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Investing Specialists

Data Quirks--and a Gift From Japan--Take Sting Out of Lackluster GDP

While the sequential GDP growth number didn't look good, same-quarter to same-quarter growth has been much less volatile.

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It was yet another week of volatility, with all markets ending on a high note Friday, likely driven by the Bank of Japan's surprise rate cut. (Key Japanese officials denied this was a possibility just a week ago.) That made everyone happy, and everything was up: stock, bonds, commodities, and emerging markets. Usually when bonds are up, commodities are down and typically stocks, too. What's different this week?

The out-of-the-blue Japanese rate cut (which now means negative interest rates), combined with continued whispers of more easing by European Centrail bankers and even dovish indications from the U.S. Fed on Wednesday all cheered the free-money crowd, which is now hopeful more cash is headed its way. That served to lift all asset classes. We appreciate the break in the selling, but eventually ongoing earnings pressure and other stock fundamentals could keep a lid on stock market improvement.

Robert Johnson, CFA does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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