Today's delayed release (due to the government shutdown) of the monthly payroll report came in weak but not too weak. The market appears to like the number as the S&P is tacking on an additional 12 points at the time of this post. We are in the very strange time where the markets are actually wanting benign numbers. Economic reports that come in too strong could lead the Federal Reserve to accelerate their tapering of quantitative easing and easy money. Economic reports that come in too weak could lead to a recession and the failure of the Fed's monetary strategies. So, the report today was just right. Weak but not too weak.
Earnings season is in full swing and have largely been in lockstep with expectations to this point. Corporate profits continue to hold steady while, generally, revenue numbers disappoint. If there is a greater slowdown, corporate profits could really suffer as most companies have already done all the cost cutting they can.
The government shutdown will certainly have an effect on the economy and the employment situation. We will have to see if it is just a one month blip or something more persistent. If the latter, then the market will have to determine how weak the numbers can be before getting too nervous. Time will tell. For now, the markets remain in a state of bliss (ignorant or not is open to question) and higher prices look to be coming despite many negative technical warnings and an anemic economy.
Welcome to the extended version of the BAM Market Note. We are not bloggers by nature but have had clients and friends inquire about our thoughts on the market in between our newsletters. The number and content of posts will likely be determined by the conditions of the markets and the interests of our readers. We would greatly appreciate your feedback and comments.
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