Politics - Just Noise For Markets Or Something More?

Every day it seems the country's general media is filled with minute-by-minute coverage of the most intricate details happening in the corridors of America's capital as well as that in other very internationally impactful, whether in terms of politics or economics, nations across the world.

There's a constant drumbeat of news about every minute event that happens in human government and politics, whether in the United States or internationally. However does it all really mean anything to markets? Do the 2018 midterm elections, public summits, press interviews by leaders, let alone the more minute political drama that fills the gossip columns, actually affect company trends let alone broader developments?

Much of that news is complete noise to the markets, with an impact that is either negligible or totally beyond meaningful evaluation and analysis. However due to the potential impact even the slightest government action can have on companies and sectors, it is important to watch for those developments that may prove impactful.

In some cases, it is obvious where there is impact. For example, a regulation that could dramatically transform the way an industry functions and the likelihood and nature of its implementation has a clear realm of importance.

Anyone who has an account with a major email or social media provider has undoubtedly been receiving notices about the impending European General Data Protection Regulation (GDPR) officially implemented on May 25. That is one clear example where politics and government indeed have a direct and ascertainable effect on companies.

On the other hand, in some cases the potential results are so far off from any certain consequences that their contribution is essentially impossible to ascertain in a meaningful way.

For example, a Deputy Secretary in a federal government agency gets replaced or a special election happens.

While theoretical implications could be drawn, it faces problems in firstly that a lot of the truly essential information is hidden in the cloakrooms and away from the public eye.

If a summit between various international leaders happens, we only see the public dance. While the public front can be read and analyzed, a lot of the essential actions take place behind the scenes and make it difficult to get a complete picture.

Secondly, even with a full picture of the circumstances and changes, the impact may be minute or merely a drop in a torrent of other equal drops. These events may be soon washed away by bigger events later, with the art of politics, whether domestic or international, a science that sits on an unstable foundation.

Nonetheless, politics and government is worth watching for when it does have a potential impact, particularly because of the immense potential of public action to transform companies, sectors, and the entire market.

The technology world in particular has been experiencing enormous regulatory threats as of late. With the tech world moving from a state of free roaming exploration and development to now a more structured regimen, not only in the United States but around the world, it is clear that a discerning eye will be needed to separate the essential clues to future trajectories from the noise.