Robert McMillan, Wired, This Google Motherboard Means Trouble for Intel, here. It has been years since I have played with any POWER chips.

The latest blow to Intel’s future arrived on Monday in the form of a red server motherboard touted by Gordon MacKean, the man responsible for building the hundreds of thousands of servers that power Google’s online empire. In a Google+ post, MacKean said he was “excited” to show off the red motherboard, which was built using not an Intel chip, but IBM’s Power8 processor.

To the outsider, the motherboard may not look like much, but the fact that Google has taken the time and effort to port its software to IBM’s architecture and even design a motherboard based on an IBM processor is a big deal. Since its beginning, back in 1998, Google has used servers equipped with Intel processors, and today the company is one of the world’s largest buyers of Intel server chips. The search giant doesn’t make servers for anyone but itself, but it’s likely the fifth-largest Intel server chip customer on Earth.

…

The Christopher Lameter, an R&D team lead with JumpTrading, a Chicago-based high-frequency trading firm, says that he hopes that the OpenPower effort will lead to new types of chip design that will be useful to customers like JumpTrading. He worries that the desktop slowdown will ultimately hurt new Intel developments on the server side, some four-to-six years down the line. And at the same time, he’s excited by some of the new things that have been developed in the mobile phone world. “On the kernel level, it seems that ARM/Android [is] driving innovation,” he says.

Wowsers, it’s the best when finance guys set up to do chip design like The Chistopher Lameter is getting ready to do. “Somebody go back an get a shitload of L3 cache.”

Shane Ferro, Felix Salmon, Reuters, Post Felix, here.

Today is Felix’s last day at Reuters. Here’s the link to his mega-million word blog archive (start from the beginning, in March 2009, if you like). Because we’re source-agnostic, you can also find some of his best stuff from the Reuters era at Wired, Slate, the Atlantic, News Genius, CJR, the NYT, and NY Mag. There’s also Felix TV, his personal site, his Tumblr, his Medium archive, and, of course, the Twitter feed we all aspire to.

So, I have to change links in Safari now? Great.

The Financial Engineer, here.

2013 – 2014 Financial Engineering Program Rankings

1 Columbia University Financial Engineering
2 Cornell University Financial Engineering
3 Stanford University Financial Mathematics
4 University of Chicago Financial Mathematics
5 Carnegie Mellon University Computational Finance
6 New York University Financial Mathematics
7 University of California – Berkeley Financial Engineering
8 Georgia Tech University Quantitative & Computational Finance
9 University of Illinois at U-C Financial Engineering
10 University of Southern California Financial Engineering
11 Johns Hopkins University Financial Engineering
12 University of California – Los Angeles Financial Engineering
13 University of Minnesota Financial Mathematics
14 Rutgers University Mathematical Finance
15 Stony Brook University Quantitative Finance
16 Boston University Mathematical Finance
17 Texas A&M University Financial Mathematics
18 Rensselaer Polytechnic Institute Financial Engineering
19 Fordham University Quantitative Finance
20 North Carolina State University Financial Mathematics
21 Stevens Institute of Technology Financial Engineering
22 Claremont Graduate University Financial Engineering
23 Polytechnic Institute of New York University Financial Engineering
24 Florida State University Financial Mathematics
25 University of Washington Computational Finance
26 Oklahoma State University Quantitative Financial Economics
27 Illinois Institute of Technology Mathematical Finance
28 University of Dayton Financial Mathematics
29 DePaul University Computational Finance
30 Baruch College Financial Engineering
31 University of Hawaii Financial Engineering
32 University of North Carolina – Charlotte Mathematical Finance

Kyle Russell, BI, Dish Network Is Partnering With This Startup To make Cell Phone Internet 1,000 Times Faster Than 4G, here.

In today’s world, there’s one area of technology that can almost never be fast enough: the wireless networks that power our mobile devices.
Founded in 2011, Artemis is a startup working on pCell, a new wireless standard that it thinks could leapfrog 4G and LTE altogether. Last month, we wrote a guide explaining everything you need to know about how it works.

It’s not easy for a 10-person startup to roll out a cellular service using a new kind of radio technology. That’s why Artemis announced in recent demonstrations that it had found a partner in the wireless space that would help it deploy the technology in a trial in San Francisco in the final quarter of 2014.

Steve Perlman, Artemis Networks, You Tube, 19Feb,  here. Uhoh, doesn’t look like HFT  had enough HF to work with. Roll out a bunch of pCells in the North Jersey malls and open up retail mobile HFT trading. It could work. That’s how you get the NY AG, Schwab, and Michael Lewis  on board. Probably you ditch the nerdy HFT name and substitute something humans can understand like Stay Free Trading, 1%Trading, or pTrading.  Give Joe and Suzy Sixpack a pCell phone to trade in the Mall and highlight the killer profitable trades they make each month. Hey you never know, but now you get more chances to realize your dreams.  Sweet. Don’t let them trade while driving though. Make them go to the Mall and park their car before they start winning trades. On the other hand if they have a Google car to drive them to the Mall and they are not driving they can print trades, alfresco. We could even make this work with that silly Michael Lewis Erlang HFT infrastructure.

Honey, I’m going to the Mall to make some money real quick TM.

On February 19th, 2014, Artemis CEO Steve Perlman performed a live, hands-on demonstration for the faculty and graduate students at Columbia University.

