1 - How little politics matters to the market
A couple of weeks ago, I tweeted the following after Michael Cohen pleaded guilty:
For those surprised there’s no market reaction to Cohen, why should there be? It has no bearing on earnings, no bearing on the economy either. The closest explanation I can see is the Fed being marginally less hawkish.
— Edward Harrison (@edwardnh) August 22, 2018
My point is that we overestimate how much politics drive economics - both macro in terms of the whole economy and micro in terms of individual companies. I would say that politics plays very little role in the short- to medium-term.
So, I agreed with Greg Ip when he tweeted yesterday:
Suppose on Jan. 1 you correctly guessed that Trump would impose steel tariffs and attack Amazon so you went long U.S....
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.