The market's biggest fear these days: Strong economic data

All of a sudden, the market’s back in “good-news-is-bad-news” mode.

Anthony Saglimbene, global market strategist at Ameriprise Financial, joins this week’s “What Goes Up” podcast to discuss his views on that. Below are lightly edited and condensed highlights of the conversation.

Q: You say that good news is bad news again for the market -- can you lay that out for us?

A: Over the last couple weeks, the markets have really settled into this idea of A, “are we headed for a recession?”, and then B, “is it going to be prompted by the Fed raising interest rates too aggressively?” And so what I mean by a good-news-is-bad-news type of market environment is the hotter that economic news comes in versus expectations kind of implies that maybe the Fed will need to continue to raise interest rates more aggressively. And so you saw a little bit of that in the reaction to the May employment report where we created 390,000 jobs in May, the unemployment rate held steady at 3.6 per cent for the third straight month. By all accounts, the employment backdrop is very strong. And the markets declined because the idea is that as long as the labor market remains strong, as long as economic activity is moving above what I think consensus estimates are, it implies that the Fed may have to raise interest rates more aggressively.