All markets are rigged

It is still working. Mario Draghi just explained what ECB board council was discussing and markets jumped on this verbal game. ECB let basic rates unchanged and board had just discussion about unconventional measures as QE. Draghi also explained that it does not mean that it will be used in a short term period but they are at hand in the mid-term period. He stressed the world “also used” which means that they are still prepared to use conventional measures as interest rates. The press conference was quite successful because peripheral bond yields in Europe have collapsed once again. It also means that the longer relatively low inflation in the Eurozone the higher probability to use similar QE program as in the US.

Somebody could considered it as a first April joke but Eurozone finance ministers agreed to pay out €8.3 billion of Greece’s bailout package. Greece will receive a first tranche at the end of April. So things changed once again, because Greece declared just two month earlier that they will need not any new rescue package. Greece should have no cash-flow problems for the rest of 2014. But as usually you will never know. We saw these claims many times before and some of us consider them as some king of folklore.

How have you to deal with secessionists? Arrest them. Italian special operations forces arrested 24 suspected secessionists who were allegedly planning a violent independence campaign for the northeastern Veneto region. They build up armed vehicle and wanted to deploy it during the May European elections.

Just few days after the reconstruction of France´s government because of leftists’ fiasco in local government election is France calling for more time to reduce its deficit to three percent of GDP. The European Commission last year granted Paris an extra two years – until 2015 – and expected serious reforms of labour markets, pensions and the welfare state. As we can see it is not so easy and rules are not the same for all Eurozone members. The French budget deficit was up to 4.3 per cent of GDP compared to 4.1 planned percent.

Politicians try always blaming and beating market. Government in Venezuela is rolling out a new ID system to track families’ purchases on groceries. Devaluation of currency caused increasingly difficult for Venezuelans to find imported basic products like milk, flour, toilet paper or cooking oil. Price controls don’t help either and only cause shortage of these products. The most interesting for me is the fact that poor people still support these measures. They do not understand that it is the governmental policy in the field of money, capital controls and regulation of prices which caused the problem. It is not the problem of business.

China is buying not only gold US treasuries but also is active on the US real estate market where they are buying land and houses. According to some analysts China is on the way to become the dominant land owner in the US. The Chinese are quite active in undervalued areas as in Detroit or New Jersey. This is connected with increasing number of US green card applicants from China who are willing to move from China abroad. It is possible due to the program of investor immigrant visa which is conditioned by the investment commitment of at least $500,000 and creation of 10 jobs in the US.

Are all markets rigged by HFT? The SEC and FBI will try to find answer for this question. Both agencies opened some probes against HFT companies which allegedly rigged markets. HFT means high frequency trading which is run by super power and fast computers which are able to execute many transactions within milliseconds. A big dispute starts in the US about using HFTs. To understand the problem we have to state that speed itself is not a problem. The real problem is that some HFT companies had some companies had advantage with faster information or placing of trades based on the better conditions arranged between exchanges and some HFT providers. These companies based their business model only on the fact that they are always able to execute or cancel some orders faster than competitors. It is good to mention that not all markets are probably rigged by this behavior. HFT are concerned mostly with high volumes markets. So we will see what exactly happens. Both agencies will looking into ties between high-speed traders and major exchanges, examining whether the firms are getting preferential treatment that puts other investors at a disadvantage.

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