A Mixed Day

By: Kent Engelke | Capitol Securities

JP Morgan has accused 12 artificial intelligence hedge funds (aka algorithmic) of playing a major part in the equity sell off that hit global markets in early February. The bank believes AI funds, which use machine learning in their trading processes to predict market trends, played a “big role in February’s de-risking” as the models rushed to unwind positions as volatility rose.

The “AI” funds slumped 9.3% in average in February, the worst monthly decline since the index began in 2011. JP Morgan writes there are just 12 funds as well as 11 defunct ones.

Wow! I rhetorically ask what happens in a crisis? Does the cheapest execution morph into the greatest cost? I think the odds suggest yes.

Market activity yesterday was mixed. This week’s economic calendar is comprised of retail and inflation data that can greatly influence perceptions.

Commenting about inflation and growth, real GDP or growth minus inflation has averaged about 1.5% since the end of the great recession. Gluskin Sheff writes real GDP has averaged 3.8% in comparable post war periods. Nominal GDP, which is growth not adjusted inflation, has averaged 3.1% since June 2009.

I believe it is lack of nominal GDP growth that is why the populist movement is so strong in the US and the result of the world.

What will happen today? Will the CPI impact trading?

Last night the foreign markets were mixed. London was down 0.04%, Paris was up 0.35% and Frankfurt was up 0.03%. China was down 0.49%, Japan was up 0.66% and Hang Sang was up 0.02%.

The Dow should open flat ahead of the CPI. The 10-year is unchanged at 2.87%.

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