Thoughts to Ponder and The Market Update October 7

Thoughts to Ponder . . .

• Dear LOL, thank you for being there for me all those times I never had something else to say.
• Sorry I didn’t pick up my phone, I got carried away dancing to the ringtone.
• You come into the world with nothing, and the purpose of your life is to make something out of nothing.
• Those who snore always fall asleep first.
• Last night I lay in bed looking up at the stars in the sky and I thought to myself, where the heck is the ceiling?

 

And now on to The Market Update . . .

The first four trading days of the week.

• Although containing some volatility, it seemed to end Thursday about the same place the week started on Monday morning.
• The big news for the week is Friday’s employment report, which investors have been waiting to hear, as it will likely have an impact on the Fed’s decision regarding rates.

 

At 8:30AM on Friday, the Labor Department announced that September’s employment numbers showed that 156,000 jobs were added.

• The latest numbers are within analyst’s expectations, although on the low end.
• Pre-market trading indicates that the market may go into negative territory.
• Investors might feel that this latest report is strong enough for the Fed to raise rates at the next FOMC meeting.

 

We have been down this road for well over a year.

• The reality is that as much as investors speculate on the reaction of the Fed to a report like this, no one really knows, not even the Fed decision makers at this point, what they will do.
• They will figure it out at the next meeting when they can absorb the rest of the economic data that will be coming forth in the next week.

 

On a side note.

• Wednesday the ADP Employment Report predicted a growth of 154,000.
• This is the closest ADP has come to the Labor Department report in many years, if ever.

 

Rates returned to lowest point since July.

• Refinance activity once again jumped up 5.0 percent for the week of September 30^th.
• Purchase activity might be slowing, as applications for purchases remained virtually flat from the prior week, however they are down 14 percent from the same time last year.
• This is data that the Fed will likely be paying attention to as well at the next FOMC meeting.

 

Factory Orders increased 0.2 percent for the month of August.

• When you remove the core capital goods orders (nondefense ex-aircraft), orders jumped 0.9 percent.
• This follows substantial increases in the two prior months of 0.8 percent and 0.5 percent.

 

Another sign of potential housing weakness.

• The only area of construction spending showing strength is the multi-family sector.
• Overall spending declined 0.7 percent in August.
• Spending on construction for single-family homes declined 0.9 percent whereas multi-family increased by 2.4 percent.

 

After August’s decline in manufacturing, September bounced back with an increase of 2 points.

• That brings the reading up to 51.5.
• A reading above of 50 is positive for the report.
• New orders jumped by 6 points up to 55.1, which is a very strong monthly increase.

 

This week’s potential market moving reports are:

• Monday October 10^th – Labor Market Conditions Index
• Wednesday October 12^th – MBA Mortgage Applications & JOLTS Report
• Thursday October 13^th – First Time Jobless Claims
• Friday October 14^th – Producer Price Index, Retail Sales, and Consumer Sentiment