The jobs report came out on Friday (September 2, 2016) and the numbers were worse than expected.

There were 151,000 new jobs added in August, but analysts were expecting 180,000.  Meanwhile, the official unemployment rate remained at 4.9%, while analysts were predicting a drop to 4.8%.

This sent U.S. stocks up and gold up.  So why are stocks soaring when the news is worse than expected?

In the bizarro world of central banking, bad news equals good news.  Since the economy is not as robust as expected, it means that the Fed is less likely to hike its target rate in its September meeting.  Therefore, stocks soar, as investors see rates remaining low for at least a little while longer.

The Fed comes up with an excuse not to raise the federal funds rate every time a new meeting approaches.  Fed officials and analysts in the establishment media have been talking about hiking rates for a couple of years now.  Yet, we have only seen one hike – in December 2015 – during this whole time.  Now we have to wonder whether there will be any hike at all in 2016.

I don’t think the Fed usually plays favorites during the election, as long as they are guaranteed to get an establishment figure.  The problem this time is that Donald Trump is a wildcard.  He is not approved by the establishment.  Therefore, it would not be surprising if Fed officials are strongly in favor of having Hillary Clinton as president over Trump.

This gives an incentive for the Fed to delay a rate hike, at least until after the election.  When the Fed hiked its target rate by one-quarter of a percent in December, stocks plunged in January.  Whether or not this was the cause, there is obvious uneasiness about the prospects of hiking the target rate, if nothing else for psychological reasons.

The Fed is not likely to risk a major stock market crash just prior to the election.  This would be highly beneficial to Trump.

The Federal Open Market Committee (FOMC) meets 8 times per year.  The next meeting is on September 21, when the next statement on monetary policy will be released.  There will be another meeting on November 2, just before the election.

We should not expect any announcement of Fed rate hikes in the next two meetings.  They will find excuses.  They will run with the latest bad news.  Stock investors are now in a situation of liking bad news.  This does not bode well for the economy.