Markets Are Processing Signals Faster Than Humans Can Interpret Them
Most financial commentary still assumes markets react to news. The data and decades of academic research suggest something far more unsettling.
On January 2, 2020, the VIX—Wall Street’s “fear index”—was sitting at 12.47. Calm. Historically low.
Six weeks later, before most people had heard the word “pandemic,” something started shifting. Options skew on airline stocks tilted toward puts. Credit spreads on hospitality names widened quietly. Supply chain monitoring firms flagged disruptions in Asian manufacturing networks.
By March 16, 2020, the VIX had reached 82.69, the highest level ever recorded, surpassing even 2008. The S&P 500 had lost a third of its value in weeks.
Here’s the uncomfortable question: was this a reaction to news?
Or had the system already known something, weeks before the headlines caught up?
The answer, supported by decades of research, may permanently change how you think about markets.
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