(Washington)

Fake news has become an important part of the American conversation. People discuss it at work, dinner parties, and at the kitchen table. But one fiercely contested question is whether the right or left side of the political spectrum puts out more fake news. Well, the British seem to have an answer, it is the right, according to the University of Oxford. The university analyzed near 100,000 social media posts to trace the source of fake news, and found that what it calls the “hard right” dominates the use of disinformation.

FINSUM: Obviously take this with a big grain of salt, but an interesting study nonetheless.

(New York)

Advisors all over the country got a lot of worried phone calls yesterday. Clients are understandably anxious about the mammoth losses over the last week, all punctuated by an almost 5% fall in the Dow yesterday. One advisor from LA says that “We’re reminding them that we knew this was going to happen and that we’ve been planning for it”. Other advisors are reminding their clients that the economy looks strong and that we are not headed into a recession. One Wells Fargo advisor makes a note that looks negative for stocks, saying “A 10-year Treasury yield above 3% would be reasonable competition for equities, and I would be able to replace fixed income maturities with higher yields for the first time in a decade”.

FINSUM: We think this a healthy correction, but that the market will likely continue to move higher. There is nothing fundamentally wrong with the economy, and once the market realizes that higher rates won’t kill stocks, things will get back to normal. However, this maelstrom is a very healthy recognition of risk.

(New York)

Everyone knows it, but in case you were under a rock, the Dow had its worst day in six years yesterday. At one point the index fell around 1,600 points before recovering to close down 1,175 points, or nearly 5%. The S&P 500 fell 4.1% to close down 7.8% since last Monday. One commentator argues that the market is now in “full price discovery mode”, with no technical supports or trend lines holding whatsoever.

FINSUM: We are five years since the Taper Tantrum, and now it is actually happening. Is this the start of the huge sting everyone has been predicting for years?

(New York)

The markets had a wild day yesterday. Big loss at open, almost back to even, then a really steep fall, and finally, a little rally to close. Bloomberg says that the trading activity has all the telltale signs of algorithms wreaking havoc. For 15 minutes just after 3 pm, the volume of sell orders was so quick and so voluminous that nothing alive could have possibly executed them. The market tanked, plunging to a 1,597-point loss. Interestingly, the involvement of algorithms might help to assuage some fears, as brokers are using that dimension as a way to calm human investors that this was not an all out emotional panic, but rather technology gone wild.

FINSUM: So we know they are deeply ingrained and certainly going nowhere, but why, in principle, are non-human agents allowed to transact in markets? Market-making firms would say they add liquidity, but they certainly exacerbate, or even cause panic too.

(New York)

One of the guiding ideologies of the bond market over the last few years has been to buy the dips. Every time that bond yields have risen some, it has been smart to go long bonds as they inevitably came back down. However, this time looks very different. The difference is that central banks are no longer fixed to their ultra-low rates policy, which means there is no big magnet that pulls rates and yields ever downward.

FINSUM: So in our view what is really happening right now is a market wide price discovery period for bonds. Because the underlying situation is changing, no one is comfortable judging bond yields and prices. This worry has spread to equities, but in our view the root anxiety is in fixed income.