When Good News No Longer Matters

-edited

Many times it's not the news that significant, but rather the stock market's reaction to the news.

If I was asked "How would the stock market future react to news that Trump was vindicated?" I would have guessed up, and perhaps hugely so.

Tonight, with the stock market futures down, it seems the market already factored in the fact that the Trump-Russia investigation was all bullsh*t.

In case you disagree, please see Mueller Report Synopsis: "No Evidence of Collusion Between Trump and Russia".

It's not that investors or the market gets everything right as absurd euphoria in 2000, 2007, and 2018 shows. Rather we have another huge warning signal that good news no longer matters.

We already had a hint of that if one looks at the three-day reaction following the latest lovey-dovey Fed FOMC meeting.

It's early. The futures may reverse. I don't know what tomorrow brings, nor does anyone else.

I merely caution the possibly that we have gone from an environment in which all news is good news to an environment on which all news is bad news.

In the all news is good news environment, stocks go up on good news and bad news. The latter because the Fed won't hike or will start cutting, or it's all just transitory.

In the all news is bad news environment, there is worry over overvaluation, recessions, earnings, etc. Good news is never good enough.

We may not be in that environment yet, but I suspect we are. Regardless, we will get there if we're not, sooner rather than later.

Recession signals are flashing red, not yellow. Last Friday, I reported Near Full Inversion: 10-Year Note Inverts With 1-Month T-Bill

The inversion steepened tonight. Recession is at hand.

Mike "Mish" Shedlock

Comments (24)
No. 1-16
Cichocki
Cichocki

Pretty sure your logic is flawed. If the market priced in Trump no collusion then the news shouldn’t have moved futures down. Am I wrong? Doesn’t the market move when reality is above or below expectations?

hmk
hmk

BTW the 3 month 10year inversion is the most reliable indicator and it needs to be so for 10 days. So we'll see.

sequoia512
sequoia512

The story is food prices. 40 percent of the potato crop was lossed world wide last year. We will have a hell of a time getting the corn in on time this year. I have heard that as much as 6.4 billion bushels of corn may be contaminated from flooding. If so food is about to double or more in price. The Grand Solar Minimum should be what everyone is talking about not the Kardashians.

Carl_R
Carl_R

Mish has it exactly right. How the market reacts to news tells you a lot about the state of the market. In a bull market, anything that might be construed as good news moves the market higher, sometimes substantially higher. In a Bear market, good news sometimes moves the market higher, but is quickly shrugged off, and the market continues in prevailing direction.

truthseeker
truthseeker

One more try. Ok if Mish has it right this time with the stock market, and I agree with him, tho that’s not particularly a positive, as the selling gets really going, where will people put their money. Yes I agree with Mish you should have some exposure to gold but I will not be buying any gold stocks. That’s paper. No GLD, more paper. Buy bullion or coins and for heavens sake, take delivery and be very careful where you store your bullion!

AWC
AWC

Mr. Market is Manic/Depressive. Anyone who thinks they can predict which one of those moods he will go into at any given time in the future is only fooling themselves.

Six000mileyear
Six000mileyear

"In the all news is good news environment, stocks go up on good news and bad news."

"In the all news is bad news environment, there is worry over overvaluation, recessions, earnings, etc. "

Individual mood, collectively by market participants, drives long term price trends. Media can control the message, but not the people. In WW2 on Christmas German and Allied troops took a timeout from fighting and celebrated the holiday together. Goebbels' propaganda machine was powerless against this change in mood.

2banana
2banana

How about investors knew it was a sham investigation right from the start? That Hillary lost because she was a terrible candidate, even when she outspent DJT 4:1?

The real qurstions:

How is Trump going to hit back now that this attempted coup is over?

How much more wacko are democrats going to get before 2020?


If I was asked "How would the stock market future react to news that Trump was vindicated?" I would have guessed up, and perhaps hugely so.

ReadyKilowatt
ReadyKilowatt

When the gold bugs come up from the baseboards I'll start to think we're in a recession.

stillCJ
stillCJ

Editor

Mr. Market suspects Mueller will not find any collusion and buys the rumor. Mueller finds no collusion, Mr. Market sells the fact. Anyone that does not know markets buy the rumor and sells the fact should not be in the market.

shamrock
shamrock

How is this good news? Tariff man is a giant lead weight around the neck of the world economy. He got $1T in tax cuts and spending increases from Paul Ryan and Nancy Pelosi and got a 1 year bump in GDP from 1.8% to 2.9%, but now it's all trade wars and tariffs and here comes the recession.

RonJ
RonJ

"When Good News No Longer Matters"

Wave 3 down.

Blurtman
Blurtman

Swing and a miss.

BillinCA
BillinCA

Add to this the good news that February housing showed a recovery from the awful Dec and Jan numbers. I must've missed that report here though...

frozeninthenorth
frozeninthenorth

buy the rumor sell the news!

but more importantly, America is now moving to other conversations: such as the Federal government's historically high deficit: here come the cuts Medicare, Medicaid, and social security!

MtnMan
MtnMan

Yellen mentioned today the yield curve inversion doesn't mean a recession is coming, just that rates may need to be cut. The FED support for this market has no end.