By Herb W. Morgan, III, Efficient Market Advisors

Over the last two weeks, I have had dozens of conversations with investors, industry peers and colleagues about what caused equity markets to so aggressively decline. There is no shortage of theories ranging from theories about pending presidential impeachment to an imminent recession. The one theory that holds the most water is that electronic program trading has to be primarily to blame.

The genesis for what was an orderly market decline was no doubt the confluence of a myriad of factors. For starters, the US Federal Reserve is implementing two powerful tightening tools by simultaneously raising the Federal Funds Rate while pulling $50 billion of liquidity from the system each month through balance sheet run off. The European Central Bank (ECB) has announced the end of its bond-buying program, without implementing fiscal reforms to its structural deficiencies. China’s economy is downshifting while it is in the midst of a trade war with the world’s most powerful nation. Continue Reading Here