Big jobs report coming tomorrow, and of course it’s going to be godawful. But, you know, some people are desperate to put a positive spin on everything. It used to be that people greeted bad news cause they thought it meant a greater likelihood of a rate cut, but that’s gone since interest rates are basizally sub-0%.
Alas, people can still come up with a way to justify how bad news could equal big gains
AP: “Maybe that could finally raise some alarm bells and we get a big down, 300 to 400 points at the open,” says Chip Hanlon, president of Delta Global Advisors in Huntington Beach, Calif. “It sounds gruesome, but I think that might finally be the type of capitulation that they’ve overreacted to bad news. That might finally wash out the last few sellers and signal that at least investors are paying attention.”
Many analysts, indeed, cite investor apathy as a major problem for the market.
The idea of capitulation is that you hit a point where investor despondency gets so deep that it’s totally out-of-line with reality. In most scenarios, when everyone is negative, sentiment and reality are probably out of whack. Unless, of course you’re on the titanic when everyone should be negative.
But Chip Hanlon is turning this notion all on its head. If the jobs reports is beyond horrible, then despondency is warranted. And if we gap down to a terrible low on terrible news, that certainly wouldn’t imply that we’ve hit that bottom.
Of course, stocks could rally after a bad report. That’s always possible, especially since the link between news and the market is tenuous, but come on. Bad news is bad.
For what it’s worth, the unemployment rate is supposed to hit 7.9%.