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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
Updated Dec 16, 2020 - Economy & Business

Fed pledges to continue buying bonds until economy makes "substantial" progress

Fed chair Jerome Powell. Photo: Susan Walsh-Pool/Getty Images

The Federal Reserve kept rates unchanged at 0%–0.25% at its latest policy meeting, but changed its statement to include a promise to continue to buy at least $120 billion of bonds each month "until substantial further progress has been made toward the Committee’s maximum employment and price stability goals."

Why it matters: Fed chair Jerome Powell consistently stressed during his press conference that the Fed was nowhere close to reducing its massive bond-buying program, even though its evaluation of the economy had improved and would continue to provide monetary policy support.

Virginia lawmakers vote to legalize marijuana in 2024

Virginia Gov. Ralph Northam. Photo: Alex Edelman/Getty Images

Lawmakers in Virginia on Saturday approved compromise legislation that would legalize marijuana in 2024, putting the state a step closer to becoming the first in the South to end prohibition on the drug, the Richmond Times-Dispatch reports.

Why it matters: The legislation will make Virginia the 16th state to legalize marijuana, per Politico. It would add to a slate of laws that have seen Virginia move in a more progressive direction during the tenure of Gov. Ralph Northam.

Scammers seize on COVID confusion

Data: FTC; Chart: Sara Wise/Axios

Scamming has skyrocketed in the past year, and much of the increase is attributed to COVID-related scams, more recently around vaccines.

Why it matters: The pandemic has created a prime opportunity for scammers to target people who are already confused about the chaotic rollouts of things like stimulus payments, loans, contact tracing and vaccines. Data shows that older people who aren't digitally literate are the most vulnerable.