Joseph P Farrell – The disconnect between genuine human market activity and that created by machines proceeds apace, for JP Morgan has just launched a new algorithmic high frequency trading algorithm, as this article from Zero Hedge, spotted and shared by Mr. B.H., states:

JPM Develops A.I. Robot To Execute High Speed Trades, Put Humans Out Of Work

The motivation, as usual, is the “bottom line,” and maximizing profits while minimizing costly (human) labor overhead:

In the latest victory for robot kind over humans, LOXM’s job will be to execute client orders with maximum speed at the best price, “using lessons it has learnt from billions of past trades — both real and simulated — to tackle problems such as how best to offload big equity stakes without moving market prices.“

In other words, one giant “big data” aggregator, using historical precedent to guide future decisions, which coming in a time when “this time it’s certainly different” for the broader stock market, could be a big mistake.

“Such customisation was previously implemented by humans, but now the AI machine is able to do it on a much larger and more efficient scale,” said David Fellah, of JPMorgan’s European Equity Quant Research team. Mr Ciment said that, so far, the European trials showed that the pricing achieved by LOXM was “significantly better” than its benchmark. Continue reading →