Economies and markets

While the situation between Turkey and Syria certainly appears to be serious, it does provide a useful laboratory experiment to test Macro Man's longstanding thesis that geopolitical events generally do not matter for financial markets beyond those fleeting moments of time after the red headline has hit.  To be sure, there are local exceptions- witness the performance of Turkish stocks since the incident- but broadly speaking there was a decided lack of contagion evident by the end of the day.

That's not to say that such events have no impact whatsoever on economic life.  One might reasonably posit that the Paris atrocities put a dent in US consumer confidence, and the absence of Russian tourists from Turkish beaches next summer could give another kick to Turkey's ever-present external balance concerns.

However, it's an old saw that economies are not markets, and vice versa.  Here's a fun game to see how well that's playing out at the moment.  Macro Man downloaded y/y GDP, CPI, and equity return index data for ten countries.    See if you can match each country to its GDP, CPI, and equity returns...without cheating!   Answer will be posted separately later today.