The Power of Text: How News Sentiment Influences Financial Markets Get email updates

December 16, 2019, IMF Blog

By Damien Puy

How do investors react to news? This question has been at the core of the financial research agenda for several decades. Now, two forces make this question even more pressing.

First, innovations in information technologies have dramatically increased the reach of financial and economic news and the speed at which it travels. Real time newswires, such as Reuters and Bloomberg, generate and disseminate information almost instantaneously to an ever-increasing set of market participants.

Second, a growing number of countries, especially emerging markets, have opened their financial markets to the rest of the world. This makes it possible for foreign news to affect local market conditions much more directly.

For a long time, however, studying the impact of news on investors’ behavior and asset prices remained a daunting task. What is news exactly? What does it talk about? And how can we identify, in a systematic way, good (or bad) news?

What the Airline Knows About the Guy in Seat 14C

Date: 21-06-2018
Source: The Wall Street Journal

More passenger data can lead to better service, but carriers know that fliers want some limits on how much of their personal information to use

What the Airline Knows About the Guy in Seat 14C

Your flight attendant wishes you happy birthday. Is that cute or creepy?

Airlines know a lot about you, from date of birth and home address to travel patterns, vacation preferences, beverage purchases and whether your last flight was good or bad. Now the latest generation of hand-held devices used by flight crews has an overhead bin full of information about each passenger.

Carriers are using it in an effort to improve customer service. They can congratulate customers on reaching 3 million lifetime miles or toast a couple’s wedding anniversary. At some airlines, they can tell if you really paid extra for that extra-legroom seat or are traveling on a restricted basic economy ticket. Someday soon it may be, “Having the usual vodka tonic tonight, Scott?”

Our Infant Information Revolution

Joseph S. Nye, Jr., a former US assistant secretary of defense and chairman of the US National Intelligence Council, is University Professor at Harvard University. He is the author of Is the American Century Over?

Jun 15, 2018 Joseph S. Nye, Project Syndicate

In the middle of the twentieth century, people feared that advances in computers and communications would lead to the type of centralized control depicted in George Orwell’s 1984. Today, billions of people have eagerly put Big Brother in their pockets.

CAMBRIDGE – It is frequently said that we are experiencing an information revolution. But what does that mean, and where is the revolution taking us?

Information revolutions are not new. In 1439, Johannes Gutenberg’s printing press launched the era of mass communication. Our current revolution, which began in Silicon Valley in the 1960s, is bound up with Moore’s Law: the number of transistors on a computer chip doubles every couple of years.

By the beginning of the twenty-first century, computing power cost one-thousandth of what it did in the early 1970s. Now the Internet connects almost everything. In mid-1993, there were about 130 websites in the world; by 2000, that number had surpassed 15 million. Today, more than 3.5 billion people are online; experts project that, by 2020, the “Internet of Things” will connect 20 billion devices. Our information revolution is still in its infancy.

The key characteristic of the current revolution is not the speed of communications; instantaneous communication by telegraph dates back to the mid-nineteenth century. The crucial change is the enormous reduction in the cost of transmitting and storing information. If the price of an automobile had declined as rapidly as the price of computing power, one could buy a car today for the same price as a cheap lunch. When a technology’s price declines so rapidly, it becomes widely accessible, and barriers to entry fall. For all practical purposes, the amount of information that can be transmitted worldwide is virtually infinite.

The cost of information storage has also declined dramatically, enabling our current era of big data. Information that once would fill a warehouse now fits in your shirt pocket.