So why be surprised if the same is true of financial markets -- or, for that matter, of commodity prices, policymaking and corporate performance?
Or if the world's best-informed energy traders predict a global supply shortage that will boost oil prices above $100, just when a supply glut sends the market tumbling to $50?
Or if stock markets predict a global economic boom when bond markets predict recession and then both reverse suddenly, contradicting each other in the opposite direction?
It is not surprising, therefore, that the world economy slowed in 2018, instead of accelerating, as most economists (including me) expected.
Dollar weakness and global equity strength reversed abruptly in May, when markets were hit by a perfect storm of the three political shocks that I had considered most likely: soaring oil prices in anticipation of Iran sanctions, the U.S.-China tariff war, and the formation of a left-right populist government in Italy.
If so, then markets, instead of being predictive, become increasingly reactive, simply extrapolating recent events.
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