Surprise: White House's Intelligence Review Task Force Suggestions Much More Than Just Cosmetic

Bloomberg News Pays Reporters More If They Move Markets

from the financial-meltdown dept

Wed, Dec 18th 2013 4:04pm — Glyn Moody

It's become quite common to pay online writers more if their stories cause surges in traffic for the site. It has recently emerged that Bloomberg News has taken this idea much further, as reported by Business Insider:

Bloomberg News has an unusual practice of paying some of its reporters explicitly for publishing "market-moving" stories.

…

We asked Bloomberg about the practice. A company spokesperson acknowledged it.

"It isn't news unless it's true. At Bloomberg News, the most important news is actionable. That means we strive to be first to report surprises in markets that change behavior and we put a premium on reporting that reveals the biggest changes in relative value across all assets."

The Business Insider post points out a danger of this approach: Most of the people we spoke to, especially traders, were startled to hear about this practice, worrying that it might create an incentive for Bloomberg reporters to "push" or stretch stories with the specific aim of moving markets.
There's also the risk that an extremely volatile situation could go into meltdown as market movements are amplified by Bloomberg writers reporting on the effects of their previous stories, leading to a kind of journalistic positive feedback loop. This wouldn't be so problematic were it not for the fact that these movements can result in major losses and gains for some of the participants. It's easy to imagine companies or even some countries being massively affected by this, which raises the question whether it is ethical for Bloomberg News to encourage such risky behavior by its journalists.

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Filed Under: journalism, markets, moving markets
Companies: bloomberg

12 Comments

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Anonymous Coward, 18 Dec 2013 @ 4:12pm

What is new with Bloomberg?

Last month Bloomberg reporters were reading market participants Bloomberg terminals and then writing stories to influence the market.
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Anonymous Coward, 18 Dec 2013 @ 4:42pm

if their articles aren't moving the market, there's no reason for investors to subscribe to their feed, thus lost revenue.
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Paraquat (profile), 18 Dec 2013 @ 5:02pm

planting stories
I knew a stock market analyst a long time ago, and he told me that some reporters get paid to plant stories. The obvious motive was to drive a particular company's stock price up or down. Even a small percentage move can generate a huge profit for an inside trader taking advantage of "leverage."

This is supposed to be illegal. It's also pretty much the norm, especially nowadays since everything on Wall Street has been "deregulated."

The awful deregulation mania was pushed onto the unsuspecting world due to the Financial Services Agreement (FIS) which was part of the WTO agreement, and this helped to greatly exacerbate the 2008 banking meltdown. Now TPP wants to take that further, making American-style blatant fraud the world standard.
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DCL, 18 Dec 2013 @ 5:29pm

Market prices are already a positive feedback loop
...is already a positive feedback at a meta level. In general the market price ends up to be the "collective trader perception" of what their fellow traders perceive the "price should be".

The traders I knew(I used to work for a med sized investment firm, before it was all computer algorithms dictating sub second trading) cared about 'breaking news' because they wanted to capitalize on the potential changes in market price. Sure they would know the basics of a companies status (P/E, dept, etc) and the status of the at industry but many of their trades were only to make a quick gain.

What Bloomberg News is doing only reenforces that behavior.
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Jake, 18 Dec 2013 @ 7:13pm

When poor and/or nonwhite people do this sort of thing, governments call it terrorism.
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Anonymous Coward, 18 Dec 2013 @ 7:18pm

Re:
If this is the only measure of success, why would anyone believe what they read?
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Anonymous Coward, 18 Dec 2013 @ 7:19pm

Re: planting stories
Fraudsters are people my friend
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Anonymous Coward, 18 Dec 2013 @ 7:40pm

News by crooks for crooks
"There's also the risk that an extremely volatile situation could go into meltdown as market movements are amplified by Bloomberg writers reporting on the effects of their previous stories, leading to a kind of journalistic positive feedback loop. This wouldn't be so problematic were it not for the fact that these movements can result in major losses and gains for some of the participants."

That's what happens when you let your money work for you instead of working for your money. Such are the pitfalls of greed and capitalism.
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Anonymous Coward, 19 Dec 2013 @ 12:42am

CHECK, CHECK, and CHECK!
Loves money?
Loves to lie?
Morale free attitude?

Where can I apply?
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Anonymous Coward, 19 Dec 2013 @ 2:25am

Re: Re: planting stories
Just people who are above the law
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Ninja (profile), 19 Dec 2013 @ 2:34am

If it can be rigged and gamed it will be. Just remember the subprime or the more recent LIBOR issues...
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Bloomberg Little, 19 Dec 2013 @ 8:26am

THE MARKET IS FALLING, THE MARKET IS FALLING
Where's my bonus???

I moved the market (while placing my own option trades on margin to benefit from my intended decline in market prices), obviously this is NOT insider trading as there was no actual knowledge just me screaming, "The market is falling, the market is falling"... how was I to know that the market would actually fall based on a silly article like this?

AMIRITE? I'm sure nobody at Bloomberg has thought of this, so I'll trademark, patent, and copyright the idea... ALL YOUR BLOOMBERGS ARE BELONGING TO US.... MUAHAHAHA
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