Artemis.com

Felix Salmon, Reuters, The problems of HFT, Joe Stiglitz edition, here. If this was FIxed Income HFT we’d be hearing crickets.

HFT increases the amount of information in the markets, but decreases the amount of useful information in the markets.

If markets produce a transparent view of all the bids and offers on a certain security at a certain time, that’s valuable information — both for investors and for the economy as a whole. But with the advent of HFT, they don’t. Instead, much of the activity in the stock market happens in dark pools, or never reaches any exchange at all. Today, the markets are overwhelmed with quote-stuffing. Orders are mostly fake, designed to trick rival robots, rather than being real attempts to buy or sell investments. The work involved in trying to understand what is really going on, behind all the noise, “is socially wasteful”, says Stiglitz — and results in a harmful “loss of confidence in markets”.

Zerohedge, Range of HFT Strategies, here.

Julia LaRoche, BI, Cliff Asness, here.

Asness: I still hope to make money. But I wasn’t betting on that thing. I wasn’t calling the Ukraine. So yeah, you’re giving me that look that I get when when I talk to women about quant stuff.

Ruhle: Oh really? Are you hitting me with sexist line right there…Let’s just have a time out right there…Sorry, this is how it goes. ‘When I talk to women about quant stuff… I mean seriously..I’m like ringing a foul ball bell…

Woah,  Cliff Asness forced her to seriously ring the foul ball bell. Dude, what were you thinking? This is like the only time I ever heard  the foul ball bell ring.

Noah Smith, Noahpinion, No one really knows if HFT is good or bad, here.

Updates
Here’s a similar post by Craig Pirrong, who shares my uncertainty about the costs and benefits of liquidity and informational efficiency, but who is slightly more confident about the net effects of HFT on informational efficiency.

David Glasner has a great post on the topic as well. The biggest cost of HFT is probably the resources that are wasted on “information tournaments”. I’m setting up a lab experiment about this very topic, in fact. This problem was pointed out in a famous 1971 paper by Jack Hirshleifer.

Bob Lefsetz, The Big Picture, Flash Boy Rules, here. This reads like it was penned by the drunk uncle seated next to you at a family dinner party, oofta blogs suck. Brad Katsuyama wonders why the Moon is following us. Searches for answers. Lewis writes about the ensuing intellectual  Odyssey. Sort of a Lose Lose scenario for understanding stuff.

CURIOSITY RULES THE WORLD

Brad Katsuyama couldn’t understand why trading had changed. He searched for answers. It was a long torturous path. He found them. If you’re not busy questioning, you’re busy dying.

Philip Delves Broughton, NYT, Flash Boys for the People, here. So, HFT is a Schwab Cancer that consumes Canadian retail commissions before they can be processed by the Schwab host? I can see why they might be upset.

These advantages were demonstrated in a recent natural experiment set off by Canada’s stock market regulators. In April 2012 they limited the activity of high-frequency traders by increasing the fees on market messages sent by all broker-dealers, such as trades, order submissions and cancellations. This affected high-frequency traders the most, since they issue many more messages than other traders.

The effect, as measured by a group of Canadian academics, was swift and startling. The number of messages sent to the Toronto Stock Exchange dropped by 30 percent, and the bid-ask spread rose by 9 percent, an indicator of lower liquidity and higher transaction costs.

Grossman and Stiglitz, JStor, 1980, On the Impossibility of Informationally Efficient Markets, here. Uh Oh, that Schwab Cancer, it spreads back in the  time dimension. Somebody better do something. Let me see if I understand this right. As a small retail investor, just looking for a fair deal, if I trade with Schwab, or anybody else, I will be (and have always been) forced to accept an unfair deal.  That’s just like that Under the Skin movie.

Ms. Johansson’s luscious, cherry-red lips, onto which she is shown daubing deeper shades of crimson, seem to have an extra cushion of softness. In “Under the Skin,” it is as if the voice of Samantha — the operating system Ms. Johansson voiced in “Her” — has taken human form. But instead of a seemingly empathetic cyberfriend, she turns out to be a heartless humanoid temptress from outer space.

In the movie’s striking opening sequence, this otherworldly siren first appears as a speck of light that expands into a disc, which forms into an unblinking eye. Accompanying this metamorphosis is a scratchy electronic soundtrack by Mica Levi that suggests vaguely melodic static emanating from another galaxy.

That eye belongs to Ms. Johansson, whose character later appears as the driver of a white van that makes its way through the crowded streets of Glasgow. She periodically stops to ask for directions from men, then offers them a ride and beckons them to follow her as she removes her clothes and sidles backward. For her entranced victims, shown wading up to their chests in a consuming black void, the end is at hand.

I guess the moral of this story is Stay In School retail investors?

Schwab and Bettinger,  About Schwab, High-Frequency trading is a growing cancer that needs to be addressed, here. Maybe  over time you can accrue too much credibility, and then you have to lose some of it.

Schwab serves millions of investors and has been observing the development of high-frequency trading practices over the last few years with great concern. As we noted in an opinion piece in the Wall Street Journal last summer, high-frequency trading has run amok and is corrupting our capital market system by creating an unleveled playing field for individual investors and driving the wrong incentives for our commodity and equities exchanges. The primary principle behind our markets has always been that no one should carry an unfair advantage. That simple but fundamental principle is being broken.