There might be something to Roubini’s suggestion that the latest data will be bad for the economy, because it will cause the Fed to be paralysed at its next meeting.
Of course, we already knew that the Fed is splintered between at least four different camps, and the latest data makes things as confusing as ever, especially the PPI, which is definitely not showing deflation.
Basically, the bad news for stocks, is that the Fed will be as hard as ever to predict.
What’s more, it seems that with the recent rally over the past several days, a fair amount of optimism has become baked in, as stocks are sliding despite the good initial claims report.
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