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Bad News is Good News

The opinions expressed by columnists are their own and do not necessarily represent the views of

Despite midday swoon in oil prices that saw West Texas Intermediate (WTI) dip down to $27.96, equities showed a tremendous amount of spunk. Stocks tumbled out of the gate into total free-fall before staging an impressive rally. Then, stocks took another hit to the gut- this one, courtesy of the JOLTs report that showed record job openings and a spike in job quitters in key industries.


The market, however, rallied yet again. Finally, when it looked like the Dow would post a triple-digit gain (also known as a ho-hum session); the Fed told banks to model for negative Treasury bond yields. As it stands, the market held up relatively well and it didn’t crash with the crude oil. Still, it was another wild ride; it’s not for the faint of heart.

Yet on that note, investors must understand that trying to pick the exact bottom is a mistake; when it’s time to buy, it will not feel great.

Janet’s Roar

There are still signs the Fed wants to take victory laps via a series of rate hikes, perhaps to justify their actions and their very existence.

One of the big dilemmas for the stock market is the thinking at the Federal Reserve, which seems very cheerful these days. It could be because there is some need for the justification of risk after all their handiwork and unprecedented moves to ‘save’ the economy. Along with their counterparts, our central bank has monetized government debt through the quantitative easing (QE) process; there are known and unknown risks to this gambit.

Wholesale Inventory for December saw the headline -0.1, which is actually better than consensus, but it’s the third consecutive month of decline.

Atlanta Fed hiked its 2016 first quarter (1Q16) assumption on the Gross Domestic Product (GDP),


(See table) while Goldman Sachs (GS) modeled for 1.75 from 1.90. So, it begs to question whether the Fed is too giddy or the street is too pessimistic?

For all the talk about whether good news is bad news or bad news is good news, it looks like the Fed is sticking with its notion of an economy on the mend. Today, Janet gets to make her pitch with the start her two-day semi-annual Humphrey-Hawkins testimony to Congress. She’s going to get an earful-she will have to come back to explain to the masters about free stuff and why the money-printing spigot should ever be turned off.

Good News is Bad News

These days, the last thing any company could ever say in an earnings press release is Record Profits because it’s almost a guarantee that the underlying shares will get hammered. The latest case in point is Disney (DIS), which posted big earnings beat, only to see the shares immediately sell-off.

Candidates & Economy

As job growth slows, the issue of the economy will play a big role in deciding the next occupant of the White House. With Iowa and New Hampshire in the books, it’s important to start to understand what the candidates are promising and what they can deliver.

In January, unemployment surged for folks without a high school diploma. However, I see Donald Trump doing his best with this block (although his supporters get angry when I bring this up). It’s an area where the eventual GOP nominee might find so-called Reagan Democrats.


Unemployment Rate



Less than High School



High School



Some College






In addition, every age group, save for those aged 15 -24 and 65 and over, many have seen a real household income decline since 2009. This means a lot of pain for folks in the middle, often compounded because of boomerang adult children or those sandwiched between themselves and their parents.

Someone has to get the economy going for everyone, and spark the right backdrop for wage growth – America needs a big raise.


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