Second-rate economic data is first-rate news for Wall Street these days. We don’t quite comprehend the logic. But the popular reasoning goes something like this…
Good economic data is bad for stocks. For it means the Fed will begin increasing rates sooner rather than later. Higher rates are bad for the stock market because of increased borrowing costs.
Nonetheless, bad economic data is also bad for stocks. For it means the economy could be slowing into recession. Declining corporate earnings and contracting growth should push stock prices down.
The sweet spot, however, is in the middling. Moderate growth means corporate earnings should hold. It also means the Fed will delay raising rates…which furthers Wall Street’s glee.
This is simply absurd, we know. But just because it is absurd doesn’t mean we should deny it. We may not understand it, we may not agree with it. Yet it is happening all the same. Who are we to resist it? Continue reading
