Positive economic reports released this week helped push the markets higher. The Dow gained 0.76% for the week, with the Nasdaq up 2.61% and the S&P 500 up 1.32%.
The big news of the week came on Friday with the November jobs report. Economists were predicting over 100,000 job losses for the month, yet the number came in at just 11,000. When initially announced, many traders on Wall Street believed there was a typo. Nonetheless, this sent markets sharply higher for a short period until traders digested the information further. A lower unemployment rate means an improving economy and possible Fed rate hikes, as well as a stronger dollar. Remember, this market has been feeding on the easy-money, cheap dollar policies of the Fed. This frightened many on Wall Street and the market turned briefly negative, yet managed to close up by just 0.2%, significantly below the highs of the morning.
Jobs had been the big topic all week - even before the unemployment report - as the Obama administration held a "Jobs Summit". It seems that the only conclusion to come from this summit is that the government needs to spend more money to create jobs. We could write a whole article on the failures of these Keynesian policies and the backward thinking of this administration, but we won't. What we do see if a second stimulus is implemented, however, is an increase in an already record high debt, a weaker dollar, and higher taxes. Each, a factor that will hurt the economy in the future.
Despite the headwinds from the government, we see continued economic growth in the future. How this will affect the Fed's decision to raise interest rates, we aren't sure. Friday's market sell-off provides us some insight in how the market may behave in the face of rising interest rates. The market has come a long way since its lows back in March and has certainly gotten ahead of itself, so a pause or a sell-off is not unlikely. Until that time, however, we see the markets pushing higher.
A relatively quiet week awaits us in terms of economic releases. The trade balance comes in on Thursday and Retail Sales on Friday. We do not see these having much impact on the market. Unfortunately we will be subjected to the Copenhagen climate nonsense beginning Monday, as well.
Where are we investing now?
Until the Fed raises rates, or hints that they will, we continue to buy equities on the market pullbacks, especially higher-quality stocks. We are still bullish (positive) on commodities as the dollar trends lower. TIPs continue to be a favorite, as we expect inflation to increase in the future. Additionally, we are looking at putting more money internationally, as emerging markets (excluding China) are an area we favor.
The big news of the week came on Friday with the November jobs report. Economists were predicting over 100,000 job losses for the month, yet the number came in at just 11,000. When initially announced, many traders on Wall Street believed there was a typo. Nonetheless, this sent markets sharply higher for a short period until traders digested the information further. A lower unemployment rate means an improving economy and possible Fed rate hikes, as well as a stronger dollar. Remember, this market has been feeding on the easy-money, cheap dollar policies of the Fed. This frightened many on Wall Street and the market turned briefly negative, yet managed to close up by just 0.2%, significantly below the highs of the morning.
Jobs had been the big topic all week - even before the unemployment report - as the Obama administration held a "Jobs Summit". It seems that the only conclusion to come from this summit is that the government needs to spend more money to create jobs. We could write a whole article on the failures of these Keynesian policies and the backward thinking of this administration, but we won't. What we do see if a second stimulus is implemented, however, is an increase in an already record high debt, a weaker dollar, and higher taxes. Each, a factor that will hurt the economy in the future.
Despite the headwinds from the government, we see continued economic growth in the future. How this will affect the Fed's decision to raise interest rates, we aren't sure. Friday's market sell-off provides us some insight in how the market may behave in the face of rising interest rates. The market has come a long way since its lows back in March and has certainly gotten ahead of itself, so a pause or a sell-off is not unlikely. Until that time, however, we see the markets pushing higher.
A relatively quiet week awaits us in terms of economic releases. The trade balance comes in on Thursday and Retail Sales on Friday. We do not see these having much impact on the market. Unfortunately we will be subjected to the Copenhagen climate nonsense beginning Monday, as well.
Where are we investing now?
Until the Fed raises rates, or hints that they will, we continue to buy equities on the market pullbacks, especially higher-quality stocks. We are still bullish (positive) on commodities as the dollar trends lower. TIPs continue to be a favorite, as we expect inflation to increase in the future. Additionally, we are looking at putting more money internationally, as emerging markets (excluding China) are an area we favor.
