Friday, February 6, 2009

Pessimism

Via the Globe: Loonie plunges on jobs report. To quote one analyst:
“So it's way worse than expected ... and, not surprisingly, the loonie tanked this morning after the release of the jobs report.”

And yet, the fact that the market rallied 1.5% right from the opening bell - one hour after the data was out - seems to have escaped the article.

How can you argue that the loonie is tanking versus the USD because of unexpectedly bad job numbers - and they were bad, no doubt - but the market is rallying? I find it hard to believe that stock traders have completely different expectations relative to currency traders.

A more likely story is that job numbers in Canada and the US both beat expectations, but the US ones by a greater margin? Or maybe they didn't beat expectations, but the markets had risk aversion priced in?

Either way, I don't know what to conclude except the Globe likes publishing negative news.

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