Investors bet on policies, not success

Just a glance at this week's bout of earnings-related market angst shows how little conviction there still is in a sustainable global recovery -- or the fabled 'green shoots'.

In an otherwise punchy, policy-driven year of double-digit western equity gains, October is set to be first month in the red since May for both MSCI's all-country world stock index and US blue chips in the S&P 500.

To keep that in perspective, this month's wobble of 1-2 per cent pales in comparison with prior Halloween scares.

There was a 22 per cent monthly drop on Wall Street during the October crash 25 years this week and there was a near 17 percent October drop after Lehman Brothers went bust in 2008.

But if investors have been happy so far this year riding waves of central bank money-printing or asset-buying from the United States, euro zone, Britain and -- likely yet again next week -- from Japan, they remain doubtful the hell-for-leather policy of reflation will succeed.

Positive economic surprises, including third-quarter US and British economic growth data, and signs of economic bottoming in the latest Chinese or East Asian export data might also be good reasons for underlying bullishness. But markets continue to show caution.

Behaviour in the fixed-income markets shows it best.

With official interest rates bolted near zero and central banks directly supporting many key sovereign and asset-backed markets, there's been an indiscriminate scramble for any

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