Wall Street 101

I promise to read this 10 times each morning.

1.
Strong economic number is good for the stock market, because corporate profits will soar.

Weak economic number is good for the stock market, because the fed will cut rates and lower bond yields will lift financials.

2.
High inflation number is good for the bond market, because it means the fed will tighten to keep inflation under control and economy will slow.

Low inflation number is good for the bond market, because the present value of future income stream has increased.

3.
Higher oil is good for the bond market, because a big chunk of foreign oil profits will be invested in Treasuries and/or consumer spending will slow.

Lower oil is good for the bond market, because inflation will go down.


4.
Higher oil is good for the stock market, because oil company profits will go up.

Lower oil is good for the stock market, because consumers will have more disposable income.


5.
Lower dollar is good for the bond market, because currency intervention money will flow into bonds.

Higher dollar is good for the bond market, because inflation will go down and the fed is free to cut rates.


6.
Lower dollar is good for the stock market, because profits of multinationals will go up.

Higher dollar is good for the stock market, because inflation will go down and it indicates strong fundamentals of the economy.