Friday, March 5, 2021

Tech Talk

      China Emits More Carbon In 2 Weeks Than Australia Does In One Year: Think...

      China Emits More Carbon In 2 Weeks Than Australia Does In One Year: Think Tank

      Authored by Henry Jom via The Epoch Times,

      China emits more carbon dioxide in 16 days than Australia does in one year, according to new research published by a free-market think tank.

      Australia’s net-zero emissions target would therefore be cancelled out by China in just two weeks, the Institute of Public Affairs (IPA) said in a press release on Wednesday.

      According to the report, China operates 57 times as many coal-fired power stations as Australia. This figure is set to increase with China currently constructing 92 coal-fired power stations.

      The report also added that while Australia’s carbon emissions per capita have declined by 15.4 percent since 2004, China’s emissions per capita over the same period have increased by 83.5 percent.

      Globally, the report identified that Australia’s share of global carbon emissions declined from 1.3 percent in 2009 to 1.1 percent in 2019.

      “Despite Australia’s negligible share of global emissions, under the Paris Agreement, Australians are subject to the deepest per capita emissions cuts in the developed world,” the report added.

      Meanwhile, Prime Minister Scott Morrison is pursuing “low emissions technologies” instead of committing Australia to net-zero emissions, with New South Wales and Western Australia referring to net-zero it as an “aspirational” target, reported Herald Sun.

      However, Federal Labor Opposition leader Anthony Albanese looks set to committing his party to achieve net-zero by 2050, while Independent Member for Warringah Zali Steggall plan to introduce a Climate Change Bill to parliament in March.

      Cian Hussey, Research Fellow at the IPA, said calls for Australia to adopt a net-zero emissions target would “ignore the significant economic, social, and humanitarian costs which would inevitably be the result of such a target.”

      “It is reckless and futile for the political class to impose on Australians further severe cuts to emissions which costs jobs and livelihoods, while China—the world’s largest emitter—continues to rapidly increase its emissions without consequence,” said Hussey.

      Earlier research by the IPA found that up to 653,600 jobs would be at “direct risk” if a net-zero carbon emissions target were put in place—particularly in the agriculture, heavy manufacturing, and coal mining industries.

      While some Nationals have called for exemptions for the agricultural sector, Independent Zail Steggall said keeping the sector out of the zero-emissions target would mean the sector risked being charged carbon tariffs from other countries.

      Nationals backbencher Matt Canavan has warned the 2050 net-zero emissions target is the “wrong priority” for the Federal government, reported Sky News.

      “There’s way too much focus on what might or might not happen in 30 years time rather than dealing with the challenges we face right now,” Canavan said.

      “When I think about what the biggest challenge for my kids is going to be in their generation, I think it’s the rising aggression of the Chinese Communist Party in our region. Not carbon neutrality by 2050.”

      Tyler Durden Fri, 02/26/2021 - 23:00

      “Drunk” Roomba Robots Aimlessly Roam Homes Amid Major Software Glitch   

      "Drunk" Roomba Robots Aimlessly Roam Homes Amid Major Software Glitch   

      Here's an instance where smart internet of things (IoT) automation devices are miserably failing. Users on Reddit and other forms of social media are reporting their iRobot Roomba vacuums are experiencing navigation issues, with some users comparing their expensive robo-vaccums' behavior to that of a "drunk."

      "iRobot what's up with the 3.12.8 release? My tickets were closed and I wasn't rolled back. These robots looks drunk since the update. Mounting complaints in the forums continue. Some folks who were rolled back got rolled forward and the issues came back. HELP!," tweeted Anthony Virtuoso

      YouTuber Garrett McGrath uploaded a video titled "Drunk roomba, useless firmware" that shows the robo-vacuum wandering around the room, performing useless tasks. At the end of the video, the robot fails to dock at its charging station. 

      "irobot published a firmware recently that may as well have turned these things into paperweights. the 'fix' is to delete all your maps, reseat the robot a bunch of times, factory reset it after that, reboot it a few more times, and start over entirely with pairing it again. Just to the machine work for two weeks then return to this state, "McGratg explained in the video's description.

      The Verge reports that iRobot's latest software updates for i7 and s9 Roomba models have faulty "firmware updates have been causing navigation issues." According to that report, new software updates could be rolled out "over the next several weeks." 

