Following yesterday’s sharp market selloff, the biggest drop in two months, pundits have been banging their heads to explain what changed: after all we have had bad news for 6 years in a row – it is not as if the latest bout of deteriorating economic reality came as a surprise to anyone but the most lobotomized permabulls. So to say that algos and/or the few remaining human traders finally reacted to the newsflow is clearly wrong. The question is why they reacted the way they did.