A trader works on the floor of the New York Stock Exchange in New York City, July 28, 2021. (Andrew Kelly/Reuters)

Financial markets are caught between the countervailing forces of recovery and retrenchment.

Scenario analysis is widely used in financial forecasting. Because the future is unknown, it makes sense for a forecaster to outline all the possible market outcomes (scenarios) and to then decide which course of action is most appropriate.

But there is a part of Wall Street that has come to believe that, thanks to the Federal Reserve, such a painstaking exercise may well be a waste of expensive analyst time.

After all, for at least 27 years (if we count the Brady bond bailout as a starting point), the Fed has been almost unfailingly willing to intervene to shore up markets. This engendered a reflex among investors, which may not be…

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