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Taper Expectations Tapered






As the US Government comes back online we will begin to get a backlog of economic data. Tomorrow morning we'll get a look at the Non Farm Payroll number the markets expected on 10/4. The forecast calls for +180k, but given the insanity in the weekly jobless claims numbers lately.....this release might as well be come from the Bureau of Labor Statistics in crayon.

In any event, the only thing that matters is TAPER IS OFF.

Blame it on non existent Fiscal policy.

Blame it on Nancy Pelosi or Ted Cruz or Chuck Schumer or Mitch McConnell.

Blame it on Obama or Bush or the ghost of John Maynard Keynes.

In my opinion, economic data makes for wonderful conversation at a dinner party or at a coffee shop, but it DOESN'T MATTER anymore. It hasn't mattered for quite some time.

It will matter greatly when the Monetary Methamphetamine drip does slow, but that's down the line. Outta sight, outta mind.

Here is a look at the Federal Reserve's Balance sheet.

The Fed's Balance sheet is up 285% since Fall of 2008.

The Russell 2000 is up 225%.

The Fed's Balance sheet is up 31% in 2013.

The Russell 2000 is up 31% in 2013.

A guy I respect in the business told me "Don't confuse a Bull market for brains".

To that I would add, "don't delude yourself into believing in fundamental/organic growth". This is about limitlessly supportive monetary policy.

I haven't seen an updated QE Chart in a few months, but this one certainly gives you the flavor (into early June of this year, just after the threat of Taper on May 22nd derailed the risk on ramp).

In case you do have a dinner party or coffee meeting, here is this week's economic calendar in the US.

If your friends/colleague are more cosmopolitan, you might want to consider mentioning:

  • The Eurozone's Debt to GDP release today (90.6%).
  • Bank of England Minutes on Weds AM along with Bank of Canada meeting.
  • China Manufacturing PMI + Japanese CPI - Thursday
  • British GDP Friday

Other "interesting" things in markets that are not necessarily 1:1 correlated with the FOMC balance sheet

  • Crude oil broke $100 for the first time since early August. The Term Structure in WTI continues to flatten and the spread between WTI and Brent moved back out to $9.50 wide.

Brent v. WTI spread - @ highs from Feb and April. Crossroads?

Kevin Davitt

Global Execution and Futures/Options Broker

621 S. Plymouth Ct. Floor 1

Chicago, IL 60605

Direct: 312-870-1520

Cell: 773-732-5197

Fax: 312-275-8123

AIM: kpdavitt13

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