Bad news is still good news

FRIDAY'S rise on Wall Street after the release of a weak August jobs report serves as a timely reminder that "bad news is good news'' is still very much in force. This has been the preferred investment slogan for several years now since the US Federal Reserve started "quantitative easing'' to bail out the country's crooked banks and despite periodic indications that markets may actually like to see robust economic growth, it remains the default setting for equities everywhere.

The reason why Wall Street leans towards negative economic news should now be well-known - it means interest rate hikes will be delayed. In the federal funds futures market, the implied probability of rates being raised this month fell from 24 per cent on Thursday to 21 per cent after the employment n…