My wife and I once took a twilight cruise out of Waikiki during whale season and things were going great until the captain told everyone there were whales to be seen off the port side. The captain warned everyone not to rush to see the whales to avoid the 100-year-old sailing ship from capsizing. The trouble was 95% of those on board were Japanese with no command of English. The cruise did not end well.
That incident reminds me of what’s happening with media coverage right now and the bipolar impact it has on investor behaviour - rushing in the direction of every latest news thread.
Trump narrative
Given the proclivity of the Trump administration for knowingly sewing lies into its messaging to the American and global public, it’s incredulous how wired Wall Street appears to be the latest nuance on the Iran War - drip-fed to the world specifically to drive an expected market outcome.
At the best of times, most capital markets take their cue from whether futures traders believe markets will go up or down based on any number of factors, none the least being geopolitical and macrodynamics playing out globally, which become the substance of the next news feeds.
Trump knows full well that what he nuances to the media today will immediately fashion market sentiment, but that of itself is only part of the problem; while a lot of media coverage is obligated to, first and foremost, report, it often provides little to no context to White House announcements – even if it knows they’re at best misleading.
To make matters worse, due to news syndication and the costs associated with investigative journalism, most news channels cling to the same feeds – and it becomes entrenched in news coverage that gets recycled into media globally.
In other words, the entire Western world ends up being force-fed the same lies and half-truths as news of the day.
Futures traders set the tone
That’s why it’s important to remember that the market reset is compass daily and to a large degree based on futures traders’ sentiment.
The trouble is that futures traders don't have the same timelines as most retail investors.
While share market brokers typically take a 12-month outlook on stocks, it’s acutely short for those trading futures.
Futures traders are only interested in what markets will do over extremely short time frames, and right now those time frames are getting shorter.
Given the highly volatile state of financial markets right now – and especially since the Iran war started – retail investors, the primary group for day trading, account for a whopping 20-25% of daily U.S. equity trading volumes.
This is a sharp increase from a decade ago, when retail participation in day trading was consistently below 10%.
What these futures traders do is enter and exit trades on the same day, hoping to do so at a profit.
Caught in the crossfire
While futures traders place bets on today’s news feeds, retail investors - who typically buy and hold stocks, have 401K plans or super funds that acquire wealth over time – are continually caught in the crossfire.
Placing too much emphasis on today’s news feeds is one thing, but what’s also overlooked is that futures traders – whose behaviour determines whether markets open up or down - tend to take their cue unashamedly from U.S.-centric news feeds.
Whether these feeds are right or wrong, true or false tends to make little difference; futures traders tend to sell the rumour and buy the fact - and where futures traders go, the broader market tends to follow.
One of the most recent examples here in Australia is ASX-listed tech stocks.
While the fundamentals of local ASX-listed tech stocks haven’t changed, they got caught up in a sharp selloff by their U.S.-based counterparts early this year, with the Nasdaq Composite down on fears of "Big Tech" stocks sitting on stretched valuations.
Through no fault of its own, the S&P/ASX All Technology Index is still down 23% year to date.
Understand media biases
So, where does that leave you, the poor old retail investor trying to navigate your investments in light of what the futures traders’ behaviour is constantly trying to tell you?
Firstly, it’s important to understand the narrow lens through which a U.S.-centric media narrative sets its daily compass.
Once you become more aware of this, you can be more circumspect about what markets are doing right now and why.
Secondly, once you understand that syndicated media coverage tend to be tarred with the same narrow narrative, it’s important to find credible non-U.S.-centric sources of international news coverage.
Three biggest drivers
Global traders are most heavily influenced by the:
S&P 500: Regarded as the gold standard for tracking the U.S. economy.
Nasdaq 100: Heavily tech-focused and a primary indicator for high-growth sectors.
Dow Jones Industrial Average: Tracks 30 massive, “blue-chip companies in the U.S.
Despite being heavily influenced by U.S.-centric media coverage, these U.S. indices serve as the primary barometers for the global economy and often dictate the opening sentiment for markets in other regions.
US media biases
If you are exposed to U.S.-centric media, it’s important to understand where they sit on the political spectrum. Here are just a few:
Left-Leaning Bias: Major, broad-audience media outlets (e.g., CNN, MSNBC, The New York Times, NPR) frequently demonstrate a left-of-centre viewpoint in their reporting and editorial decisions.
Conservative Counterpoint: Fox News is widely regarded as the most prominent mainstream conservative, or right-leaning, media outlet, with a primarily Republican audience.
The "Neutral" Centre: Outlets like USA Today are often described as more moderate or closer to the centre, while most other prominent national papers lean one way or another.
Assessment Tools: While platforms like AllSides or the Ad Fontes Media Bias Chart are commonly used for analysing the specific bias of various outlets, you can also use websites like Media Bias/Fact Check to understand the potential biases of a source.
Non-US-centric media
Some suggestions for non-U.S.-centric media to add to your daily news updates include:
BBC News: Known for comprehensive, high-quality international reporting.
Reuters: Widely considered a "wire service" providing straightforward, factual reporting on global events with minimal commentary.
Al Jazeera (Qatar): A prominent news network that provides excellent coverage of the Middle East and global affairs, often focusing on stories overlooked by Western media.
France 24: Provides a European perspective on world news, available in multiple languages with a focus on live coverage.
The Economist (UK): A British weekly magazine providing deep, factually rigorous analysis of politics, business, and international relations.
Financial Times (UK): A premier source for international business and political news, known for its objective, fact-focused reporting.
Bloomberg (Global): Provides high-quality, non-partisan, data-driven journalism, particularly strong in financial and global economic news.
Regional Perspectives
ABC News (Australia): A highly trusted public broadcaster in Australia offering solid coverage of the Asia-Pacific region.
CNA - Channel NewsAsia (Singapore): A reliable source for news covering Asia in depth.
CBC News (Canada): A trusted public broadcaster offering Canadian and international perspectives.
