Thanks Bloomberg, for another useless piece of regurgitated info we've known for years; fake news drives the fake markets which are artificially inflated. Actually thanks to the Fed for doing the academic research on this topic to confirm what we've known for years - the markets are rigged and one way they are manipulated is by the mainstream news. As we explain in our book Splitting Pennies - the markets are artificially inflated and manipulated by remote control (yes - that remote control. It's a metaphor!) TV watchers have a 'remote control' and so does the CIA. They press 'play' and markets move as they want. Just as TV viewers change the channel the CIA changes the 'mood' of the country with a few clicks of the remote. They even have a pause button! From Bloomberg:
Buy the news and sell the soft data. That’s the conclusion drawn from a paper by the Federal Reserve Bank of San Francisco, which suggests that financial news holds predictive power when it comes to a slew of economic data. Stories about the U.S. economy can even outperform more traditional measures such as surveys of consumer sentiment when it comes to gauging ‘‘animal spirits’’ and forecasting future activity, it found. While trust in news sources among the general American population has fallen to historic lows amid accusations of fake news lobbed during the U.S. presidential elections, the Fed research throws cold water on the notion that the mainstream media is far removed from Main Street, if headline economic indicators are anything to go by.
“Specifically, we have shown that sentiment extracted from newspaper articles correlates with both contemporaneous and future key business cycle indicators,” economists Adam Hale Shapiro and Daniel Wilson of the San Francisco Fed concluded in a report co-written last month with Moritz Sudhof, of data analytics firm Kanjoya. “In a head-to-head comparison, these news sentiment measures perform better than both the University of Michigan and Conference board measures of consumer sentiment.”
The paper is very well documented, an A+. Great job. We by no means mean to detract from the great work accomplished here by paraphrasing the paper as 'fake news drives fake markets' - it simply serves as a great example of yet another proof how markets are manipulated, even if as the paper suggests - indirectly.
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