I get this question often these days. In the face of war in Ukraine, global supply chain disruptions, the US-China bipolarisation, rampant inflation, rising interest rates….How on earth can markets rebound so soon from their February trough?

Markets react to news on the spot, and are not really sensitive to the protracted consequences of a specific news flow. For example, while our soul remains very affected by the daily horrors of the war in Ukraine, the markets constantly price scenarii linked to a stream of news events and forget about it (a) invasion – high probability to lose Ukraine to the US, (b) impact on commodity supplies – low in the medium term, (c) nuclear threat – probable but low, (d) medium-term impact on the US consumer – low…etc. Markets only come back to revise these probabilities when they are material adverse changes to the consensus outcome. For them, the lingering effects of war or the pandemic have very little relevance. In a sense, they are a lot more rational than all of us.

Paraphrasing Daniel Kahneman, author of Think Fast-Think Slow, “Nothing in life is as important as you think it is, while you are thinking about it.” As individuals, we often are trapped between our automatic and impulsive behaviours and our more thoughtful and considerate actions.

Ok, I get it. But what is it that markets price that is so rosy? Well, the wealthiest companies and individuals are flush, and consumer moral is up. Despite rising interest rates, consumption hasn’t been stifled yet. Companies are buying back shares like these is no tomorrow. China came to realize that its sagging economy needed an immediately strong boost. On the geopolitical front, Russia and China may think their moment to challenge Western powers hasn’t come yet.

Let’s face it folks, world is not always a good place. Yes, some parts of the economy, the society, even your community will always go down the wrong path. We know it, everybody knows it. Move on. Just ask yourself now, what you do to make such constant uncertainty a factor of success and harmony around you. Embrace uncertainty, don’t escape it.