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Normal Topic Markets Correct on Positive Jobs Report- Good News Is Bad News (Read 128 times)
TowardLiberty
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Markets Correct on Positive Jobs Report- Good News Is Bad News
Mar 6th, 2015 at 1:18pm
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In a world where stock prices are driven not by earnings and revenues, but by central bank policy, good news in the real economy is bad news for financial markets.

The reason for this inverted state of affairs is rather simple.

Good news increases the chance of a hike in the fed funds rate in the near term, and that is bad for stocks, bonds and financial assets.

Thus it is a sell signal.

Where as bad news decreases the chance of rate hikes (ZIRP forever!) and also increases the chance for further quantitative easing.

So that is why goods news is bad news.


http://www.zerohedge.com/news/2015-03-06/who-knew-what-when-gold-stocks-morning

*Also of great note here is the fact that some traders (the HFT algos no doubt) got a full minute jump on the market, prior to the news being made public.
« Last Edit: Mar 6th, 2015 at 1:33pm by TowardLiberty »  

"Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist." J M Keynes

"In the first place, the dichotomy between "theoretical" and "practical" is a false one. In economics, all arguments are theoretical. And, since economics discusses the real world, these theoretical arguments are by their nature "practical" ones as well." M Rothbard
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