Markets and the perils of Twitter

“Breaking: Two Explosions in the White House and Barack Obama is injured”, tweeted the Associated Press on Tuesday.

“Breaking: Two Explosions in the White House and Barack Obama is injured”, tweeted the Associated Press on Tuesday.

Within six minutes the Tweet was read by two million followers, re-tweeted 1,181 times and sent the Dow Jones Industrial average and Standard & Poor’s 500 Index tumbling 1 per cent (erasing $136 bn) and dramatically weakening the dollar. Spectators rushed to the White House to see... absolutely nothing.

Following these six minutes of utter horror, AP sent out another Tweet: “That is a bogus @AP tweet.” Its account had been hacked.

After the markets re-stabled, investigations announced and reassurances given that President was unhurt, the wave of analysis begun. Commentators and experts were exacerbated at the ability of social media to influence markets. They noted how key words put together like "White House" and "Explosion" can cause algorithmic trading computers to sell, sell, sell. Twitter’s power has already played its part in toppling dictators in the Middle East, but now it is bringing down financial markets.

But then another twist emerged: The Tweet actually was directly linked to the protests in the Middle East – it came from the Syrian Electronic Army, a hacking organisation that supports the Syrian regime.

What are we to make of all of this? This bizarre scenario of events sounds like something out of a Robert Harris thriller combined with the warnings of Nicholas Taleb’s Black Swan. Hot topics now thrown into the air include the use of algorithmic trading computers and the reliability of Twitter as a news source.

Then there is Syria’s part. Cyber warfare has long been an understated part of the Syrian uprising. Two years ago in Damascus I was warned that internet cafes were under constant surveillance with regular hacking of Twitter and Facebook. The government, I was told, was particularly influential online – Assad was in fact president of the Syrian Computer Society.

 Then, last year, anti-government "hacktivists"(to use the newly created term) hacked into the Al-Assad’s personal email account and exposed all through the Guardian.

This unofficial online war has only grown alongside Syria’s physical uprising. The Syrian Electronic Army first occupied itself by posting slander against the rebels and praise of Assad on websites including the BBC. More recently, the Syrian Electronic Army, which many to believe to be unofficially connected to the regime, has attacked state supporters of the rebels. Qatar is a particular target: postings on Saudi Arabia’s news side, al-Arabiya, announced a coup against the emir and others said that the Qatari prime minister’s daughter was arrested in London.

Tuesday’s cyber attack on American markets was the Syrian Electronic Army’s most dramatic yet, but it surely won’t be its last. Who knows what they hope to achieve, but they have at least put into question the trust of markets in social media. The Syrian Electronic Army is crying "wolf" on Twitter and so far followers and algorithms have listened. But they won’t for long and Twitter is sure to  suffer the consequences of mistrust.

Photograph: Getty Images

Oliver Williams is an analyst at WealthInsight and writes for VRL Financial News

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The Brexit effect: The fall in EU migration spells trouble for the UK

The 84,000 fall in net migration to 248,000 will harm an economy that is dependent on immigration.

The UK may not have left the EU yet but Europeans are already leaving it. New figures from the ONS show that 117,000 EU citizens emigrated in 2016 (up 31,000 from 2015) - the highest level for six years. The exodus was most marked among eastern Europeans, with a fall in immigration from the EU8 countries to 48,000 (down 25,000) and a rise in emigration to 43,000 (up 16,000).

As a result, net migration has fallen to 248,000 (down 84,000), the lowest level since 2014. That's still nearly more than double the Conservatives' target of "tens of thousands a year" (reaffirmed in their election manifesto) but the trend is unmistakable. The number of international students, who Theresa May has refused to exclude from the target (despite cabinet pleas), fell by 32,000 to 136,000. And all this before the government has imposed new controls on free movement.

The causes of the UK's unattractiveness are not hard to discern. The pound’s depreciation (which makes British wages less competitive), the spectre of Brexit (May has refused to guarantee EU citizens the right to remain) and a rise in hate crimes and xenophobia are likely to be the main deterrents. Ministers may publicly welcome the figures but many privately acknowledge that they come at a price. The OBR recently forecast that lower migration would cost £6bn a year by 2020-21. As well as reflecting weaker growth, reduced immigration is likely to reinforce it. Migrants pay far more in tax than they claim in benefits, with a net contribution of £7bn a year. An OBR study found that with zero net migration, public sector debt would rise to 145 per cent of GDP by 2062-63, while with high net migration it would fall to 73 per cent.

Brexit has in fact forced ministers to increasingly acknowledge an uncomfortable truth: Britain needs immigrants. Those who boasted during the referendum of their desire to reduce the number of newcomers have been forced to qualify their remarks. Brexit secretary David Davis, for instance, recently conceded that immigration woud not invariably fall after the UK leaves the EU. "I cannot imagine that the policy will be anything other than that which is in the national interest, which means that from time to time we’ll need more, from time to time we’ll need less migrants."

Though Davis insisted that the government would eventually meet its "tens of thousands" target (a level not seen since 1997), he added: "The simple truth is that we have to manage this problem. You’ve got industry dependent on migrants. You’ve got social welfare, the national health service. You have to make sure they continue to work."

As my colleague Julia Rampen has charted, Davis's colleagues have inserted similar caveats. Andrea Leadsom, the Environment Secretary, who warned during the referendum that EU immigration could “overwhelm” Britain, has told farmers that she recognises “how important seasonal labour from the EU is to the everyday running of your businesses”. Others, such as the Health Secretary, Jeremy Hunt, the Business Secretary, Greg Clark, and the Communities Secretary, Sajid Javid, have issued similar guarantees to employers. Brexit is fuelling immigration nimbyism: “Fewer migrants, please, but not in my sector.”

Alongside the new immigration figures, GDP growth in the first quarter of 2017 was revised down to 0.2 per cent - the weakest performance since Q4 2012. In recent history, there has only been one reliable means of reducing net migration: a recession. Newcomers from the EU halved after the 2008 crash. Should the UK suffer the downturn that historic trends predict, it will need immigrants more than ever. Both the government and voters may only miss migrants when they're gone.

George Eaton is political editor of the New Statesman.

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