Flash crash arrest: Straight outta Hounslow

How might Michael Lewis dramatise the life of Navinder Singh Sarao, a British high-frequency trader accused of helping trigger the 2010 "flash crash" in US equities? The US author specialises in hard-boiled Wall Streeters of the Salomon Brothers type. So he could struggle to inject testosterone into the life of a man who reportedly drove his parents' clapped-out car and used their neat Hounslow semi as a registration address for his company.

Mr Sarao, judging from the criminal complaint against him from the US Department of Justice, is hardly an HFT of the kind described in Mr Lewis's book Flash Boys. Some of these drilled data pipes through mountains to gain extra microseconds of latency.

However, Mr Sarao has high latency from a US legal perspective. The DoJ's system for extraditing suspect businessmen from the UK is a well-oiled machine, though its reach runs out at the borders of countries such as Russia, where other HFTs are reputedly based. Mr Sarao appears to have been a one-man band, whose alleged "spoofing" of the market may have been reported by an external tech provider. A bent US-based trading firm would employ its own technicians, reducing vulnerability to such tip-offs.

Hounslow is even close to Heathrow Airport, which could make it easier to put Mr Sarao on a flight to Illinois.

This is not to imply that the futures trader, who was active on the Chicago Mercantile Exchange, is a scapegoat. His innocence or guilt will, one assumes, be established by a court. But the regularity with which Mr Sarao allegedly placed massive phantom sell orders in stock index futures with the aim of moving prices advantageously, combined with the factors mentioned above, suggests he is a soft target.

The DOJ complaint against the Hounslow HFT leaves US market companies and regulators as exposed to criticism as Mr Sarao. If he could manipulate stock index futures and contribute to a flash crash, maybe anyone could. That would make the probity and stability of US futures markets far more fragile than billed.

Tesco: Dave does drastic

"Drastic" Dave Lewis, would-be rescuer of Tesco, has lived up to his nickname with £7bn in impairments, pushing the supermarket group to a £6.4bn loss in the year to February. That is the easy bit. The challenge for the ex-Unilever executive is to rebrand himself as "Fantastic" Dave by reviving the UK's largest supermarkets group.

Reporters were groping for precedents on Tuesday morning. This was the biggest loss in Tesco's history. But where might it fall in the horror show of all-time UK corporate purlers? Fourth or fifth?

That ignored inflation, which reduces the comparative awfulness of the number, and downplayed the fact that most of the damage consisted of a non-cash writedown of property values. Tesco's net cash outflow was just £717m. Analysts, who accentuate the positive for sales purposes, preferred a trading profit number smack on the nose of estimates at £1.4bn, a 58 per cent decline.

Tesco's real situation lies fuzzily between the pessimism of the first group and the relative optimism of the second. The property writedowns are an indictment of past expansionary hubris. They reflect falling profitability, particularly at large sites. The problem is compounded by heavy exposure to leased stores, whose rents can typically only rise. Tesco's net debts, adjusted for leases and pensions, are more than five times underlying earnings, compared with three times for Wm Morrison.

Further asset sales and kitchen sinking are likely as Mr Lewis drags the viable core of Tesco from beneath the collapsing superstructure erected by past managements. This continuing business needs investment and greater local flexibility to counter the threat from discounters. The mood music from Mr Lewis is good. But discredited predecessor Phil Clarke sang a similar tune. So Mr Lewis's mission is clear: to go from drastic, to elastic, to fantastic in a couple of far-from-easy steps. These results mean the clock is running.

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