      One Reddit user records a timelapse video of their i7 failing to dock. 

      These robots cost anywhere from $600 to $900 per unit - these domestic help robo-cleaners under the IoT umbrella are supposed to improve our lives though that doesn't appear to be the case here. 

      Tyler Durden Fri, 02/26/2021 - 22:40

      BREAKING: Huge Covid News in These 7 States

      These 7 States Are On The Verge Of Herd Immunity

      Nothing seems to scare the establishment more than a return to 'normal'. And by 'normal', we mean a return to an environment outside of the tyrannical control of career politicians and bureaucrats who have got a taste for this 'being king' stuff and know that anyone who questions their edicts will be 'canceled' by their Covidian cultists.

      So, a week after Johns Hopkins surgeon, Dr. Marty Makary, penned an Op-ed in the WSJ saying that we will have herd immunity by April... and was instantly disavowed as 'dangerous', some awkward 'facts' and 'science' have been dropped by none other than FundStrat's Tom Lee.

      "...cumulatively and slowly, the US is seeing more states reach that combined level of vaccinations + infections approach what is seen as herd immunity.”


      So far, South Dakota, North Dakota, Rhode Island, Arizona, Oklahoma, Utah, and Tennessee are the nearest.

      Lee's "math" - which we also know is racist - appears to fit with Makary's arguments for why the recent plunge in cases, hospitalizations, and deaths is not policy-related (no matter how much the politicians and their media lackeys push that narrative):

       "...the consistent and rapid decline in daily cases since Jan. 8 can be explained only by natural immunity. Behavior didn’t suddenly improve over the holidays; Americans traveled more over Christmas than they had since March. Vaccines also don’t explain the steep decline in January. Vaccination rates were low and they take weeks to kick in."

      "Experts should level with the public about the good news..." exclaims Makary, and this data on imminent herd immunity puts more pressure on Fauci and Biden to come clean... despite their variant-fearmongering and "no return to normal until Christmas or beyond" predictions.

      But of course, this reality may never be allowed in the national narrative, as Makary previously concluded:

      "Some medical experts privately agreed with my prediction that there may be very little Covid-19 by April but suggested that I not to talk publicly about herd immunity because people might become complacent and fail to take precautions or might decline the vaccine. But scientists shouldn’t try to manipulate the public by hiding the truth. As we encourage everyone to get a vaccine, we also need to reopen schools and society to limit the damage of closures and prolonged isolation. Contingency planning for an open economy by April can deliver hope to those in despair and to those who have made large personal sacrifices."

      But, but, the science!?

      Tyler Durden Fri, 02/26/2021 - 15:00

      Maryland teaching aide ‘engaged in inappropriate behavior’ on Zoom call with eighth grade students

      (thepostmillennial)A Maryland middle school teacher's aide was caught masturbating during a Zoom call with eighth grade students. Marc Schack, a special education teaching assistant at Shady Grove Middle...

      UK Health Authorities Announce Not A Single Case Of Flu Detected This Year

      UK Health Authorities Announce Not A Single Case Of Flu Detected This Year

      Authored by Paul Joseph Watson via Summit News,

      Health authorities in England have announced that not a single case of influenza has been detected this year, with one professor suggesting that mask wearing should be kept in place during winter to drive down flu deaths to “zero.”

      “The social restrictions brought in to curb transmission of coronavirus, combined with an increased uptake of flu vaccine, have both been credited with driving down infections,” reports the Independent.

      Of the 685,243 samples tested at the PHE’s laboratories since the first week of January, not a single flu infection was discovered.

      Professor Christina Pagel went on to suggest that some of the measures brought in to fight coronavirus could be kept in place to combat flu infections.

      Asserting that “we can reduce flu deaths to pretty much zero,” Pagel said it is “worth encouraging people to wear masks” on public transport and in other busy environments every winter.

      As we previously highlighted, other health experts have suggested that flu cases are so dramatically low because influenza cases are being falsely counted as COVID cases.

      Last month, top epidemiologist Knut Wittkowski asserted that, “Influenza has been renamed COVID-19 in large part.”

      According to the CDC, the cumulative positive influenza test rate from late September into the week of December 19th was just 0.2%, compared to 8.7% from a year before.

