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John Authers

As Binary As It Gets: Bulls, Bears and the Pivot

Whether the Fed has to reverse to easier monetary policy in the next few months is the big question. But its simplicity masks important issues.

A pivot runs between them.

A pivot runs between them.

Photographer: Ulrich Baumgarten via Getty Images

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It’s a binary world. To an extreme extent, opinions on the market are divided, and they are split on one key issue: Will the Fed have to “pivot” toward easier monetary policy in the next few months, or won’t it? This question vitiates investment decisions in almost any asset you care to mention. Everywhere you look, choices are contingent on that central call of whether the Fed has to reverse. Meanwhile, prices of most assets are set at some mid-point, based on a set of conditions nobody expects.