Investors Turn Cautious As Rally Gets a Bit Long In The Tooth
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Investors turned cautious as we closed out October seeing swings of 200 points the last three sessions. Troubling was the rejection of higher prices in the face of what appeared to be investor friendly news from Corporate earnings and Economic data. What needs to kept in mind, is October is year end for many hedge funds, and could have added to the volatility.
This week kicked started November with strong numbers on pending home sales and the Purchasing Managers Index (PMI) both. Buried within the PMI is an employment index which finally went from contraction mode last month, 46.2 (above/below 50 reflect contraction/expansion) came in at 53.1 suggesting jobs are being created. Will that expansion be reflected in Friday's Non-Farm Payrolls release. If not, it would be just the fourth time over the last thirty years that a positive ISM employment index is not reflected by a positive non farm payroll number. Now Friday's number, estimated to reflect a contraction in the job market by 175,000, may come in negative, but the PMI cannot be ignored.
On the corporate front, Ford (F) came front and center with terrific news of an almost $1billion dollar profit. That profit came on cost cuts and market share gains, but a dramatic improvement from the staggering losses we've grown accustomed to hearing.
The good news as of this writing, is the market is responding as expected with a triple digit move higher. It makes it a bunch easier, when the data releases and corresponding market response makes sense. We'll continue to monitor the dollar and the inverse relationship it currently enjoys with the equity markets. For now, we'll enjoy the level of chi achieved within the market this morning.
Investors turned cautious as we closed out October seeing swings of 200 points the last three sessions. Troubling was the rejection of higher prices in the face of what appeared to be investor friendly news from Corporate earnings and Economic data. What needs to kept in mind, is October is year end for many hedge funds, and could have added to the volatility.
This week kicked started November with strong numbers on pending home sales and the Purchasing Managers Index (PMI) both. Buried within the PMI is an employment index which finally went from contraction mode last month, 46.2 (above/below 50 reflect contraction/expansion) came in at 53.1 suggesting jobs are being created. Will that expansion be reflected in Friday's Non-Farm Payrolls release. If not, it would be just the fourth time over the last thirty years that a positive ISM employment index is not reflected by a positive non farm payroll number. Now Friday's number, estimated to reflect a contraction in the job market by 175,000, may come in negative, but the PMI cannot be ignored.
On the corporate front, Ford (F) came front and center with terrific news of an almost $1billion dollar profit. That profit came on cost cuts and market share gains, but a dramatic improvement from the staggering losses we've grown accustomed to hearing.
The good news as of this writing, is the market is responding as expected with a triple digit move higher. It makes it a bunch easier, when the data releases and corresponding market response makes sense. We'll continue to monitor the dollar and the inverse relationship it currently enjoys with the equity markets. For now, we'll enjoy the level of chi achieved within the market this morning.
posted by James | 1:42 PM
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