Love this quote, because it is so true.
Policy debate informs market direction.
Financial markets, whatever the asset class normally do not wait for political policy decisions to shape their thinking. They anticipate! They move, ebb and flow with the prevailing mood.
Do they get it right all the time? Of course not, that would be having the crystal ball or some form of leak or insider information to get it spot on. Yet, what markets and the participants in those markets clearly demonstrate is their willing to take reliable actions, not accurate outcomes, but reliable patterns to set a direction of travel and price in the risk of failure or success.
Where has this been evident in the past few weeks:
Two examples:
- The outcome of the US presidential election
- The French government, budget failure and the no confidence vote last week.
Here is a clear example well articulated by Ignacio Ramirez Moreno
