>Geopolitical risks may be underestimated after U.S. action in Venezuela, investors warn
>…”There should be broader geopolitical implications from this event, but in my view, the financial markets are not very efficient in pricing such risks accurately,” said Tai Hui, chief market strategist for Asia-Pacific at J.P. Morgan Asset Management.
>…Indeed, some analysts say investors have increasingly become used to Trump’s various foreign policy and military gambits.
Charu Chanana, chief investment strategist at Saxo, said the U.S. action in Venezuela is more of a geopolitical bombshell rather than an oil shock for now, noting that unless it threatens the broader supply chain, investors tend to rotate back to rates, earnings, and positioning.
>”We’re in a regime where geopolitics has become a persistent feature, not a surprise.”
We are now seeing the unanticipated cost of giving up “the wisdom of the market” where the risks of unhinged policy are reflected in market prices. Rather, market prices are now determined by huge universal owners who trade on algorithims that are not connected to events. They fine-tune returns on a diversified portfolio, while assuming that someone else is noticing what’s happening in the world.
And so Trump’s terror tactics as a policy strategy got normalized, and have now metastasized uninhibited to close down the Straits of Hormuz.
Who could have possibly foreseen this, or acted to forestall it?
Not the owners of the planet. They are only looking out for better-than-average returns on a market that exists in a world of its own.
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>Geopolitical risks may be underestimated after U.S. action in Venezuela, investors warn
>…”There should be broader geopolitical implications from this event, but in my view, the financial markets are not very efficient in pricing such risks accurately,” said Tai Hui, chief market strategist for Asia-Pacific at J.P. Morgan Asset Management.
>…Indeed, some analysts say investors have increasingly become used to Trump’s various foreign policy and military gambits.
Charu Chanana, chief investment strategist at Saxo, said the U.S. action in Venezuela is more of a geopolitical bombshell rather than an oil shock for now, noting that unless it threatens the broader supply chain, investors tend to rotate back to rates, earnings, and positioning.
>”We’re in a regime where geopolitics has become a persistent feature, not a surprise.”
We are now seeing the unanticipated cost of giving up “the wisdom of the market” where the risks of unhinged policy are reflected in market prices. Rather, market prices are now determined by huge universal owners who trade on algorithims that are not connected to events. They fine-tune returns on a diversified portfolio, while assuming that someone else is noticing what’s happening in the world.
And so Trump’s terror tactics as a policy strategy got normalized, and have now metastasized uninhibited to close down the Straits of Hormuz.
Who could have possibly foreseen this, or acted to forestall it?
Not the owners of the planet. They are only looking out for better-than-average returns on a market that exists in a world of its own.