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This is a fun read! I think something interesting about the news and its supposedly predictive power is that the market already discount the news. If you look
by _benj 2y ago
This is a fun read!
I think something interesting about the news and its supposedly predictive power is that the market already discount the news.
If you look at the daily and weekly charts for SP500, it has been on a bill run, for a bunch of unknowable factors but I suspect one of them is the expected rate cut from the fed. Now, if the cut was, for example 50 bsp, instead of 25 that would be news indeed, but the again, last rate cut the prices jump sharply exactly at 1 PM EST, meaning that computers, not humans, read the report and placed hundreds of orders in milliseconds after the report was released.
IMHO knowing the future 1 day ahead is not enough because in that timeframe the market has already discounted the news.
- cabby 2y agoThe market isn't some kind of oracle. It's driven by sentiment. And the bond market controls rates.
- ac29 2y agoThe bond market controls rates, but the fed sets the floor. For example, if you believe we would had decades of a near zero federal funds rate, you might be willing to accept a 2% yield on a 30 year bond. But if you thought the long term federal funds rate was going to be 2%, you might want 4% or more on the long bond.
- dave333 2y agoThe fed follows the market rates - their control is an illusion. https://www.elliottwave.com/articles/fed-rate-cut-interest-rates-lead-and-the-fed-follows/ https://www.elliottwave.com/articles/fed-rate-cut-interest-r...
- dist-epoch 2y agoI saw many times something like this: 1. rate cut 2. S&P rises, financial press writes "market rise because of the rate cut" 3. later during the same day, S&P reverses and drops below price when rate cut was announced, financial press writes new article "market drops because of the rate cut" rinse & repeat. they literally are reacting and correlating price movement with whatever big news happened.