In January 2023, Canada and the US announced the unemployment data. The US added over 500,000 jobs in January, and the unemployment rate pushed to its lowest rate since 1969. The stock market in the US fell that day. Most people would believe that with better job data, the stock market would continue its rally upward. Why did it have the exact opposite reaction?
The goal of the FED and the central bank of Canada is to slow down the economy, which is why they have raised interest rates. The relation to increasing interest rates means that citizens and businesses will have less money to spend, and more of their budget will go to debt reduction. So additional jobs mean more people are earning an income, and more people will be spending, and therefore inflation will persist.
We have seen this as well when a company gets bad news, but the stock of the company begins an upward trend. They say any publicity is good publicity. So suddenly, the bad news regarding this company now becomes good news for their stock price.
What does this tell us? Well, good news can be bad news, and Bad news can be good news. But most importantly, it is all just “news.” We cannot control it; it’s best we don’t read into it. Instead, we control what we can control. Which is the portfolio you invest in, your saving/spending strategies, and not letting outside forces impact your long-term plans.
