The stock market and the economy are stuck on different pages - but the Fed's going to get the last word

Welcome back, Opening Bell crew. I'm Phil Rosen, reporting from New York City.

This morning I'm thinking about Joseph Heller's 1961 book "Catch-22." Since it came out, the name's become a colloquial way of describing a snafu defined by conflicting ideas.

Heller coined the term in describing a soldier who wishes to stop flying dangerous combat missions.

But soldiers can only be grounded if they are found "unfit to fly."

"Unfit," however, is defined as any pilot who is willing to fly such dangerous missions, which is nobody.

That means the pilots who are wise enough to request to stop flying is proof that they are indeed fit to fly.

"Anyone who wants to get out of combat duty isn't really crazy," as Heller put it.

It's one of my favorite books, and the idea is relevant today because "Catch-22" is a fitting characterization of what's facing stocks and economy right now.

If this was forwarded to you, sign up here. Download Insider's app here.

1. Good news isn't good news and bad news is good news. Make sense?

No? You're not alone. Investors are having a tough time with it too.

Here are the basics:

• From consumer spending to jobs, we've gotten a wave of strong economic data recently
• Stocks go down when upbeat economic data comes out
• Investors don't like the good news because it means the Fed is going to carry on with restrictive monetary policy.

Hence, good news = bad news.

But the catch is that investors and companies, in theory, should want robust economic data to keep coming, despite the potential for more interest rate hikes, because those numbers are exactly what can stave off a deep recession.

The better that good news looks, the more likely it is that the economy can sidestep a downturn.

To be sure, inflation remains hot, as we saw in Friday's Personal Consumption Expenditure data — the Fed's preferred inflation gauge. Stocks tumbled on the higher-than-expected reading.

The falling stocks come after a breakneck start to the year, as retail investors have piled record amounts into the stock market over the last two months, despite warnings from Wall Street giants that the bear market isn't over.

Tim Gramatovich, the chief investment officer of Gateway Credit, told me that it's been perplexing to watch the market rise in the face of the Fed's aggressive agenda.

"I've been in the higher-for-longer camp on rates, and for as long as I can remember 'don't fight the Fed' was good advice," he said. "I'm not sure why so many people choose to ignore that."

Meanwhile, Callie Cox, US analyst for eToro, pointed out, too, that markets are forward-looking whereas most economic data isn't, which suggests stocks can sometimes be a leading indicator for the economy.

Even as many top commentators are split on the outlook for the economy, markets appear stuck digesting a host of mixed signals, from strong economic data on the one hand, to fears of higher rates on the other.

In the end, though, it's still the Fed that will most likely have the last word.

What's your take on the good news-bad news conundrum with markets and the economy? Tweet me (@philrosenn) or email me (prosen@insider.com) to let me know.

In other news:

2. US stock futures rise early Monday, following a rough week on Wall Street that ended with the Fed's preferred inflation gauge showing a stronger-than-expected increase in prices. Here are the latest market moves.

3. Earnings on deck: Zoom, HEICO, and more, all reporting.

4. Make these contrarian investments now to profit, according to a Fidelity strategy director. Many vocal stock-market bears have spoken up in recent weeks, but Denise Chisholm thinks plenty of pain is already priced in, which sets up further gains ahead. Here are the five trades she likes.

5. On Friday, the one-year anniversary of Russia's war in Ukraine, the US and G-7 allies hit Russia with fresh sanctions. Restrictions targeted 200 individuals and entities that are supporting Moscow's war efforts, the US said. Get the full details.

6. Elon Musk weighed in on Fed policy again. The billionaire Tesla chief has warned that the central bank could crush the value of the entire stock market. In his words: "A bad Fed decision affects the lives of everyone."

7. Larry Summers warned the US economy may be inching closer to the cliff edge. Rising inventories and dwindling savings are among the key factors threatening the sturdiness of the economy, the former Treasury chief said. "People may be reading a bit too much into the moment in terms of economic strength."

8. Real estate strategies like "zero-money-down" and wholesaling won't work in 2023. That's according to one investor who owns over 1,250 units and retired by age 36. Here's the approach he recommends instead for the new year.

9. This freelance writer's "hourly earning potential" is $215. He's 27 years old, and said he uses ChatGPT and other writing tools to boost his efficiency. He shared with Insider how he maximizes earnings without a day job and how to secure competitive rates from clients.

10. Russia's war in Ukraine has dramatically shifted global markets. Flows for oil and gas in particular look starkly different than a year ago. These four charts show how the conflict has impacted the energy landscape.

Curated by Phil Rosen in New York. Feedback or tips? Tweet @philrosenn or email prosen@insider.com.

Edited by Max Adams (@maxradams) in New York and Hallam Bullock (@hallam_bullock) in London.