Monday, September 7, 2009

PIMCO's El-Erian: HFT is a Head-Fake

WOW! No less that the majestic PIMCO is now admitting that High Frequency Trading (HFT) is causing distortions in the equity markets. And when PIMCO talks, we certainly perk up and take a listen, even though we believe that a lot of their talk is self-serving at best. However, given their sheer size and deep political connections it is hard to dismiss their views. And since their portfolio is so much more valuable to BFF Bernanke vs. ours, we for all practical purposes view PIMCO as a market insider.
So attached below is El-Erian’s interview with the wildly optimistic but sadly uninformed CNBC host Joe Kernen. Move over to 2:47 min mark to hear El-Erian tell Joe "The High Frequency data has acted as a head fake for many in the market...equity markets are on a Sugar High".
And er... before we go we have one piece of advice for the financially illiterate Joe Kernen: “Before you go off berating our insider boy El-Erian on not having a grasp of the buoyant equity markets, we would like you to spend a few hours on a bond trading desk. You Joe will realize that bond investors often have a better grasp of equity markets, since equity is the cushion underneath their bonds. So they make SURE they understand the equity markets very well thank you. And yes we at The Firecracker Report have been there done that, which is why we are telling you Mr. Joe to go to bondholder boot camp”.

No comments: