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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.

Updated 45 mins ago - Sports

Japan's Naomi Osaka lights Olympic cauldron, kicking off Tokyo Games

Naomi Osaka lights the Olympic cauldron. Photo: Clive Rose/Getty Images

After a year-long delay, the Olympics finally got underway Friday as tennis star Naomi Osaka, who is competing for Japan, lit the cauldron, formally kicking off the Tokyo Games.

The big picture: Friday's opening ceremony looked, like many things over the last year, different than normal — multicolored seats replaced cheering fans, masks were a central part of the athletes' uniforms and a subdued, somber tone marked the occasion.

1 hour ago - World

China sanctions Wilbur Ross, 5 other Americans over Hong Kong warnings

Photo: Al Drago/Bloomberg via Getty Images

The Chinese government imposed sanctions on Monday against six Americans, including former Commerce Secretary Wilbur Ross, in response to an advisory from the Biden administration warning businesses of the increased risks of operating in Hong Kong.

Why it matters: It's the latest example of China responding furiously to U.S. attempts to shed light on human rights abuses in places like Hong Kong, Xinjiang and Tibet, which Chinese officials routinely condemn as "interference" in domestic affairs.