No matter how hard traders try to keep up with the news, absorbing and interpreting economic prints as they roll in, speculators never seem to know for sure what is going on or what lies ahead. Indeed, the economic picture always looks different each time new data comes out with the word “uncertainty” appearing in almost every missive published in the major financial papers. Economic scenarios vary constantly from no-landing to soft-landing to hard-landing, and price outlooks from inflation to disinflation to deflation. This happens because it is known that forecasting is a probability process prone to upsets, which can cause traders and speculators to overestimate the information that the latest prints gave. It’s called regency bias, making forecasts subject to noise and inaccuracy.
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By Hubert Marleau
By Hubert Marleau
