Pages

Friday, July 5, 2013

Today's Orwellian Stock Market Where 'Good News Could Be Bad News'

      We looked at today's job numbers out from the BLS earlier. The numbers beat to the upside-195,000 against 165,000 expected, though the unemployment rate was expected drop to 7.5% but stayed steady at 7.6%. 

      http://diaryofarepublicanhater.blogspot.com/2013/07/may-jobs-beat-to-upside-with-195000.html

      Still,  what the market seems to care about mostly is what it might mean for the Fed down the line. A Politico thinks that good news may be bad news for Democrats. 

      "Welcome to the good-news-could-be-bad-news economy.Friday’s Labor Department report showing a better-than-expected gain of 195,000 jobs in June was a heartening sign for many that the economic recovery continues to move ahead at a modest pace. But it could ultimately turn out to be bad news, especially for Democrats, because it means that the Federal Reserve might start winding down its extraordinary efforts to boost the economy later this year."

        "And if the Fed takes the juice away too soon it could tank the stock market, crush housing prices, snuff out the four-year-old economic recovery, and make life exceedingly difficult for any Democrat who hopes to run in 2016 for what will essentially be President Barack Obama’s third-term."

      Read more: http://www.politico.com/story/2013/07/june-2013-jobs-report-2014-2016-elections-93747.html#ixzz2YBwYqe00

      I don't know that I buy this premise-it seems that Politico just likes to spin everything as bad news for Democrats. Actualy Sumner insists on seeing good news as bad news for Keynesians. 


      Under this logic. maybe good news is good news for Republicans as it means that the sequester was a success. I notice that Sumner also often seems to think that tapering off talk also makes Keynesians wrong. 

      What is clear is that these days it's less about good news than what the good news means. First of all for the future of Fed action. Secondly, who gets to be right or wrong.

       "Politico seems to be thinking that the Fed could prematurely taper which would strain the economy and help Republicans. I'd say that in this perverse way of looking at it, the Dems have plenty of bad news (is really good news) themselves. We have Republicans across the country at every level of government intensifying a war on women with draconian new abortion restrictions with many states cutting back sharply the clinics that offer abortions-clinics which don't offer abortions primarily still are targeted in many states and see their funding cut. So this war is not just on abortion services but women's health services more broadly." 

      Then there is the rollback of the Voting Rights Act. This is a major problem for the GOP. Is it going to block legislation called the Voting Rights Act? 


       Even if they do pass immigrating reform-which I believe eventually will happen, though it may require Boehner to again break the Hastert Rule; he will if he has to I think-they would be the party that is weakening the VRA and won't fix it. 
 
      That should be more than enough to help the Dems eve if the economy really did hit a funk thanks to the Fed winding down too early. 

       As to whether the Fed should taper down already it seems strange with inflation just 1%. The Evans Rule had set a kind of target of 2.5% inflation and 6.5% unemployment. Sumner's whole 'monetary offset' thesis is based on the theory that the Fed is very conservative and is ready to cut back at the first sign of trouble. The tapering off talk certainly seems to underscore
   

        

3 comments:

  1. Love your post and totally agree with you that we can not predict at all about the stock market.Anytime good news can be converted in to the bad news.I really appreciate your post and the way of you explain all the points.
    share market news

    ReplyDelete
    Replies
    1. Thanks very much Linda! I appreciate you dropping by. Please come again often!

      Delete
  2. Politico just likes to spin everything as bad news for Democrats


    Stock Market

    ReplyDelete