Bad News Is Bad News, Good News Is...
By Cam Hui:
It's always good to have a long weekend once in a while as it gives me time to think and reflect, rather than to react in a knee-jerk fashion to news. So what to make of the shocker of a NFP release last Friday? Upon further consideration, it sounds bad as the stock market is caught by the dilemma where bad news is bad news and good news may be bad news.Why was employment rising so quickly? Ben Bernanke's speech to National Association for Business Economics Annual Conference provides some clues. He said that:
[T]he better jobs numbers seem somewhat out of sync with the overall pace of economic expansion. What explains this apparent discrepancy and what implications does it have for the future course of the labor market and the economy?
The apparent discrepancy is due to Okun's Law [emphasis added]:
Okun noted that, because of ongoing increasesComplete Story »