      According to Wittkowski, former Head of Biostatistics, Epidemiology and Research Design at Rockefeller University, this was because many flu infections are being incorrectly labeled as coronavirus cases.

      “There may be quite a number of influenza cases included in the ‘presumed COVID-19’ category of people who have COVID-19 symptoms (which Influenza symptoms can be mistaken for), but are not tested for SARS RNA,” Wittkowski told Just the News.

      Numbers published in April last year by the UK’s Office of National Statistics also showed that there had been three times more deaths from flu and pneumonia than coronavirus.

      “The number of deaths from flu and pneumonia – at more than 32,000 – is three times higher than the total number of coronavirus deaths this year,” reported the BBC.

      *  *  *

      In the age of mass Silicon Valley censorship It is crucial that we stay in touch. I need you to sign up for my free newsletter here. Support my sponsor – Turbo Force – a supercharged boost of clean energy without the comedown. Also, I urgently need your financial support here.

      Tyler Durden Thu, 02/25/2021 - 02:00

      Supposedly Retired, F-117 Nighthawk Stealth Jets Spotted Over Los Angeles

      Supposedly Retired, F-117 Nighthawk Stealth Jets Spotted Over Los Angeles

      Defense Blog reports a pair of Lockheed F-117 Nighthawk stealth attack aircraft were spotted above Los Angeles last Friday. The F-117s are supposedly retired but were spotted flying with a Boeing KC-135 Stratotanker. 

      AP Freelance photographer Matt Hartman tweeted a picture of the stealth aircraft on Sunday. He said:

      "So one day at ⁦ @flyLAXairport ⁩ I get a tip about something special… I look up ……. USAF KC-135R in-flight w/ 2 F-117 Stealth Fighter’s! Well I guess their NOT retired after all?? 02-19-21 2."

      Two F-117 Nighthawks

      After 25 years in service, the Air Force retired the F-117 fleet in April 2008, but in September 2017, the service received special permission to keep 51 in Type 1000 storage, meaning the planes could swiftly return to active service. 

      In October, we reported two F-117s were spotted at the Miramar Naval Base in San Diego.

      It appears the Pentagon is bringing some of these legacy stealth aircraft back to active duty. 

      Four decommissioned F-117s were secretly deployed to the Middle East in 2017 to launch surgical strikes. The reason for the deployment was simple; Russia and Syria had shut down Syrian airspace by mid-2016. The U.S.-led coalition was unwilling to lose a fifth-generation aircraft to Russia's S-400 missile systems in Syria. 

      With a great power competition unfolding between the US and China - may be the Pentagon is prepping these planes for future Pacific warfare. 

      Tyler Durden Mon, 02/22/2021 - 23:40

      US Army Prepares To Equip Unit With Hypersonic Capability 

      US Army Prepares To Equip Unit With Hypersonic Capability 

      Following conflicts over trade, technology, and capital markets, rising political tensions between the US and China will continue under the Biden administration.

      For instance, the US Army is expected to equip its first unit with hypersonic equipment this fall. The Pentagon is far behind in the hypersonic races with China and Russia. 

      A hypersonic unit within the Army will begin training with all the equipment it needs to launch these new weapons, according to Lt. Gen. L. Neil Thurgood, director of the Army's Rapid Capabilities and Critical Technologies Office, who spoke with Defense News.

      Thurgood said the equipment will be delivered to the unit by September. 

      "By the end of this fiscal year, which is in September, all of the equipment that the unit needs plus training will be delivered to the unit," he said. 

      The unit will be supplied with a vast number of launchers, trucks, trailers, computer systems, and other pieces of equipment to begin training in early 2022. 

      Thurgood declined to tell Defense News which unit will receive the equipment. He said the live round is the only piece of equipment that won't be delivered this fall. It was noted that the weapon itself will be delivered in 2023. 

      Thurgood did not comment on the type of hypersonic weapon the unit will be receiving. However, we noted last March, the US Department of Defense (DoD) successfully launched a common hypersonic glide body (C-HGB) missile from the Pacific Missile Range Facility, Kauai, Hawaii.

      The DoD has been allocating more funds to hypersonic programs for upcoming military budgets as it must desperately catch up with China and Russia. 

