Are AI Hedge Funds Really To Blame For The February Market Downturn?

Amid the recent February 2018 volatility crash, one that began over concerns central banks were removing quantitative stimulus, an odd result followed. It was mostly quantitative investments driving bizarre market behavior in early February, with traditional correlation ratios breaking their traditional ranges, that pushed markets in a negative direction. In a headline-grabbing JPMorgan Global Markets Strategy report, Nikolaos Panigirtzoglou and his research team point to Artificial Intelligence (AI) hedge funds as a meaningful contributor to the fall. But do AI hedge funds have that much power to move markets?

The Bank of International Settlements (BIS), commonly known as the “central banker’s bank,” weighed in on the cause of the early February market turmoil. They note...