Friends
I think we’ve heard this tune before. This morning’s non-farm payroll number (169,000 new jobs created) was slightly less than the consensus estimate, and just lukewarm enough for whatever case the Fed wants to make in the coming weeks. No, we can’t really call the number bad news, but it sure is benign enough to make the case that the Fed continue its bond buying purchases as is, and put off, for the time being, the taper talk. On the other hand if the FOMC is inclined to begin tapering this month, there is enough good news lately to give the green light.
Market participants seemed confused today, as bonds first rallied (rates dropped) then gave up the gains as the day went on. Stocks climbed at the open, then sold off hard on Mr. Putin’s comment that he has Syria’s back, only to rally back midday and into the afternoon. Traders are trying to figure out just what they are trading on. Is it Syria, economic data, or reading the Fed tea leaves?
Anyway, by the close, the results were mixed with the Dow Jones Industrial Average down 14 points to finish the day at 14,922. The S&P 500 was up less than a point to close at 1655. Gold was up $16.60 to trade at $1389 per ounce, while oil was up $1.80 to trade at $110.17 per barrel WTI.
For the most part, recent economic data is supporting the view that things are getting better, despite the continuing struggle we have seen on the employment front. You know our view has been, let’s get on with the taper and perhaps we can get rid of the punch bowl altogether someday. True price discovery of markets will be achieved when the distortion that has been the Federal Reserve (and central bankers around the world), is removed from the equation. Long term bulls want true price discovery and markets that can be measured by improving economic activity. Bring on the taper.
Have a great weekend everyone.
