On Wall Street bad = good

Explained at the Washington Post:

The Dow Jones industrial average soared more than 260 points on the news that the U.S. economy is creating fewer jobs than expected... But bad news can be good news in the upside-down world of Federal Reserve interest-rate manipulations and presidential interventions to keep the good times rolling...

“The world economy is slowing, inflation is below target, and now the slowing U.S. economy with today’s no-jobs report is the final straw to break the camel’s back for the Federal Reserve sitting on the sidelines,” said Chris Rupkey, managing director at MUFG Union Bank. “Rate cuts are coming. Bet on it.”

Job creation had been the one holdout against a slowing economy. Unemployment is still crouching at a 50-year low of 3.6 percent. But the Labor Department showed that the economy created far fewer jobs last month than experts had forecast, adding the latest piece to a string of disappointing reports that shows a 10-year boom gasping — for an interest-rate cut.

”This looks like the first shot across the bow,” DePalma said. “One of the economy’s only bright spots is finally weakening. The labor reports have been so consistently good that this is a slap across the face. It gives the Fed license to cut rates.”

The odds of a rate cut rose immediately on the news, with futures placing the chance of a Fed interest-rate cut at 79 percent. The chance of a second rate cut by September rose to 95 percent. “The market is happy because the punch bowl is still there,” DePalma said...

”The jobs report is bad news for Main Street and good news for Wall Street,” said Jared Bernstein, who served as the economic adviser to Vice President Joe Biden. “It’s a microcosm of our inequality problem. You have wage gains that appear to have stalled, and Wall Street loves that because it means fatter profit margins.”