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When Good News is Bad

By Jon S. Strebler

 

Good news is bad news in the crazy world of investing. Except when it’s not. It all boils down to people’s expectations, which are truly and regularly the wild card that makes the whole business so tricky. Last Friday we got the latest U.S. unemployment numbers (wait – didn’t we just talk about the latest unemployment numbers the week before?), and they were much more positive than expected. The unemployment rate is down to 5.5%, with an additional 295,000 jobs being created. Great news! Which is negative. Got it?

 

Lower unemployment rates and rising GDP levels generally translate into higher overall prices. The concern of course is that with the U.S. economy continuing to surprise on the upside, the Fed may raise interest rates sooner than expected in order to head off future inflation. However, with price levels rising so meagerly these days, one wonders why policymakers worry about ... Log in or subscribe to continue reading.


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