      Senator James Inhofe, a senior Republican from oil-producing Oklahoma and Senate Armed Services Chairman, told Defense News in 2019 that DoD's hypersonic testing labs were inadequate. He said, "dilapidated testing infrastructure is holding us back from catching up to our enemies. Just look at hypersonic weapons: Beijing is parading around dozens of its newest weapons, and we have yet to build one."

      The US is in a hypersonic race with major global superpowers and is clearly behind the curve. 

      Tyler Durden Fri, 02/19/2021 - 23:40

      U-Haul’s annual ‘migration trends’ report reveals massive exodus from Washington state

        (thepostmillennial)The latest annual 'migration trends' report from U-Haul, on approximately two million, one-way household moves in 2020, showed Washington state dropping from the number five spot in...

      Exposing The Robinhood Scam: Here’s How Much Citadel Paid To Robinhood To Buy Your...

      Exposing The Robinhood Scam: Here's How Much Citadel Paid To Robinhood To Buy Your Orders

      Frankly, we've had it with the constant stream of lies from Robinhood and neverending bullshit from the company's CEO, Vlad Tenev.

      With Tenev scheduled to testify on Thursday, alongside the CEOs of Citadel, Melvin Capital and Reddit, the apriori mea culpas have started to emerge - if a little too late - the former HFT trader spoke late on Friday on the All-In Podcast hosted by Chamath Palihapitiya, who had strongly criticized Robinhood over the trading restrictions, and Jason Calacanis, a Robinhood investor, and said that “no doubt we could have communicated this a little bit better to customers."

      What he is referring to, of course, is Robinhood's outrageous decision to restrict the buying of 13 heavily shorted stocks on Jan 28 that had been driven to record highs, including GameStop, whose shares had surged more than 1,600%.

      Tenev said the restrictions were necessary due to a large increase in collateral/deposit requirements by the DTCC, but that was not spelled out in automated emails sent to Robinhood customers early on Jan. 28.

      Robinhood CEO Vlad Tenev

      And then he decided to pull the oldest trick and deflect attention from his own mistakes by blaming "conspiracy theories."

      "As soon as those emails went out, the conspiracy theories started coming, so my phone was blowing up with, ‘how could you do this, how could you be on the side of the hedge funds,’" he said.

      What Tenev did not say, or explain, is why his company - which is merely a client-facing front of Citadel, which buys the bulk of Robinhood's orderflow to use it perfectly legally in any way it sees fit - was so massively undercapitalized that the DTCC required several billion more in collateral to protect Robinhood's own investors against the company's predatory ways of seeking to capitalize on the gamification of investing making it nothing more (or less) than a trivial pursuit to millions of GenZ and millennial investors, a point which Michael Burry made so vividly.

      Incidentally we know why Tenev did not mention it: it's because Robinhood's back office is a shambles of a shoestring operation, one which never anticipated either such a surge in trading not a multi-billion collateral requirement; had Robinhood been a true brokerage instead of pretending to be one, and run merely to open as many retail accounts as it could in the shortest amount of time, thus generating the most profit in the quickest amount of time to allow its sponsors a quick and profitable exit, it would actually have been on top of this.

      It's also why Tenev's ridiculous pleas for immediate settlement instead of the usual T+2 arrangement, which has not been an issue for any other brokers, is nothing but a strawman argument which he hopes to present in Congress.

      Which brings us to a totally separate topic, and one which Tenev will one way or another have to address: the fact that Robinhood is a de facto subsidiary of Citadel, whose entire business model is to sell retail orders to a handful of HFT market makers first and foremost... Citadel. In doing so the only ones who benefited from the surge in retail trading are Robinhood itself, by pocketing millions more from selling orderflow to Citadel, Virtu, Two Sigma, Wolverine and other HFT frontrunning "market-making" venues, as well as Citadel which made billions by having an advance look at the biggest surge in retail stock and option orders flow in history, and being able to trade ahead of and around it.

      And no, it's not a conspiracy theory Vladimir - it is the stone cold truth, as Jeffrey Gundlach suggested last week when he said "Robin Hood (sic) should be forced to change its name to Hood Robbin’.  I grow so weary of lies through nomenclature, which are ubiquitous these days" adding "To be clear, the name change would reflect Robinhood robbing the little guy, nothing else."

