Stocks End Higher and Bad Might Be Good Again

Dow: +140.90…
Nasdaq: +53.98… S&P: +20.10…

Stocks rose today, marking a bounceback from sharp losses late last week.  After rising as much as 279 points in morning trading, lifted by energy and bank stocks, the Dow ended the day up 140.90 points.

Bank stocks outperformed the market after taking a beating late last week as the XLF was +1.2%.

Recent jitters over the prospects for global growth relating to a raft of downbeat economic data have prompted a softening in central-bank rhetoric in recent weeks, a move that has stung bank stocks, but may, in the long run, may be good for the market.  The weaker we see global growth (here and globally), the central planners (those folks that know what’s good for you and always know best), will continue to ease rates and open the spigot.

We saw this with the ECB two weeks ago after they did a sudden about-face and went dovish again. I think over the next few months you will see more of this from China and we may even see more talk of “cuts” not “raises” from our own Fed, but the economy would have to really slow for that to happen.

Remember, the basis for this entire bull market was keeping rates very low, close to zero in fact.  Where ya’ gonna go when you can’t get a return? Stocks right?

When bad is good…….

Housing starts dropped 9% in February and consumer confidence dropped last month.  That’s bad right?  Well, the market was green today. Why? Because the market is getting more confident that the Fed will backstop anything “bad” that may happen down the road.

In the long run, this will find a way to backfire in a “bigly” fashion, but for now, the market seems to shake off bad news quickly.

Keep your eyes on the financials and the transports to a degree.


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