Caution: Temporary Soft Patch Ahead
Economic news could get worse in the short term, but the seeds of improvement have already been planted.
This week's economic news was a combination of slow--but not disastrous--U.S. data, and a well-organized and orchestrated monetary easing by many of the world's leading economies. However, the market anticipated most of the easing early in the week and sold off on Thursday when the well-anticipated programs were finally announced.
While U.S. data (including Friday's labor market report) were weak, they were not weak enough to drive an immediate response from the Fed, which did not participate in this worldwide easing program. Paradoxically, markets might have cheered a weaker employment number that would have driven the Fed to immediate action. The bad-news-is-good-news syndrome has been evident over the past month or two. This week's news wasn't so bad, which is just fine with me even if the Fed watchers were disappointed.
Robert Johnson, CFA does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.