      As an aside, how dare we allege that Citadel was buying orderflow to frontrun it? After all, that very allegation...

      ... coupled with the reminder that Robinhood engages exclusively in a practice called payment-for-orderflow (or PFOF)...

      ... which is what allowed Robinhood to provide "free" trading in the first place, that nearly destroyed us when last June Citadel's lawyer army threatened to sue us into the ground for suggesting precisely that?

      Some key phrases of note from the above text:

      • "'Frontrunning' is an industry term of art that refers to an illegal form of trading."
      • "Citadel Securites does not engage in such conduct [i.e., frontrunning] and there was no factual basis whatsoever for ZeroHedge to publish such an incendiary, false, and reckless allegation to its 742,000 Twitter followers" [it's 771,000 now].
      • "ZeroHedge's statement obviously disparages the lawfulness and integrity of Citadel Securities' business pratices."
      • "Quite obviously, this most recent iteration of this same harmful allegation was not made in jest."
      • "We demand that ZeroHedge immediately retract this tweet by deleting it from ZeroHedge's Twitter page... A refusal to promptly take down these remedial steps will be seen as further evidence of actual malice and will only increase the already substantial legal risk faced by you and ZeroHedge."

      Well, we now officially know all about Citadel's modus operandi because just a few days after we received that letter, none other than financial regulator FINRA, revealed that Citadel Securities was censured and fined for engaging in - drumroll - "trading ahead of customer orders" as Letter of Acceptance No. 2014041859401 revealed:

      Now we admit that our financial jargon is a bit rusty these days, but "trading ahead of customer orders" sounds awfully similar to another far more popular "term of art", one which we know very well: frontrunning!

      Jargon aside, some of the other highlighted words we are very familiar with, such as "hundreds of thousands"... and "559 instances" in which Citadel traded ahead of customer orders.

      And while we may be getting a little ahead of ourselves here, it was Citadel's own lawyers that informed us on more than one occasion that:

      "frontrunning" is an unethical and illegal trading practice."

      So, what are we to make of this? Could it be that Citadel was engaging in at least 559 instance of what its lawyer called "unethical and illegal trading practice." Surely not: after all the lawyers would surely know very well how ridiculous and laughable their letter and threats would look if it ever emerged that Citadel was indeed frontrunning its customers.

      But wait, it gets even funnier.

      Back in April 2004, long before Citadel became the dominant market maker - and buyer - of retail orderflow controlling a whopping 27% of total US equity volume market share in 2020 according to Bloomberg and a staggering 46% of retail orderflow, it was Citadel's own General Counsel, Adam Cooper, who urged the SEC to ban payment for orderflow because it "distorts order routing decisions, is anti-competitive, and creates an obvious and substantial conflict of interest between broker-dealers and their customers."

      As Cooper also revealed...

      "broker-dealers accepting payment for order flow have a strong incentive to route orders based on the amount of order flow payments, which benefit these broker-dealers, rather than on the basis of execution quality, which benefits their customers. Furthermore,  the  parties  making such payments (either voluntarily or through an exchange-mandated program) are forced  to  find  other  ways  to  recoup  the  amounts  of  such  payments,  whether  through  wider  spreads  or  a  reduction  in  other  benefits  that  otherwise  could,  and  should,  be  provided to customers."

      And the punchline:

      Payment  for  order  flow  is  a  practice  that  on  its  face  is  at  odds  with  a  broker-dealer’s obligations to its customers.  A broker-dealer has a fiduciary obligation to obtain the best execution reasonably available for its customers’ orders under prevailing market conditions.    We  do  not  believe  that  a  broker-dealer  that  accepts  payment  for  order  flow  and does not pass such payments on to its customers (either directly or through reduced execution fees or commissions) can consistently fulfill its best execution obligations.

      Which leads us to the one time Citadel was actually telling the truth:

      Because  payment  for  order  flow  creates  fundamental  conflicts  of  interest  that  cannot  be  cured  by  disclosure,  the  Commission  should  ban  payment  for  order  flow  altogether.  It is crucial that this ban include not only exchange-sponsored programs, but also  payment  for  order  flow  arrangements  entered  into  privately  between  order  flow  providers   and   market   centers. 

