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When Good News is Bad

By Jon S. Strebler

 

“It’s not the news that matters, it’s how the market reacts to the news.” – Old market adage

 

Due to weak international markets, it appears less and less likely that the US Fed will raise interest rates this year. The virtual “sure bet” of a rate hike in September, based on a robust US economy, vanished after China devalued its currency in August. That move reinforced the seriousness of China’s economic problems and, unlike what some glib but ignorant US presidential candidates suggest, China’s #2 economy is a very big deal indeed, and that country can’t be bossed around to follow our wishes. 

 

Negativity from China’s move spread pessimism across world markets, many of which were already on somewhat shaky ground. The end result is that most world stock markets can now be judged as bearish, the path of least resistance for share prices being lower. It is during ... Log in or subscribe to continue reading.


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