Quartz Weekend Brief—High-frequency trading, sneaky logic, stop-and-frisk, rhino-horn rustlers

April 4, 2014
April 4, 2014

The talk of Wall Street this week wasn’t an IPO, or a market crash, or multi-billion-dollar rate-fixing settlement. It was a book: Michael Lewis’s Flash Boys, the story of a group of traders and technologists who built their own exchange, IEX, in an attempt to short-circuit the high-frequency trading (HFT) firms that skim hundreds of millions of dollars out of the markets in tiny increments using millisecond advantages. (Here’s an excerpt from the book, and our own story about IEX, from last year.)

The book has spawned reams of commentary, a televised shouting match that brought Wall Street to a standstill, and investigations by several government bodies into whether HFT constitutes insider trading.

All of which is, at some level, crazy. The first “flash crash” blamed on the volatility caused by trading algorithms was in May 2010. Regulators have been nosing around the issue (pdf) for years. And now everyone’s up in arms because a guy wrote a book?

Of course, Lewis isn’t just any guy; he’s an ex bond trader whose 1989 book Liar’s Poker was one of the defining accounts of the Wall Street of those days, and who has written several blockbusters since. He’s exceptionally deft at weaving a gripping narrative that isn’t about finance, but about people—their vanities and frailties and victories and betrayals. And such stories still have the power to stick in minds and change opinions in a way that no amount of careful analysis about algorithms and trading machines and financial instruments can.

And that’s the moral of the story: It’s the story that matters.—Gideon Lichfield

Five things on Quartz we especially liked

The sneaky logic behind Google’s latest privacy change. Learning from the flak it endured after combining users’ data across its services two years ago, the search company recently made a similar tweak for mobile phones that gives it far more information about their users—and almost nobody noticed, says Leo Mirani.

The even sneakier logic behind the prices in the hotel minibar. A TripAdvisor survey revealed the cheapest and most expensive cities for hotel-room snacks, but why is vodka universally cheaper than nuts and sometimes even water? Annalisa Merelli suspects an ingenious behavior-modification stratagem.

What’s really going on with Chinese housing? We’ve heard about the property bubble in China since forever, so does a recent fall in home sales mean it’s popped? Not necessarily, explains Gwynn Guilford: It all depends on what kinds of housing China has, and no-one is quite sure.

Why the rich keep getting richer, as explained through pop culture. You may have read reviews of Thomas Piketty’s Capital in the 21st Century, the book that explains why wealth concentration is generally inevitable. But you haven’t read Tim Fernholz’s version, which reconstructs the argument through Piketty’s fondness for TV dramas, cartoons, and Balzac.

An 800-pound gorilla just stepped into your living room. Fire TV, Amazon’s set-top-box-cum-gaming-device, is a latecomer to a crowded field, notes Zach Seward, but the product involves some smart choices. And John McDuling has a not-so-gentle reminder for media companies of what happened to the last few industries Amazon decided to get into.

Five things elsewhere that made us smarter

What you hear when you’re supposed to be dead. Brandon Keim of Wired interviews Sam Parnia, a doctor who specializes in resuscitating people from the very frontier of death. His research suggests that people are processing sensations and thoughts even when the brain appears to be shut down.

The social cost of “stop-and-frisk.” Stopping and searching predominantly young black men is touted as an effective strategy against crime in US cities. In the Atlantic, Christopher Smith, the white father of a young black man, argues that it effectively creates two different countries, and wonders what would happen if white men suddenly found themselves transported to the country black men inhabit.

How Gmail came to be. The defining characteristic of the free email service Google launched on April Fool’s day a decade ago—and the key to its survival—was that it had the best search function. (As Quartz’s Max Nisen wrote this week, search has since become the only way to organize.) But, as Harry McCracken recounts in Time, Gmail almost didn’t happen.

How to make sense of Russia’s nationalism. It’s standard to account for the behavior of states in terms of rational self-interest, but that can lead to some absurd rationales. Peter Turchin in Aeon suggests that injecting some evolutionary thinking into realpolitik may better explain Russia’s seemingly illogical attachment to Crimea.

The rhino-horn rustlers of County Limerick. If you have an hour or two, curl up with Charles Homans’ 19,000-word yarn in the Atavist, as long and looping as an Irish ghost story, about the families who have improbably cornered the worldwide trade in black-market rhinoceros horn, stolen from Europe and the US and shipped to the far East.

Our best wishes for a relaxing but thought-filled weekend. Please send any news, comments, nationalist theories, and spare rhino horn to hi@qz.com. You can follow us on Twitter here for updates throughout the day.

Sign up for the Quartz Daily Brief here, tailored for morning delivery in Asia, Europe & Africa, and the Americas.

Top News

Powered by WordPress.com VIP
Follow

Get every new post delivered to your Inbox.

Join 24,417 other followers