      Little did Citadel know that just 15 years later it would be the single biggest beneficiary of paying for orderflow, a practice which has allowed Citadel founder to amass a trophy collection of some of the most expensive real estate in the world.

      We also know all this is true because we were also among the first to expose Robinhood as a client-facing front for Citadel back in 2018, when we wrote "Robinhood Is Said To Get 40% Revenue From HFT Firms Like Citadel" in which we said that...

      "Stealing from millennials to give to the rich. Robinhood app sells user customer data to make a quick buck from the high-frequency trading (HFT) firms on Wall Street," that is what we wrote last month, in one of the first articles that expressed concern over the popular Robinhood investing app for millennials, which has shady ties to HFT firms and undermines its image of an anti-Wall Street ethos. 

      The conclusion was a searing prediction of what would happen a little over two years later:

      A few anonymous venture capitalists told Bloomberg that Robinhood has already begun to see the consequences of their cozy relationship with Wall Street firms, which has degraded the company's image. 

      With six million clients, most of whom are millennials -- seeking an anti-Wall Street investing culture, could soon find out, that, they too, have been conned by Robinhood founders into thinking the app offers free investing. The lesson at play: nothing in life is free, even if it is from Silicon Valley.

      That said, we were not the first to expose Robinhood's ways. That honor falls to our friend Joe Saluzzi and Sal Arnuk, who for over a decade have led the crusade against high frequency trading, and who in November 2014 wrote "Beware of Those Offering Free Retail Trades."

      We are always suspicious when somebody offers us something for free.  Usually, the one offering the free service has other ways of making money.  For example, Google offers lots of free services like Gmail, Google Maps or Youtube. While the services are free, Google is still making money by targeting ads and selling data. The latest free thing which is creating quite a buzz (the hot term for this is “disrupting”) is free retail trading by a company called Robinhood.

      What is Robinhood?  According to an article in the Irish Times yesterday:

      “Founded by Stanford mathematics graduate Vlad Tenev and  Baiju Bhatt last year, Robinhood is a stock brokerage that charges no commission.”

      Robinhood is offering free stock trades and no-cost real time market data.  How do they do it? According to the company:

      – They don’t have brick and mortar companies and don’t spend millions on Superbowl ads.

      – Technology has allowed them to eliminate much of the human intervention and paper confirms.

      And how do they make money?  According to their website:

      “Robinhood has two key revenue streams; charging interest for margin trading, and collecting interest on cash balances.”

      Call us crazy but relying on generating revenue from margin interest and collecting interest on cash balances (where the account minimum is $0) sounds a bit risky and overly ambitious in a market which has been saddled with zero percent interest rates for the past 5 years.  That’s why we think Robinhood must have another way of making money. Could it be that the founders, Vlad and Baiju, are planning on taking advantage of the rebates and payment for order flow that are embedded in the equity market?  But how could two guys who graduated from Stanford in 2008 know that much about the market structure of the US equity market? From their website:

      After graduating from Stanford, roommates Vladimir Tenev and Baiju Bhatt moved to New York, where they built high-frequency trading platforms for some of the largest financial institutions in the world. They began to realize that electronic trading firms pay effectively nothing to place trades in the market yet charge investors up to $10 for each trade — and thus the idea for Robinhood was born. They soon ventured back to California to begin solving the problem of democratizing access to the markets.”

      Seems like Vlad and Baiju know a lot more about US equity trading than we thought.  Heck, they may even know that when a retail limit order is sent to the DirectEdge stock exchange, that order could qualify for a special rebate if it is attributed and displayed as a retail order.  Here is how DirectEdge describe their retail attribution program​ :

      “With this improvement, Members sending Retail Orders may elect to display those orders on the EdgeBook Attributed data feed with the generic retail identifier “RTAL” rather than their Market Participant ID (MPID).  Including a standard retail identifier gives retail brokers greater flexibility and choice to participate in the attribution program that has helped improve execution rates for retail orders.”

      Talk about leading the lambs to the slaughter.  Retail orders that are being attributed are basically flashing bright lights telling the world that they are retail.

