After last Friday’s 200 point Dow rally following a 200k+ jobs number, is it safe to say that the market is finally beginning to make a little sense? I.e., is good news good news?

Well, it depends on the news. The problem with Friday’s action is that—if financial markets indeed traded on a good jobs number—we should have seen bonds sell off in a big way. Why? Because good news spells less QE and, consequently, higher long-term interest rates/lower bond prices.

Save for a brief spike in yields (that quickly settled back) Friday clearly did not produce a good-news style reaction in the bond market. Could be—as I read somewhere—that the whisper jobs number (what Wall Street really thought) was much higher than the reported number. In which case Friday’s number was not a good number.

While I suspect we’ll ultimately get there, in my view, we’re not yet in a good news is good news environment. Except (like I said, depends on the news), that is, when we’re talking about “good” news (or at least what short-term bulls would consider good news) out of Washington. The respective house and senate budget chairpersons, Paul Ryan and Patty Murray, are reportedly close to a deal (don’t hold your breath just yet—although it could happen) that would fund Washington for another year. Thus, sidestepping the political circus scheduled to begin in January. This was in the rumor mill last Friday.

So then, some good news is bad news and some “good” news is good news. The lesson being, never trade the news.