{"id":1155051,"date":"2019-12-11T17:07:24","date_gmt":"2019-12-11T23:07:24","guid":{"rendered":"https:\/\/dailyreckoning.com\/?p=108720"},"modified":"2019-12-11T17:07:24","modified_gmt":"2019-12-11T23:07:24","slug":"beware-good-news","status":"publish","type":"post","link":"https:\/\/juniorminingnews.com\/?p=1155051","title":{"rendered":"Beware Good News!"},"content":{"rendered":"

This post Beware Good News!<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n

Mr. Jerome Powell and his mates sat on their hands today \u2014 no rate cut:<\/p>\n

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The Committee judges that the current stance of monetary policy is appropriate to support sustained expansion of economic activity, strong labor market conditions and inflation near the Committee\u2019s symmetric 2% objective.<\/i><\/p>\n<\/blockquote>\n

Nor does \u201cthe Committee\u201d intend to cut rates next year. But what of possible rate hikes?<\/p>\n

Only four of 17 members anticipate a quarter-point raise in 2020.<\/p>\n

Of course… the Committee hooked the standard disclaimer to their announcement:<\/p>\n

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The Committee will continue to monitor the implications of incoming information for the economic outlook, including global developments and muted inflation pressures, as it assesses the appropriate path of the target range for the federal funds rate.<\/i><\/p>\n<\/blockquote>\n

The stock market greeted the news with a general shrug of the shoulders. It was, after all, expected.<\/p>\n

The Dow Jones gained 29 points on the day. That is, it barely made good yesterday\u2019s 28-point loss.<\/p>\n

The S&P scratched out a nine-point gain. The Nasdaq fared best \u2014 up 38 points today.<\/p>\n

The world jogs on.<\/p>\n

But let us take a brief canvas of the overall economic condition…<\/p>\n

Stocks presently summit new heights, unemployment presently plumbs old depths, consumer confidence is presently up and away.<\/p>\n

Meantime, the Organization for Economic Cooperation and Development (OECD) claims the global economy has swung 180 degrees since October.<\/p>\n

That is, the global economy has swung from contraction to recovery since October.<\/p>\n

Sample quote:<\/p>\n

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Stable growth momentum is anticipated in the euro area as a whole, including France and Italy, as well as in Japan and Canada. Signs of stabilizing growth momentum are now also emerging in the United States, Germany and the United Kingdom, where large margins of error remain due to continuing Brexit uncertainty. Among major emerging economies, stable growth momentum remains the assessment for Brazil, Russia and China (for the industrial sector).<\/i><\/p>\n<\/blockquote>\n

Just so.<\/p>\n

If October did represent an actually inflection point, investors can prepare for a merry run\u2026<\/p>\n

Reports Saxo Bank\u2019s Peter Garnry:<\/p>\n

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Our business cycle map on country level going back to 1973 suggests that if the turning point came in October, then we are entering the most rewarding period for investors in equities relative to bonds. The average outperformance for equities versus bonds in USD terms has been 9.4% for every recovery phase.<\/i><\/p>\n<\/blockquote>\n

Look close. You can almost see the erring stars returning to their courses\u2026 the angels returning to their posts\u2026 the Perfections returning to view.<\/p>\n

But as we have noted before:<\/p>\n

While bad news frightens us\u2026 good news terrifies us.<\/p>\n

Too many animal spirits are unchained, too many guards go down, too many fools rush in.<\/p>\n

Have they forgotten the trade war? Are global debt levels falling? Is a white age of peace suddenly upon us?<\/p>\n

And we might remind the chronically hopeful of this capital fact:<\/p>\n

Recession is a menace that often arrives unannounced, like an influenza\u2026 or an unexpected visit from a mother-in-law.<\/p>\n

Periods of seemingly incandescent growth may immediately precede it.<\/p>\n

Please consult the following dates. Each reveals the real economic expansion rate \u2014 that is, the economic growth rate adjusted for inflation \u2014 immediately before a recession\u2019s onset:<\/p>\n