      We’re not sure if Robinhood is planning on selling their order flow but it is certainly something that their customers should be asking them once they do start trading. While their website does not say anything about payment for order flow, in a CNBC interview from earlier this year, Vlad Tenev did say the company would be accepting payment for order flow:

       “So, Robinhood has many revenue streams on Day One. Those include margin lending, payment for order flow, interest on cash balances. We’ll have those on Day One,” Tenev said on CNBC’s “Halftime Report”.

      Right now, Robinhood is still busy attracting some high profile investors which include Snoop Dog, actor Jared Leto, the venture capital fund Andreessen Horowitz and Google Ventures (Robinhood raised $13 million in their latest financing round).

      Two points here: Vlad Tenev's entire background is HFT - he knew from day one that he could create a "free brokerage" if only he were to quietly sell all the orderflow to a generous sponsor, say Citadel. It's also why we find laughable his recent tweet asking, obviously rhetorically, "What exactly is high-frequency trading? And is it evil?"

      Tenev then went on into a rambling, nonsensical defense of HFT and why it is not evil, concluding that "high-frequency trading is just what you get when you apply technology to trading and getting data moving faster between trading centers will enhance trading for us all"...

      ... what he did not say is that HFT is just a perfectly legal and widely accepted way of frontrunning retail orderflow (usually by the order of a few milliseconds, explaining the presence of lasers at the New York Stock Exchange in Mahwah), and then selling it to the highest bidder, something he knew almost a decade ago when he launched Robinhood. We almost wonder if he did so in some low-lit Chicago backroom while sitting across from Citadel's Ken Griffin (this would be the other Citadel, not the one from 2004 which found payment for orderflow loathsome and deserving to be banned, but a Citadel which now considered PFOF a source of almost unprecedented riches and profit).

      The second point we would like to address from the Themis Trading 2014 post is that while back then it was unclear if RH sold their orderflow, we now know that not only is Robinhood selling your orders to other internalizers, but that sale represents the biggest source of RH revenue by orders of magnitude. And thanks to the company's just filed latest Disclosure Form 606 we know just how much Robinhood made from selling your orderflow to Ken Griffin.

      The chart below shows Robinhood's monthly revenues for the full year 2020, broken down in the three key categories: i) S&P500 stocks, ii) Non-S&P500 stocks and iii) Options. And while Robinhood made a not-too-shabby $247 million in 2020 from just selling access to your retail stock orders to such non-directed orderflow venue as Citadel, Vitru, Wolverine, Two Sigma, G1X, Morgan Stanley and others, it is the sale of option orderflow that has emerged as Robinhood's golden goose, having generated an impressive $440 million in revenue in 2020.

      Which then brings us to the punchline: Robinhood is kind enough to break down not only revenue by product (going down to such granular detail as market orders and limit orders), starting several years ago the company also started disclosing who its biggest clients were. And here it will come as no surprise that in 2020, Citadel accounted for more than half of all Citadel revenues, or $362.5 million, exactly 53% of the company's total revenues of $687.1 million.

      Would it therefore be farfetched to say that Robinhood is nothing more than a client-facing subsidiary of Citadel, one which pretends to offer free trades to tens of millions of young, naive traders, but in reality merely allows Citadel Securities to trade ahead and/or against this orderflow for which it paid over $300 million... and to generate record revenues of $6.7 billion!

      Probably not, but we won't have a definitive answer until we find out just how much profit Citadel made from buying all this critical data, which gives it an early glimpse into not only each discrete individual trade but also a sense of which way the retail horde is moving, critical and extremely valuable data which until last August was public and available to all (with a slight delay) courtesy of Robintrack, and which last August was inexplicably halted.

      We are confident that this week's Congressional hearings will quickly get to the bottom of this critical question of just how profitable this orderflow - which it paid Robinhood $362 million to procure - is for Citadel, because anything less will confirm that this latest hearing is nothing but a kangaroo court meant to appease retail investors that someone in Washington is doing something... when in reality everyone knows that what Citadel wants, Citadel gets and there is no sign that Citadel will ever tire of making billions out of the same orderflow for which it paid subpennies on the dollar to Robinhood.

      As for Robinhood's trite virtue signaling of taking from the rich and giving to the poor, all it took was 30 billion subpenny rebates from Citadel for the firm to remember who really calls the shots.

      Tyler Durden Mon, 02/15/2021 - 14:17