R.I.P. Price Discovery (Buy The Dip)

Seeking Alpha | Feb 18, 2020 at 6:26 PM
  • The coronavirus headlines aren’t exactly getting “better,” per se, but just as escalating trade risks prompted investors to pile into bonds while simultaneously enjoying gains in risk assets in 2019 on the expectation of an aggressive monetary policy response, the epidemic seems to have created a similar dynamic.
  • The fact is, forward guidance and central bank liquidity provision have perpetuated this cognitive dissonance.
  • And for the technical “analysts” among you, you can forget about those lines you draw on your charts in the event a major central bank wrong-foots the market with the forward guidance at a post-meeting press conference.