So. It’s been a pretty hectic day on Wall Street and in the boardrooms of global corporations. According to Bloomberg News, China has suspended trading on at least 1,331 companies as of this morning in the midst of a growing economic crisis that some analysts are comparing to the 2008 financial collapse in the United States.
This morning, Wall Street opened in a slump amid concerns about the impact of the crashing Chinese stock market and as top-level officials in the Obama administration heightened calls to offer Greece debt relief after the Greeks voted on Sunday to reject the government’s referendum calling for more austerity.
Yeah, that was a bad start to a day that got worse fast.
As of this post, the New York Stock Exchange is still shut down after a “glitch” forced a halt to all trading shortly before 11:30 am (follow up-to-the-minute updates here). Around the same time, The Wall Street Journal’s webpage went down, replaced with a big “Oops, 504” error graphic. More “technical difficulties,” we were told. To make matters worse, United Airlines experienced “network connectivity issues” this morning forcing the company to ground all its planes globally.
I don’t know about you, but all three of these things happening at once has me glued to Twitter and breaking news sites with the expectation that we are going to learn that these three “glitches” are somehow connected. For now, the NYSE is still saying that there was no cyber attack, the shutdown had to do with “technical issues.”
(1 of 3) The issue we are experiencing is an internal technical issue and is not the result of a cyber breach.
— NYSE (@NYSE) July 8, 2015
Likewise, the Obama administration is saying that the multiple “glitches” do not seem to be coming from hackers or a cyber attack. According to Reuters,
U.S. Homeland Security Secretary Jeh Johnson said technical problems reported on Wednesday by United Airlines and the New York Stock Exchange were apparently not related to “nefarious” activity.
Ok, for now, I guess. But, there are at least a couple of things that are keeping me refreshing my feeds.
Given that these “glitches” hit two sites almost synonymous with global capitalism – the NYSE and the Wall Street Journal – just a few days after Greeks loudly said “ENOUGH!” to austerity, I immediately thought of the hacker group Anonymous. Anonymous has not been exactly shy about their hatred of the New York Stock Exchange and Wall Street institutions. In their October 3, 2011 video, Operation Invade Wall Street – A Message to the Meida,” for example, Anonymous declared a “war against the New York Stock Exchange,” announcing that “on October 10th, NYSE shall be erased from the Internet.”
Maybe I am watching a little too much Mr. Robot. Anonymous doesn’t tend to strike out of the blue, but you never know.
Then something else stopped me in my virtual tracks. Earlier this morning the University of Cambridge Centre for Risk Studies and the Lloyd’s of London insurance market, released a report warning about the costs of a cyber attack on the U.S. power grid. According to Reuters,
A cyber attack which shuts down parts of the United States’ power grid could cost as much as $1 trillion to the U.S. economy, according to a report published on Wednesday.
Company executives are worried about security breaches, but recent surveys suggest they are not convinced about the value or effectiveness of cyber insurance. The report from the University of Cambridge Centre for Risk Studies and the Lloyd’s of London insurance market outlines a scenario of an electricity blackout that leaves 93 million people in New York City and Washington DC without power.
Then reports of a surge in trading on Wall Street started to come in. After the news about the NYSE, the Wall Street Journal, and United Airlines began to spread, guess who started making money hand over fist? Here’s Bloomberg News on it:
A number of cybersecurity stocks moved sharply higher on the news, though the NYSE has since said that the outage was due to an “internal technical issue.”
Yes, cybersecurity stocks. But that’s not all. Just yesterday, YESTERDAY, that other stock exchange, the NASDAQ, released a whole slew of new cyber security stocks. According to The Hill, there was a whole lot of buzz about the new stock offerings:
The cybersecurity boom on Wall Street is growing.
This week, the second-ever cybersecurity exchange-traded fund (ETF) — which bundles multiple crime fighting companies to trade as one stock — hit the New York City-based NASDAQ stock exchange.
Prominent security firm Rapid7 also said on Tuesday it was boosting its initial public offering (IPO) goal to $111 million, a 38 percent from a previous estimate in late June.
The ETF, which goes by the symbol “CIBR,” comes on the heels of another wildly popular cyber ETF, which trades on the New York Stock Exchange under the symbol “HACK.”
In less than eight months of trading, HACK has eclipsed $1 billion in assets. According to financial news site ETF Trends, roughly half of ETFs introduced each year fail to even reach $10 million in assets.
Security has become big business on Wall Street as hackers continue to crack the cyber defenses of retailers, banks and government agencies.
Gartner analysts project $77 billion will be spent on cybersecurity this year alone.
Security firms have benefited from the growing frequency of massive breaches in the U.S.
When Target was hacked in late 2013, exposing 40 million customers’ payment card data, the scale shocked the public. But such breaches have become common, with retailers such as Home Depot, banks such as JPMorgan and health insurers such as Anthem all suffering attacks.
Each high-profile incident has also given a slight bump to security firms’ stock.
Coincidence? Look, when it comes right down to it, these coincidences are juicy, but we just don’t know. The latest updates posted on The Guardian’s live updates page still points to “internal technical issues,” perhaps resulting from a recent “systems upgrade.” But the The Guardian also pointed to a potential problem with the increasing automation of trading:
Does the automation of the stock market mean many more days of glitches, breaks and malfunctions interrupting the rivers of cash moving around the world?
At least one trader foresees problems in the rise of the machines – but says that doesn’t mean the markets need people per se.
Markets don’t need people. Got that?
Just as I get ready to post this article, the NYSE has announced that it is opening back up for business for the remaining hour of trading. It will be interesting to follow this story over the next few days to learn what we can about what exactly happened today…not just at the New York Stock Exchange, but at sites around the world.
Coincidence? Hackers? Corporate manipulation? Rise of the Machines? Or, “E,” All of the Above.