Everyone agrees algorithms are spreading fast. This is most evident in the stock market, where algorithms account for up to 70 percent of all volume, according to conventional wisdom. This could even go higher, even as the algorithms themselves get more intelligent, increasingly relying on powerful  analytical engines  capable of "reading" the news and more. An article in Wired, noting the march of algorithmic progress over the years, suggests that Wall Street these days cannot run without algorithms. 

But algos are not just a stock market phenomenon. Various companies have developed algorithmic techniques for other assets classes, notably forex. And some algorithms are essentially cross-platform, logically linking stocks and, say, various financial futures. This factored into the Flash Crash. 

All of this leads me to wonder if some kind of grand design is out there, a Theory of Everything, that links all markets--stocks of all classes, bonds of every stripe, all currencies, all commodities and all derivatives. It sounds like something only a leading edge physicist might be able to conceive. No firm has moved along this frontier obviously, which we would assume to be efficient. But there may be some quants working on various cross-class algorithms right now. 

While the reality of a single, all-encompassing God-like algorithm remains science fiction, some people are wondering about an interconnected market meltdown--dubbed a Splash Crash by CNBC. "Geopolitical disturbances such as those in Egypt, Tunisia and elsewhere in the Middle East are just the kind of things that could trigger the Splash Crash, sapping liquidity from trading systems and causing havoc among various markets." The idea is that massive volatility would spread throughout the financial system via technology-greased markets and software-driven trading.

"We're convinced it's going to happen. We're on constant Amber Alert for signs of it unfolding, because by definition it won't come from where everybody's looking. It has to come from where they're not looking," one money manager tells CNBC. "It's our feeling that it starts in the currency market and morphs into the debt market." 

It may sound far-fetched, but the idea of a algo-driven crash also sounded unlikely until the May 6 Flash Crash. What do you think? - Jim