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Monday November 2, 2015

// November 2nd, 2015 // Daily News

Markets to tune out Fed speakers in favor of jobs report

CNBC.com
Markets will be laser-focused on Friday’s October jobs report in the week ahead, and may even look past more than a dozen scheduled Fed speeches, particularly if they send confusing messages.
“I think people will discount them. They’re just going to look through this cacophony of speeches and say, ‘Look, if those employment numbers are reasonably solid, that’s a green light to raise rates,’ ” said Mark Zandi, chief economist at Moody’s Analytics. Economists expect 182,000 nonfarm payrolls and the unemployment rate to hold steady at 5.1 percent, according to Thomson Reuters. Just 142,000 jobs were added in September.
“As long as we get the next couple of jobs numbers, over 150,000, that will be enough to get them to move in December. That was a pretty clear message in the statement,” said Zandi.
Zandi said the Fed clarified its position on raising rates in its post-meeting statement this past week, after surprising markets by not hiking in September and pointing instead to a slowing China as an issue. “It was not clear what they were trying to say. Their communication strategy broke down. I was confused by them. Maybe they were confused,” he said.
Stocks kick off November on Monday, after the best monthly gain in four years. The S&P 500 ended October at 2079, gaining 8.3 percent for the month but just 0.2 percent for the past week. That was its best month since 10.7 percent gain in October, 2011. Those strong gains, however, do not necessarily bode well for the market’s near-term performance, with some analysts predicting that October now has taken some of the gains away from a year-end rally.
The Fed again surprised markets in its post-meeting statement Wednesday by downplaying concerns about international developments, like China, and instead specifically mentioning what it will consider when making a decision about whether to hike rates at its Dec. 16 meeting. The market had been pricing in a one-in-three chance of a hike for December, but those odds have risen and that could affect the market.
“It’s 50 percent now. That is maximum uncertainty. From that point of view, we think upside in the near term is going to be capped by the fact there is this new uncertainty,” said Julian Emanuel, equity and derivatives strategist at UBS. “It’s not entirely clear the Fed is reacting to incoming Chinese data, having removed that from its statement, or just reacting to the fact that markets seem to be a little more sanguine since the September meeting, particularly with respect to China. The whole mantra about being data dependent and needing to have a degree of uncertainty about liftoff is understandable, but in our view it caps the upside over the next month or so. What’s likely is looking toward the end of the year, after what we think is a pause, you’re going to get more upside as uncertainty dissipates.”
Emanuel said he thinks stocks could trade sideways until the Fed’s decision is clear, and his target for the S&P at year end is 2,125, just about 50 points higher than Friday’s close.
“Part of the reason that October’s gains were as vigorous as they were was that the market was relieved the Fed was taken off the plate as an issue, and the Fed is now squarely back on the plate and frankly as large as turkey and stuffing,” he said.
While the Fed speakers in the coming week could shed some light on Fed thinking, markets are more likely to lean on the data when looking for clues as to how quickly the Fed is moving toward its first rate hike in nine years.
“They’re a loquacious bunch. They really want to get their views out there,” said Zandi. But he said the markets will tune out any contradictory messages, particularly if they don’t come from the core of the committee, made up of Fed Chair Janet Yellen, New York Fed President William Dudley and Vice Chairman Stanley Fischer.
Yellen testifies before the House Finance Committee Wednesday and is discussing bank regulation. Dudley and Fischer are at forums where they are more likely to make comments on policy, and they also speak Wednesday. There are also appearances by Fed. Governors Daniel Tarullo and Lael Brainard, who both publicly disagreed with Yellen recently, saying the Fed should not raise rates this year.
Jobs data is the most important report in the coming week, but there is also ISM manufacturing data Monday, vehicle sales Tuesday, international trade and nonmanufacturing ISM Wednesday. There are also dozens of earnings reports, including Facebook, Disney, News Corp, AIG and dozens of others.
“I certainly think the payroll numbers are critical because there’s a significant contingent in the markets that think the economy has softened … and the Fed pretty firmly disagreed with that idea in the way they termed their statement,” said Stephen Stanley, chief economist at Amherst Pierpont.
Stanley said the Fed’s revised statement reflects more confidence that it can raise rates, unless the economy really takes a turn.
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“The Fed thinks there’s a pretty legitimate chance of going in December, and the market was in the process of pricing that out. I don’t think the 50/50 is the final resting place. I think the Fed wants the markets prepared for what they’re going to do. They’re going to signal that, and they’re going to want that increasingly priced in. Fifty-fifty is the right place to be now, but it’s not going to be the right place to be in the final days leading up to that meeting,” he said.
Stanley said the Fed speakers are likely to repeat what they’ve said previously and leave it to Yellen to send any more certain message on what the Fed is likely to do

Today’s Inspiration

Let the Holy Spirit Guide You

by Joyce Meyer – posted November 02, 2015

For this God is our God forever and ever; He will be our guide [even] until death.
—Psalm 48:14

Often when my husband, Dave, and I travel, we hire a guide to show us the best and most important sites to see. Once, however, we decided to explore by ourselves; that way we could do what we wanted to, when we wanted to.

We quickly found that our independent trips were nearly wasted. We often spent a large part of the day getting lost and then trying to find our way again. We have found it to be the best use of our time to follow a guide rather than wandering aimlessly to find places ourselves.

I believe this example relates to how we are in life. We want to go our own way so we can do what we want to do, when we want to do it, but we end up getting lost and wasting our lives. We need the Holy Spirit guiding us through every day of our time on this earth. God is committed to guide us even until we leave this life, so it seems important to learn how to hear what He is telling us.

The Holy Spirit knows both the mind of God and God’s individual plan for you. His road map for you is not necessarily like anybody else’s, so it doesn’t work to try to pattern your life after someone else or what he or she has heard from God. God has a unique plan for you, and the Holy Spirit knows what it is and will reveal it to you.

Perhaps you are like I was and have wasted many years walking your own way without seeking God’s guidance. The good news is that it’s not too late to turn and go in a new direction—toward God’s plan and purpose for your life. It is not too late to learn how to hear from God. If you are sincerely willing to obey God, He will guide you on an exciting journey of learning to hear from Him every day of your life.