{"id":8024,"date":"2015-05-12T05:32:28","date_gmt":"2015-05-12T10:32:28","guid":{"rendered":"http:\/\/olduvai.ca\/?p=8024"},"modified":"2015-05-12T05:32:28","modified_gmt":"2015-05-12T10:32:28","slug":"the-goldilocks-illusion","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=8024","title":{"rendered":"The Goldilocks Illusion"},"content":{"rendered":"

The Goldilocks Illusion<\/a><\/h3>\n

Why Market Participants Liked the Payrolls Report<\/strong><\/p>\n

Some people have wondered why the stock market reacted with such a big rally to last Friday\u2019s payrolls data. After all, the report wasn\u2019t much to write home about, especially if one\u00a0ponders the details<\/a>. In addition, the already weak March payrolls data were revised lower to an even worse figure.<\/p>\n

However, the report certainly did one thing: it kept the \u201cGoldilocks illusion\u201d alive. While jobs data are a lagging economic indicator and would likely be completely ignored in an unhampered free market (if anyone even took the trouble to collect them, that is), they are regarded as decisive for Fed policy. Few things illustrate more vividly that the central planners are driving forward with their eyes firmly fixed on the rear-view mirror.<\/p>\n

 <\/p>\n

The Fed has little choice though, since its mandate explicitly includes employment as one the things central bank policy is supposed to support (which it does mainly by fostering artificial booms and malinvestment of capital). The market\u2019s focus on the jobs data has increased greatly in recent years as a result of this, which incidentally illustrates how utterly dependent the markets have become on a continuation of easy money policies by central banks.<\/p>\n

The \u201cGoldilocks\u201d idea is that it is best for risk assets if economic data are strong enough not to signal recessionary conditions, but weak enough to keep ZIRP and monetary pumping going. Friday\u2019s data point was presumably considered almost perfect in terms of this playbook.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n

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 <\/p>\n","protected":false},"excerpt":{"rendered":"

The Goldilocks Illusion Why Market Participants Liked the Payrolls Report Some people have wondered why the stock market reacted with such a big rally to last Friday\u2019s payrolls data. After all, the report wasn\u2019t much to write home about, especially if one\u00a0ponders the details. In addition, the already weak March payrolls data were revised lower […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[124,260,303,305,353,5343,534,5344,661,662,824,1940,1939],"class_list":["post-8024","post","type-post","status-publish","format-standard","hentry","category-economics","tag-central-banks","tag-employment","tag-fed","tag-federal-reserve","tag-gdp","tag-goldilocks-illusion","tag-monetary-policy","tag-payroll-data","tag-qe","tag-quantitative-easing","tag-unemployment","tag-zero-interest-rate-policy","tag-zirp"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/8024","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=8024"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/8024\/revisions"}],"predecessor-version":[{"id":8025,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/8024\/revisions\/8025"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=8024"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=8024"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=8024"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}