Behavioral Biases Drive Reactions

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.