The Economy: The ECB cut interest rates to historic lows in acknowledgement that deflation is still problematic there. In the U.S. we have a solid start to the 4th quarter. The jobs report came in better than expected this morning. Factory orders rose after 2-months of declines. Manufacturing was reported above consensus. But the Friday jobs number will overshadow all other numbers this week. The impact of the government shutdown is proving to be difficult to assess. Thus far it’s proven to be case by case on a local basis. Economists evaluating national data disagree among themselves about the impact. However, we are seeing government officials, business owners and executives less than optimistic. Part of this attitude is because some of the issues that caused the shutdown have been kicked down the road into January 2014. While we don’t see the bruising political fight revisited, the uncertainty remains. Further uncertainty is being caused by renewed Taper Talk. This boogeyman will be with us until the event actually occurs. But we are doubtful that anything will occur until well into the first quarter of 2014. Fed Chair Bernanke has no incentive to tarnish the end of his term with a change in policy that is going to have unpredictable consequences. So we see no change for the remainder of 2013. Janet Yellen will assume Bernanke’s job in January 2014. We don’t foresee any change in the status quo until she gets settled in. Hence our call for no action until well into the first quarter. … if then.
Food for Thought: The Holidays will soon be here. This is the time for parties and cocktail conversations. The stock markets are in full swing as we go into the end of the year. So here are some tidbits to share around the punch bowl: The S&P 500’s return has been positive in November and December every year since the bull market started in 2009.The S&P 500 has risen in the final two months of the year 82 percent of the time since 1928 when the benchmark gauge advanced at least 10 percent through October. The mean November and December increase of 6 percent would lift the S&P index to 1,862.79, an all-time high. We also trade stocks here at Higgins Capital. If you are interested in trading stocks, or if you know of friends or family that have an interest, please contact us. Drive safe, be safe, have a great weekend.
November 10th, 2013