Trade Changing Tides of Sentiment, Not Skepticism
• Chinese GDP figures continue to draw incredulity printing so consistently in line with forecasts
• Market consensus - whether misinformed or contrary to theoretical interpretation - defines pricing
• Trading against the crowd only works when the crowd is expected to shift to the contrarian view
Chinese GDP figures were released Tuesday morning, but the high-level event risk proved uneventful from a market-moving potential. The world's largest economy posted a 6.8 percent pace of annual growth which is the slowest clip since 2009 but only slightly below consensus. There is a tangible concern over the accuracy of the data given its preternatural consistency. This has certainly cooled market participants' reaction to the data; but for some, it has encouraged outright bearish positioning. However, it is the 'crowd' that sets price. If the majority of the market decides to run with dubious data or holds to the sidelines, prevailing prices will follow. The contrarian view is by its definition contradicts trend. Only when the contrarian outlook is expected to be the consensus is there a reasonable opportunity to consider. We discuss skepticism in the context of the high profile Chinese data in today's Strategy Video.
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