When Reason Failed

People whose job is to report on the news in real time are forced to provide answers to their audience. Because price generally changes prior to the news, reasons provided often miss the mark, to be polite. Here’s a great example of that from When Genius Failed

“Secretary Rubin, back from salmon fishing in Alaska, tried to calm markets by declaring that the U.S. economy was “sound.” This merely deepened the mystery of the crash, for no one piece of news was responsible. The Wall Street Journal cited a “disappointing Chicago purchasing managers index,” an almost comically trivial explanation. The paper was closer to the truth when it noted, “On the margin, there is no incremental buyer.”

The vast majority of the time, it’s hard to pinpoint on any given day why markets did what they did. “More sellers than buyers” won’t win any Pulitzer’s, but that’s usually more reasonable than pointing to the economic data point of the day.