By Alan Murray and David Meyer
February 7, 2018

Good morning.

Practical-minded businesspeople may be tempted to dismiss this week’s wild market gyrations the same way they dismiss Trump’s tweets—mere noise that obscures the music. The fundamentals of the economy are good, earnings are strong, inflation and interest rates are low, so why worry?

But there’s a signal in there somewhere. Yes, algorithmic trading of volatility-related derivatives had a lot to do with the market’s roller coaster ride. But so did legitimate uncertainty about the future. For the last decade, the world has been awash in easy money—the result of an unprecedented experiment in monetary policy. As the flood recedes, rocks will emerge. To quote Warren Buffett: “Only when the tide goes out do you discover who has been swimming naked.”

There was no great harm done in this week’s swoon. Despite swings Tuesday that covered 1,200 points on the Dow, it remains close to where it started the year. But consider this a warning. Rough swimming ahead.

More news below.

Alan Murray


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