Nick Hubble | The Daily Reckoning Australia | 20 Aug 2014

New Zealand’s economic fortunes took a bizarre turn last night. The plot was straight out of the movie series Terminator. Keep in mind about a quarter of NZ’s exports are dairy products…

At 10:33 New York time, news site Bloomberg released the headline ‘WHOLE MILK POWDER PRICES FALL 11.5%’. Algorithms designed to read headlines and trade them faster than humans instantly did their damage. Currency markets went bananas as the New Zealand dollar tanked.

Luckily for the Kiwis, there are still a few real people around in trading pits. Unlike computer algorithms, these traders have an appreciation for human error. It turned out that Bloomberg released last month’s result again instead of the new data. The human traders recognised this about the same time as the algorithms finished driving down the Kiwi dollar. And so the human traders jumped in. They cleaned up while Bloomberg corrected the headline. The algorithms had to reverse their position, making the Kiwi surge back in the opposite direction.

Huzzah! Man over the machine.

Back in the real world (outside financial markets) and on our Australian shores, there’s some bad news. The lucky country’s ‘misery index’ is at a six year high. The total score of nine is the sum of inflation running at 3% and unemployment at 6%. We’re officially worse off than the US and Britain, not to mention having a higher unemployment rate than the Americans.