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Illustration: Aïda Amer/Axios

The stock markets appeared to have priced in a "blue wave" for the past few weeks, and the spending sugar high that would follow.

What happened: The stock markets were wrong. Just like they were almost every time that Nancy Pelosi or Steven Mnuchin would sprinkle a crumb of stimulus hopes, or when some press release would imply that a vaccine or curative therapeutic could be just around the corner.

Reality check: Neither the stock markets nor their "betting markets" derivatives are any better at predicting the future than a carnival fortune teller.

  • Instead, they are more like babies: Quick to react, eager to grab at shiny baubles, and lacking in object permanence.

The difference between markets and babies, though, is that lots of people (media included) give credence to their phony clairvoyance.

  • To be sure, certain investors have more foresight than others. Some are just plain lucky.
  • But, when it comes to broad-based market movement, it would do us all some good to stop pretending that it has special meaning: that "they" must know something that other well-informed individuals do not.

The bottom line: The best way to move forward, is to remember that markets are really looking backwards, if only for a moment.

Go deeper

Dion Rabouin, author of Markets
Nov 5, 2020 - Economy & Business

The no-wave rally begins

Data: FactSet; Chart: Axios Visuals

U.S. stocks which analysts and strategists insisted had been rising based on the anticipation of a blue wave Democratic victory in the House, Senate and White House — had their best day in nearly seven months as that possibility looked to be wiped off the table.

  • While some races have not yet been called, Democrat Joe Biden looks poised to win in his election against President Trump, but so do many incumbent Republicans senators.

What they're saying: Some attributed the stock market's surge — the Nasdaq rose 3.9% and the S&P 500 gained 2.2% — to the market's happiness with a potential divided government and discounted prospects of tax increases. However, there were other explanations...

Biden transition names first Cabinet nominees

Photo: Justin Sullivan/Getty Images

President-elect Joe Biden on Monday unveiled his nominations for top national security positions in his administration, tapping former secretary of state John Kerry as his climate czar and former deputy national security adviser Avril Haines as director of national intelligence.

Why it matters: Haines, if confirmed, would make history as the first woman to oversee the U.S. intelligence community. Biden also plans to nominate Alejandro Mayorkas to become the first Latino secretary of the Department of Homeland Security.

Dan Primack, author of Pro Rata
2 hours ago - Economy & Business

New deals in the COVID economy

Illustration: Sarah Grillo/Axios

COVID-19 is the macro horror of our lifetimes, and has destroyed or severely damaged countless businesses. But, like with most horribles, it also has created some opportunities.

Driving the news: Merck this morning announced an agreement to buy OncoImmune, a Maryland-based biotech that showed promising late-stage clinical results for a therapy that treats severe and critical coronavirus cases.