(New York)

It seems like every time there is a big plunge in the market over the last few years one can trace the root cause back to a few products traded by people, but more often, machines. Well, it is no different this time as Bloomberg says two tiny volatility products, which now only have $135m under management, were largely responsible for the selloff. One of the products is the VelocityShares Daily Inverse VIX Short-Term ETN, which will soon be delisted. Despite the small size of the products, traders closely monitor the products’ behavior, and that is said to have caused the panic, as traders predicted how the funds would rebalance and front ran that rebalancing.

FINSUM: Well, at least it was not an algorithmic disaster this time. This sounds a lot like good old fashion human gamesmanship.

(New York)

Goldman has been trying intensely for the last few years to develop a much bigger consumer side of its business. The bank has debuted consumer savings products and tried to extend its reach into consumer products generally. Now, it might be take a huge step. The bank is reportedly in talks with Apple to provide point-of-sale financing to customers who are buying Apple’s products. The bank sees an opportunity to provide lower interest financing than credit cards, where most people charge such purchases. The deal is not closed, and could still fall apart.

FINSUM: There is a whole slew of interesting considerations here. For one, will using Goldman Sachs for financing hurt Apple’s image? Two, is Goldman trying to make a push into credit cards with this move?

(Washington)

On the geopolitical side, most news is ominous. Countries disagree, threaten, embargo, or otherwise make antagonistic acts against one another. But sometimes you get a positive story. Today we want to report on one—the agreement between North and South Korea to compete under the same flag at the Olympics. The two countries, which have been at odds for many decades, will compete side by side in the games, with the women’s hockey team featuring players from both countries. Some see the agreement as placating an aggressive foe, but others see it as a sign of hope and progress.

FINSUM: We find this to be an undoubtedly positive progression, especially since just a couple of months ago the conversation was about how quickly North Korea could have tanks rolling through Seoul.

(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.