Where the markets ride on the road through good news/bad news is only important to managers who do not have a clue on how markets work. A collapse or a surge higher in equities will be a short term opportunity. The fact that managers cannot consistently deliver alpha no matter their pedigree is proof that most of them are accidental winners and perennial flat liners. Up has always been the favorite of most successful macro equity managers and volatility with front running solutions has been the HF's bank. Big Data momentum prop houses will be the next mediocre performers as short term momentum strategies will end up chasing their own tail as tightening latency solutions will deny any price separation opportunities between good news / bad news.
Budget /Debt Ceiling struggles have gripped hard on upside hopes as congressional true believers bleed to promote a form of government servicing the privileged at the expense of those of lesser means. But all governments in their evolution struggle with factions of extremism, adopting a tiny portion of their ideas but letting the bulk of it destroy the extremists who promote it.
The problem in this particular market construct is the world has become accustomed to asset intervention and the belief it will always be delivered and will always work. A default would be certainly bring significant flight to cash not seen since 2008. A solution would put the bears on the bottom yet again.
