A Good News Bad News Kind Of Thing… [BETTER]
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The other bad news for retired beneficiaries is that the purchasing power of their Social Security income has been rapidly declining since the beginning of the century. A May report from TSCL found that the purchasing power of Social Security dollars has plunged 40% since 2000. What $100 in Social Security income could buy in 2000 can now only purchase $60 worth of those same goods and services.
With that in mind, the goal is to find the balance between feeling informed and educated on the situation at hand while not becoming totally overwhelmed by it. After all, when good news is available, or the situation changes for the better, it will come to you; you won't need to seek it out.
To help alleviate the mental and emotional toll this is all taking, the CDC recommends taking breaks from watching, listening, or reading news stories, especially since hearing about a pandemic repeatedly is upsetting.
Taking steps to minimize stress during this difficult time is essential for both your physical and mental health. While watching the news can provide you with critical information about protecting yourself and others, taking in too much information can be overwhelming and detrimental to your mental health.
Trust through Crisis. On the other hand, women tend to benefit from a trust advantage. According to research at Lehigh University and Queen's University Belfast, when people are in a crisis situation, they are more likely to trust women to take care of them and lead them to a safe outcome. While this may seem like good news, it is still limiting for women because it speaks to a perception of qualification based on gender alone, not skills, competence or experience.
Second, women can bring their own talents forward. Women will do well to recognize their strengths and demonstrate their capabilities every day, rather than shying away from situations because of bias. When women bring their best, they contribute to their organizations and communities. We all have an instinct to matter and applying talents for the benefit of family, communities and organizations is good for all kinds of wellbeing.
In normal times, strong job gains and rising wages would be considered a good thing. But these days, they're exactly what the U.S. economy doesn't need as policymakers try to beat back an inflation problem that just won't seem to go away.
"Bad news equals good news, good news equals bad news," Vincent Reinhart, chief economist at Dreyfus-Mellon, said in describing investor sentiment heading into the key Bureau of Labor Statistics employment count. "Pretty much uniformly what is dominant in investors' concerns is the Fed tightening. When they get bad news on the economy, that means the Fed is going to tighten less."
A few times this year, strong employment reports have been met by panic selling from traders fearing more Fed hikes. This phenomenon is known to traders as "good news is bad news." If it sounds like it's an unsound way to invest your money - it's because it is. But in a QE-addicted world post-pandemic, liquidity has taken the reins from economic growth as the most important driver of stock returns. This mirrors the trade in early 2021 when virus cases would jump and traders would go buy all the work-from-home stocks like Zoom (ZM), and sell oil stocks like Exxon Mobil (XOM). In the end, the fundamentals won out, and despite Zoom briefly being valued for more than Exxon during the pandemic, they're no longer in the same ballpark. Profitable companies are almost all up from pre-pandemic levels, and many money-furnace work-from-home stocks are now down 80% or more. These weird trading patterns have now returned. With the end of QE and the start of QT as the Fed vacuums money out of the system, speculative junk gets a big bid anytime someone says the word "pivot" on television!
The ratings boost viewership, which in turn attracts advertising dollars and investments. As a result, many media outlets stress the importance of delivering negative and emotionally jarring news reports. This burden falls squarely on the shoulders of journalists, who feel pressure to deliver over-exaggerated news stories.
In fact, 79% of media companies were found to be operating under this principle of selective negative news articles that avoided negative reporting on advertisers. This accounts for a big percentage of the entire media being technically in the pockets of these companies.
Interestingly, 48% of the young respondents said that watching the news was important for them. For 70% of them, the news is a valuable source of information that helps them become smarter and more knowledgeable.
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The greatest Yogi-ism in finance is \u201CGood News is Bad News\u201D\u2014and its converse \u201CBad News is Good News.\u201D When most people talk of the good-news-is-bad-news paradigm, however, what they\u2019re primarily talking about is the market\u2019s expectations for the reaction from the Federal Reserve. A better-than-expected jobs report is good news, but equity markets can often sell off in the aftermath of such news because it means the Federal Reserve is likely to raise rates more in reaction to a stronger labor market. A weak GDP report is bad news, but equity markets can rally in the aftermath if it makes the Fed more likely to lower rates to try and prevent a recession.
Obviously, this is oversimplifying a bit\u2014financial markets and global economies are complicated interconnected systems, so it shouldn\u2019t be surprising when what\u2019s good for the goose isn\u2019t necessarily good for the gander. However, it is still true that the \u201Cmeaning\u201D of a lot of economic news is colored by the market\u2019s meta-reaction to that news, which itself is colored by the expected reaction from the Federal Reserve. Understanding the reaction function of today\u2019s FOMC is therefore key to understanding which bad news is good and which good news is bad.
Over the last couple of months, we have experienced a dynamic whereby a lot of good news\u2014the drop in gas prices, rising consumer sentiment, and strong jobs reports\u2014are treated as bad while a lot of bad news\u2014tightening financial conditions, deteriorating business outlook, and elevated recession risk\u2014are treated as good. Arguably, a stronger-than-expected overall economy (good news!) has mixed with worse-than-expected inflation data (bad news!) to engender significant increases in expected short-term interest rates and slightly tighter monetary policy, keeping recession risks elevated.
The biggest source of \u201Cgood news that\u2019s bad news\u201D comes from the labor market. The Federal Reserve wants to get inflation down, and in doing so wants to see aggregate income growth moderate towards the 5% per-year level from before the pandemic. So the fact that aggregate wage growth still remains elevated by pre-pandemic standards is not welcome news to them\u2014higher income growth means higher spending growth, and higher spending growth means higher inflation.
In fact, even the improvement of real supply conditions can engender a negative policy response. Take gas prices\u2014the major shock to energy supplies at the onset of the Russian invasion of Ukraine was clearly bad from a purely economic perspective because of the large shortage of such critical economic inputs, but the Federal Reserve also felt forced to respond to higher gas prices (bad news!) with higher interest rates (bad news again!) due to the possible effect on inflation expectations.
But that\u2019s not the full story\u2014as I discussed in my earlier piece on inflation expectations, households often interpret lower gas prices as signs of an improving economy and react by raising their sentiment. Rising consumer sentiment can instill the confidence needed to go and make major purchases, the exact behavior the Federal Reserve hopes to prevent right now. To be fair, sentiment still remains low by historical standards, but that doesn\u2019t stop falling inflation expectations from arguably being part of the good-news-that\u2019s-bad-news dynamic.
The story of aggregate output growth over the last few quarters can also arguably be told with the good-news-that\u2019s-bad-news dynamic. Real GDP growth was negative during the previous two quarters, prompting rising recession fears and arguably leading to some hesitation among members of the Federal Reserve about pursuing aggressive rate hikes. When more good data on income, employment, spending, and production came in throughout the year the consensus shifted towards higher interest rates and tighter policy.
Okay, what about the inverse? What kind of bad news could become good news based on the Fed\u2019s reaction to it? In theory, one example came hidden in last month\u2019s jobs report. Even though job growth was relatively strong, the unemployment rate rose from 3.5% to 3.7%. That wasn\u2019t from a reduction in workers with jobs but rather from an increase in the number of people without jobs who were actively looking for work.
To be clear, one report is not enough to draw a trend from (especially when unemployment data can be so volatile). But a situation in which wage growth mediates through labor supply improvements rather than labor demand destruction is the Federal Reserve\u2019s best-case scenario for the job market. So rising unemployment can also be bad news that\u2019s actually good news. 2b1af7f3a8