of fake on-line identities for it’s algorithms. Think how useful that would be to a Government offering it’s electorate the ability to shape policy by on-line voting for or against prospective legislation. The Pentagon’s Social Media in Strategic Communication (SMIC) programme is part of a desire to not just control the net, but to shape our ideas about the world by manipulating what we read.
So, the news we receive is controlled, the tweets and facebook comments we read by our ‘peers’ (an influential group) are controlled, the reports generated by the news are controlled, the trades in response to the reports are controlled.
Now then, where was it you read about those ‘free’ markets?