What I’m Watching This Week – 10 June 2013

Everything went better than expected…

After Wednesday’s 217 point loss on the Dow, it came back impressively with a 207 point gain on Friday as the monthly nonfarm payroll report provided just enough positive spin to raise all the indexes. The Dow Jones eked a .88% advance, the NASDAQ squeaked out a gain of .39% and the S&P 500 rounded out the week with a .78% achievement. Heck, I always say it’s always better to make 3% than lose 8%, okay, so we didn’t even get past 1%, but you know what I’m saying, right! A little volatility and a little positivity make for a seemly market moving experience.

The jobs number held ominous implications for both US growth and Fed policy matters and Investors relaxed just enough to exhale, for the time being. The unemployment rate showed a continued steadying of the economy but not enough improvement to bring on a hurried end to the Fed’s economic support via its monthly, $85 billion bond buying program. The ADP numbers a few days earlier in the week held an ominous suggestion that a potential disenchantment was on the Friday horizon; however the numbers were just enough to dissipate some anxiety, for the time being at least. A September-December timeframe looks to be more demonstrative of a Fed move to the lessor number of $65 Billion, but then again, I don’t really see the Fed making that significant of a movement right before the holiday season. My guess is that we’ll see something in Q1 of 2014.

I remain optimistic. The US economy added 175K jobs in May, all in the private sector, and conversely the unemployment rate ticked higher to 7.6% from 7.5% as more workers returned, encouraged that a hiring phase will continue a while longer. Much better than anticipated economic growth in Japan overshadowed China’s wavering Q2 growth; the volatility of the Dollar/Yen currency pair notwithstanding. The European situation remains mixed, with Germany’s DAX moving higher on improved industrial production results that seem to suggest growth is returning and an improving Eurozone growth expectation, if you minus Spain, Greece, Italy, etc. In the economic sea, some boats are floating, some remain tied to the docks and others are taking on a surge of water and have no life jackets to speak of. I’ll remain optimistic and cautious, regardless.

Have a great week and have a happy upcoming Father’s Day.