A stronger than expected economic report was released today by the Department of Labor, that weekly jobless claims, or first time claims for unemployment, fell to a seasonally adjusted 320,000, a bit lower than the anticipated 335,000 number, according to an article in the Wall Street Journal (1).

In still another story from CNBC (2), cheery economic data showed that new home buyers hit the market for the fourth consecutive monthly gain, as new home inventory shrinks with prices on the rise.   That’s great news, right? Well, not so much if you look at how the markets reacted.

After the good news about our economy was released, the DJIA, S&P 500 and NASDAQ all tumbled. How’s that? Yes, our economy is humming right along but stock markets are selling off? Historically, in good economic times, stock prices rise as investors place more bets on a steamrolling economy. And in bad economic times, investors pull their money out of stocks and into the safer, yet lower yielding bonds.

But now we’re seeing just the opposite and it’s been a trend for several months now. It’s sort of like a backward see-saw. Good news? Bad for the stock market. Bad news? Good news for the stock market. It’s confusing investors as well as financial advisers who learned long ago when to invest where. But not so much now. What gives?

The culprit is the Fed’s quantitative easing program which has been rolling up trillions buying mortgage-backed securities and treasury bonds. This money pumping is propping up these prices, keeping rates low. But as the markets begin to recover, investors are nervous instead of joyous. When the buying stops, will the economy take another turn for the worse?

“It’s an upside down market, that’s for certain” says Shaun Cohen, president of EquityBuild Finance. “Our clients receive a guaranteed 12 percent return on their money and has little if anything to do with unemployment reports, housing starts or any other economic dynamic for that matter.”

Investing in real estate as well as private note investing provides returns based upon solid research secured by real estate and not upon the whims of the markets or the daily onslaught of economic numbers. Safe, secure and solid.

  1. Wall Street Journal http://tinyurl.com/l3gqpyc
  2. CNBC.com  www.cnbc.com/id/100964905