The controversial financial product known as XIV is shouldering a lot of the blame for the recent flash crash that saw the Dow slump more than 6% in a span of six minutes. Dave Mazza, Head of ETF Investment Strategy at OppenheimerFunds, was with us to break down the theory that volatility-based products fueled the market meltdown.
The XIV is meant to produce the opposite returns of the volatility index, which spiked 118% Monday. Mazza explained that 2017 was a great year for stocks with record-low volatility. Due to this low volatility, many investors were feasting on these financial products, looking to benefit from volatility going lower. When the exact opposite happened, those investors dealt with the consequences.
"A lot of people like to point the finger at computerized trading for sharp movements in stocks," said Mazza. He said it's only one piece of the story. Mazza highlighted that fundamentals are important to watch and there are many variables that influence stock movement.
As the Federal Reserve prepares to hold its annual economic conference in Jackson Hole on Friday and Saturday, its policymakers are trying to guide the U.S. economy toward something akin to what's happening in Jackson Hole.
Anyone in the U.S. who had an account at any time between May 24, 2007, and December 22, 2022, is eligible to receive a payment. The 2022 settlement resolves a lawsuit alleging that Facebook allowed millions of its users’ personal information to be fed to Cambridge Analytica, a firm that supported Donald Trump’s 2016 presidential campaign.
