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Twitts

This is a graph of yesterday’s financial market trading in the USA as monitored by the Dow Jones Industrial Average Index.

djind

You’ll notice that just after 1:00 pm there was an almighty drop which lasted a few minutes. By about quarter to four things had recovered pretty much on to an even keel.

The reason for the drop was, quite incredibly, the hacking of Associated Press’s Twitter account, which announced that President Obama had been hurt in a series of explosions in the White House.

The Twits at Sadler's Wells

Roald Dhal’s ‘The Twits’ – Not the New York Stock Exchange.

The following is from the Washington Post:

The swift reaction demonstrates once more how vulnerable the markets have become to technological glitches. The bombing in Boston last week and the harrowing manhunt that ensued probably hastened the response from an already jittery investing public.

The tweet popped up on traders’ screens shortly after 1 p.m. The AP used social media, its Web site and its corporate blog to announce that its Twitter account had been hacked. The company said it was investigating the matter with Twitter, and the White House weighed in to calm nerves.

“The president is fine,” White House spokesman Jay Carney said. “I was just with him.”

But in the investing world, where super-high-speed computer trades dominate the market, the reassurances did not come quickly enough to prevent momentary chaos. The Dow Jones industrial average fell more than 100 points between 1:08 p.m. and 1:10 pm.

“And it wasn’t just the stock market. It was the bond market and commodity market and everything,” said Joseph Saluzzi, co-head of the equity-trading firm Themis Trading. “The event was done before humans could even process it.”

Saluzzi said he saw the post immediately, because he keeps an eye on Twitter for the entire trading day to learn about any potentially market-moving events. Market experts say such close tracking of social media has become the norm in trading.

“Firms are looking for information wherever they can find it,” said Larry Tabb, chief executive of Tabb Group, a financial research and consulting firm. ”They’re analyzing real time news feeds, scanning the Web and mining Twitter feeds. . . . They price news.”

But increasingly, the method has backfired. During a one-week stretch in February, hackers infiltrated the Twitter accounts of Burger King and Jeep, spreading false posts that each company had been sold to a rival.

A string of such corporate Twitter hacks in recent months prompted traders at Jones Trading Institutional Services to sit tight when they spotted the AP tweet on Tuesday, said Tom Carter, a managing director in the firm’s Los Angeles office.

The traders in Carter’s office, who stay connected with the firm’s other offices via a loudspeaker they call “the hoot,” were immediately suspicious.

“Someone said over the hoot that there’s a Twitter report about explosions at the White House,” Carter said. “We had a desk analyst and he told us to just wait. We watched the stock drop, then it stopped, and then it started bouncing around and it popped straight back up again.”

The FBI is investigating the matter, said FBI spokeswoman Jenny Shearer.

The financial markets. Just like a big bookies’ shop with the same excitable, fearful, superstitious reaction to events that punters tend to indulge in, in such environments. And it would seem with computers in control of that excitement, fear and superstition so that it can be executed with precision.

The financial well-being and decisions of the planet -its nations and their institutions, companies and citizens is predicated on such nonsense.

There surely has to be a better way.

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One Response

  1. This has happened frequently in the past but the Twitter method is new.

    I remember when I worked in a bank trading room there were scares every six months or so. A rumour would be put about that some seismic event had happened and dealing rooms would go apeshit. A particularly good one was a rumour that Clinton had been shot. Our dealing room went wild, as no doubt did others, desperately trying to offload their long position on dollars to some unsuspecting sap. Spot traders are a different breed. Many would sell their grandmothers for 100 bucks.I expect it’s even worse now.

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