Next up: Nov's US presidential election

ONE constant theme throughout the past few years is that bad economic news is good for stocks because it means low interest rates and loose monetary policy should continue for longer. Last week's rally in the US was consistent with this mode of investing since it came after the US Federal Reserve showed its reluctance to raise interest rates and after the Fed's "dot plot" suggested only two hikes next year instead of prior expectations that there would be three.

Based on a close reading of the Fed's accompanying statement, the consensus is that the US central bank wants to raise rates but is playing safe for now because of various considerations. Although many believe these considerations to be economic because of the language used by the Fed, it's very likely that the main - if unspoken - worry is the November US presidential election.

This is not to say the US economy is doing fine. Morgan Stanley's Friday US Economics and Rates Strategy "FOMC Reaction: Itching to Go, Slowly" said that it appears that the Fed would like to deliver a rate hike this year but doing so is hard to justify.