To paraphrase Socrates, we know enough to know that we actually know very little. We were reminded of this on Saturday morning when we woke to see global markets soared on the news that the US unemployment rate had dropped on better than expected employment growth.
This confused us. We thought that bad news was good news. And that good news was bad news. On this logic, the good news on employment should’ve been bad news for the stock market. A lower unemployment rate should bring an end to the Fed’s easy money quicker than expected. So the market should’ve tanked.
But it didn’t. It went up. By a lot. Good news IS good news. And it seems that bad news is still good news too. Because soon after the employment data came out, we learned that activity in the US services sector came in weaker than expected in April. And the employment sub-component of the report reflected a slowdown taking place, in stark contrast to the earlier, bullish jobs release.
And to top it off, US factory orders contracted by 4% during April, again below expectations.
So the world’s largest economy is slowing down and creating jobs, which lead to higher stock prices and greater wealth for the few who actually own stocks. But instead of spending that magically created ‘wealth’, the lucky few roll the dice again and punt on stocks going higher. And the stocks oblige, whether the news is good or bad.
Stocks continue to make new highs as the torrent of money created by central banks goes into ‘things’ (but not gold!). In a slow growth environment, the share market is king and cash is the joker.
Such is the world created by the central banker as supreme monetary architect.
It’s all good!
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- Why the gold ‘bear’ is set to bite again: What goes down, must go…down. As Jason explains, the gold crunch that kicked off in 2011 may not be over after all. In fact, gold’s plunge may be about to ramp up again. Find out why the precious metal could fall well below US$1,000 in the months ahead.
- The uncut truth on gold: Despite what you might hear, the supply and demand story for gold remains gloomy. But not for much longer. As you’ll see, one specific signals points to a potential bump in demand for the precious metal.
- Patience the key to big gold gains in 2017: Gold and gold stocks will eventually bounce back. But not right now. Jason reveals when you should jump back into gold, and why patience could pay off big time in the next few years.
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