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When Good News Is Just Good News
Did Q4 "make bad news great good again"?
That is, was the dramatic selloff in risk assets and the concurrent deterioration in the outlook for global growth paradoxically just what the doctor ordered for markets to the extent it forced the "epochal" dovish pivot, which in turn catalyzed a risk asset rally and a loosening of financial conditions?
Maybe. Or at least that's the prevailing narrative and it's certainly true that the market's pricing out of future Fed hikes has been coincident with b
The Fed rarely changes the Fed Funds rate in an election year. That’s my conclusion from looking at a chart of said rate and inspecting every fourth year from 2016 back. So if the economy starts hotting up by end 2019, the market can party without worrying about the pesky punch bowl taker awayer. But if the economy starts slumping then (slumping more, I mean), there’ll be no Fed riding to the rescue. And fiscal policy is at full blast with $1TR worth of annual stimulus. If all those predictions of a 2020 recession come true, it could be worsen by the forced absence of any corrective policy.