But What Will the Market Do?
by Michael Batnick, The Irrelevant Investor
Peter Lynch said “If you spend 13 minutes a year on economics, you’ve wasted 10 minutes.” But what would he say if you knew what the economy would do without wasting one minute at all? How much would next year’s economic data be worth to you today?
Unfortunately, it would likely be worth very little. If anything, having that information could potentially be a huge distraction. Today is a perfect example why. On Friday we found out that the economy added just 126,000 jobs versus an expected gain of 245,000. Not only did NFP have the lowest print since December 2013, but we also we saw downward revisions to the two previous months. Futures immediately sold off and people were bracing for a rough Monday for stocks.
Here is the opening line from an article written just five hours ago: “U.S. stocks will likely plummet on Monday, especially with the disappointing March jobs report.” I don’t mean to single out this one article, there were hundreds I could have picked from and to be fair, there was little reason to believe stocks would rally today. But that’s the whole point; there is not a linear relationship between the economy and stocks or the economy and currencies or the economy and interest rates. This should be crystal clear as the broad U.S. markets rally nearly 1% on the back of some lousy economic numbers.
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