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Yellen and Company Try Reasoning With Artificial Intelligence to Climb Off the Risk Ledge

IMAGE: via Twitter

“World bankers, by pulling a few simple levers that control the flow of money, can make or break entire economies. By controlling press releases of economic strategies that shape national trends, the power elite are able to not only tighten their stranglehold on this nation’s economic structure, but can extend that control world wide. Those possessing such power would logically want to remain in the background, invisible to the average citizen.” — Aldous Huxley

To create some plausible denial for a market rout, the mucky mucks at the privately held Federal Reserve Bank need to go through the motions of warning human market participants. A key tenet of Luciferian types is the “forewarning.” That way they can wash their hands of the carnage.

Yesterday San Francisco Fed President John Williams said the stock market “seems to be running very much on fumes” and that he was “somewhat concerned about the complacency in the market.”

Fed Vice-Chair Stanley Fischer was more direct, suggesting that there had been a “notable uptick” in risk appetite that propelled valuation ratios to very elevated levels.

Finally, Fed Chairwoman Janet “Yellen Wolf” offered her standard wishy-washy take: “Asset valuations, by some measures, look high, but there’s no certainty about that.”

Today’s “market participants” are the AI computers, otherwise known as quants or algos. JP Morgan’s Marko Kalonovic quote is descriptive:

“… some striking facts: To understand this market transformation, note that Passive and Quantitative investors now account for ~60% of equity assets (vs. less than 30% a decade ago). We estimate that only ~10% of trading volumes originates from fundamental discretionary traders.

Veteran hedge fund manager Doug Kass provided some more color on these “investors.” Has AI programmed in Janet Yellen’s serious lack of credibility and propensity to cry wolf?

We don’t know what AIs are working because there are no regulations requiring that machine decision-making accounts disclose and register as such … a very, very big gap in regulation. He continues on, “AI do NOT simply duplicate human rules and logic. The machines are figuring out how to decide to “make a profit” on their own and subject to no enforceable constraint. The creators have no knowledge of what their creations are thinking or what kind of inputs the machines are thinking about and how decisions about that are being made. The machines are inscrutable and, most terrifyingly important, UNPREDICTABLE.

Don’t ask me about the timing, as I am not privy to the memos. But we submit that Aldous Huxley’s words above are in play. TPTB (aka Crime Syndicate) knows exactly how to trigger these AI computers so as to create a cascade effect. They know full well they’ve created a monster. And when the trigger is tripped, the computers will figure out at lightning speed new ways to make a profit, this time on the downside. Downside or crash moves in markets occur in a short span of time, lending real meaning to the term “a quick buck” and “transfer of wealth.” It will be reinforcing, and no one will be able to turn them off.

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  • Torchy Blane

    Interesting notion that the Crime Syndicate has lost control of its own algos. I think it’s a half truth.

    First off, I don’t think any system lacks an off switch – especially one that controls funds. I think the Crime Syndicate wants you believe it’s all AI and they have no control because they fear the pitchfork crowd.

    Execution speed is an issue. How fast can the market be halted? Does it have its own algo that automatically halts trading if say the market loses for than 2% in less than 2 minutes? Probably.

    Second, I think a lot of these algos are controlled by foreign billionaires who are not in The Club and are therefore totally unpredictable. They’re in Saudi Arabia, Dubai, China, Russia and even Israel. Their objective is HTF skimming and greasing the wheels on the downside to destabilize the U.S. economy.

    Third, I think the Fed (or fed) has its own alpha/VIX-sapping algos that perform the function of patching holes and backstopping the market. Who gets the bill? John Q. Public, of course.

    Finally, I’ll bet a lot of the more aggressive alpha-seeking algos had to be tweaked or scrapped after the inauguration of Trump. He’s a big algo-rigger – and he knows it. That’s why he tweets his most salacious diatribes just before the markets open.

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