Key insights
- The author observes a disconnect between negative news (e.g., geopolitical risks) and market reactions in April, suggesting a potential shift in market sentiment or underlying dynamics. The market's muted response to worsening events raises concerns about the validity of news-driven explanations for price movements, implying a possible hidden factor influencing market behavior. This could signal increased complacency or a shift in risk perception, potentially leading to a correction if negative catalysts intensify.
Over the past month or so, every time negative news came out such as Houthis firing missiles, the markets fell, while they rose on positive news. However, at the start of April, they bounced on "old news" of diplomacy and negotiations.
If that is not strange enough for you, say it was still considered a positive development despite being a rehash of previous information, events and sentiments have become worse since then.
Except the markets have barely reacted (dipped slightly but largely holding). Price movements have been attributed to news or "surprises". Except when it no longer explains anything. Something is very off.