[JumpCrisscross]

> It really is an indication that the stock market is mostly speculative and not concerned about the actual economy

Not really. Strong jobs numbers in the midst of 3+ percent inflation means rates should go up. That, in turn, dilates time on future earnings. So making a company's future earnings more-heavily discounted will be a net drag on valuations even if the jobs numbers indicate those numbers, near term and far, will be higher.

[d--b]

tbh, it makes it even sadder.

It means the entire economy runs on borrowing to fuel growth.

When all that cash is still coming fron QE, it’s gross.

[andric]

Yep. Job numbers are the “actual economy” – the actual economy is driven by wages and consumption.

Stronger wages → stronger consumption → higher demand-pull inflation.

But higher inflation implying that “rates should go up” is central bank doctrine. It’s not a general law of how economies function.

Central banks intervening with interest rate adjustments is what distorts the prices of equities downward, when inflation rises.

Without central bank intervention, inflation should theoretically push equities higher (a highly-inflated economy driven by rising demand is by definition a well-performing economy!).

Central banks intervene because runaway inflation can be harmful to wage-earners (they save in dollars, not assets).

But I’m not sure if a 2–3% inflation target is ideal. It seems to me that this arbitrarily low inflation target restricts the growth of the economy in ways that might affect wage-earners, defeating the stated purpose of monetary policy, since higher rates also have the effect of curbing job growth as well as raising the cost of servicing mortgages.

[EGG_CREAM]

Agreed about the 2-3% target. Seems like a crazy low target for a country that has been, historically, a strong exporter. Or at least seems to want to be an exporter. I wonder if one of the reasons behind this low target rate is that inflation will ultimately decide how expensive government debt is, since under normal circumstances people will want their bonds to at least pay out enough to cover inflation.

[trumpdong]

> But higher inflation implying that “rates should go up” is central bank doctrine. It’s not a general law of how economies function.

Let's put it this way then: the central bank can raise rates or it can crash the economy into a brick wall. In that sense, rates should be raised. We have the least competent regime in history right now though, so they might choose the latter option.

[JumpCrisscross]

> higher inflation implying that “rates should go up” is central bank doctrine

Uh, no. If you have no central bank, more consumption and more employment means more demand for money. Ceteris paribus, that will raise rates. (Our own history with free banking is more complicated since the only inflationary period was driven by specie introduction from California's gold rush. The predominant problem in antebellum America was deflation and bank collapses.)

You're correct inasmuch as central banks quicken this reaction, and–when done properly–dampen it. But the fundamental engine is emergent, at least for nominal rates.