Goods news is bad news and bad news is good news.

Bad news is good news is an expression that market participants are probably most familiar with in the aftermath of the subprime crisis of 2008.

Generally, this means that scheduled incoming macroeconomic & quarterly earnings data reflect a poor state of the economy. Increasing unemployment, decreased wage-growth, declining core-inflation are a few examples of fundamental indicators that would, according to economic theory, suggest an impending recession.

The definition of a recession is different depending on the country you look at, but generally it is defined as;

"..Two consecutive quarters of negative economic growth as measured by a country's gross domestic product (GDP).." 

Declining economic activity should be interpreted in a negative light, as it often entails a demand shock, as people are laid off, salaries are cut which create a vicious cycle of falling asset and real-estate prices in an economy. 

Should is an opaque term in markets, as the markets often behave in a complete opposite fashion as to what market participants anticipate. 

From retail-traders in their pyjamas, to experienced asset managers on Wall Street, interpreting bad news as -being- bad news is not always straightforward, neither is interpreting good news as -being- good news.

It seems counter-intuitive (because it is*), as these phrases can actually mean the exact same thing in markets, with difference in interpretation between the two lying in the phase of the market cycle we're in.

Good news is bad news, and bad news is good news.

In order to understand this conundrum, one needs a basic grasp of macroeconomics and monetary policy. Monetary policy globally is primarily centered on sustaining 2% core inflation, neither more nor less.

Centralbanks tend to reduce interest-rates when inflation is lower than 2%, or if they suspect that it might drop lower than 2%. Similarly, interest-rates are raised when inflation is higher than 2%, or if they suspect that it might overshoot their target of 2%.

Secondary mandates, after sound inflationary levels, is low unemployment and increasing annual GDP-growth. (All of these are actually intertwined as we'll demonstrate soon*).

Inflation is usually suppressed (lower than 2%*) in recession times, and elevated (higher than 2%*) in flourishing economies. Central banks act accordingly in times of market distress, raising or lowering interest rates in order to stimulate/depress economic activity.

Since lower interest rates tend to re-inflate prices, leading to higher asset prices and real-estate prices, gloomy economic data can thus be interpreted as good news, as expectations change in order to price in future rate-cuts.

Since higher interest rates tend to deflate asset and real-estate prices, cheerful economic data can be interpreted as bad news, as expectations change in order to price in future rate-raises.

Therefore, higher unemployment, lower GDP, lower retail-sales, lower manufacturing, at a first glance all bad news, will all eventually be considered to be good news, as markets expect central banks to loosen monetary policy, flooding financial markets with money.

Likewise, lower unemployment, higher GDP, higher retail-sales, higher manufacturing, all appear to be good news, can potentially be interpreted as bad news, as markets expect central banks to tighten monetary policy, strangling financial markets with liquidity.

Therefore, good news is bad news, and bad news is good news.

Central banks, apart from utilising the interest-rate mechanism, can also influence the money-supply via a second mechanism; the purchase & sale of government bonds and other financial securities, also known as 
quantitative easing.

Purchasing bonds from financial institutions injects the economy with new liquidity, as central banks create money out of thin air, due to the fractional-reserve banking system.

Central banks selling bonds, or other assets to financial institutions, lowers the amount of money in the economy as institutions pay central banks for the securities.

Determining wether good news is bad news or bad news is good news is contingent upon where we are in the economic cycle.

In the aftermath of the financial crisis, good news such as decreasing unemployment in the U.S. was interpreted as bad news as markets feared that it would signal future rate increases from the Federal Reserve, thus impeding the advancement of other fundamental indicators, such as core-inflation, wage growth that would underpin that the economy was indeed strengthening. 

On February the 5th, 2018 - Volmaggedon occurred, meaning that volatility capriciously jumped, leading to a rapid market sell-off, originating in a market fear of raising interest-rates due to the U.S. economy growing very rapidly during until that point.

Conclusively Good news is bad news and bad news is good newsis an aspect of the markets that will always exist, and one of the reasons markets have an upward trending bias, due to the inflationary mechanisms built in our current macroeconomic models of monetary stimulus in times of recession and monetary tightening in times of economic booms.

So when times are good, markets go up, and when times are bad, markets go up. Ergo, markets always go up.