is this a bug or not?

No it’s not a bug. Pages are effectively a Post Type and so is your Custom Post Type. So assuming you created a Page called news but then you declared a new CPT also called news then WordPress can’t determine which is correct.
To explain this another way, if you were to create a page called news and then another one called news, the slug would be news2 but because you are declaring the slug for the CPT this is what is causing the problem. Because you’ve hard-coded the slug in your functions.php file wordpress doesn’t automatically amend it like it does with new pages (news2, news3, etc.).
You could consider a different slug for your CPT perhaps?
The following post may help to understand the different post types:
http://codex.wordpress.org/Post_Types
HTH

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