Daily update
Daily update
- Investing challenges remain. Markets react to social media posts and stories, not to verifiable information. The lack of information is complicating objective economic assessments. Investors may start looking for leading indicators of the next narrative (whether fake news or real). The Financial Times reports that there were unusually large oil market trades ahead of US President Trump’s social media post yesterday—the risk is that investors will regard sudden, outsized positioning in markets as a leading signal of an impending change in the US administration’s narrative.
- Investors want to believe stories that the war is ending—a mix of loss aversion (people irrationally prefer rising markets), and confirmation bias. A positive story bewitches investors, a negative story requires more evidence to provoke a reaction on the same scale.
- Japan’s national February consumer price inflation was a little lower than had been expected, on softer food and energy inflation (the international core measure was stable in year-over-year terms). This is not likely to provoke a reaction from the Bank of Japan, which will be focused on the relative oil price shock and the possible consumer response.
- Business sentiment polls are due in Europe and the US. They are more likely to be biased toward story-telling than verifiable information.