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Wall Street Strategies has been providing independent stock market research since 1991 to individual, retail and institutional clients through a balanced approach to investing and trading. Charles Payne, our founder and chief analyst, is routinely sought after for his stock market, political,... More
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  • DOW TAKES A BREAK - By WSS Research Desk 0 comments
    Nov 12, 2013 2:18 PM

    By Carlos Guillen

    After reaching a second consecutive record closing level yesterday, the Dow Jones Industrial Average is retreating a bit as small business optimism declined more than expected and as investors become increasingly concerned that Fed tapering may be right around the corner.

    Earlier in the trading session data from The National Federation of Independent Business showed that U.S. small business optimism fell in last month, driven by worries of slower economic growth and concerns about the government shutdown. As it stands, the Small Business Optimism Index fell 2.3 points to 91.6 for October from 93.9 from September. We should note, however, that at that juncture everyone was concerned about the "shutdown," so it is not a surprise that this had a negative effect on optimism. However, now that we see the effects of the shutdown were not as catastrophic as the media portrayed, we can expect optimism to build up again.

    Also a bit negative today was that the Conference Board said its October employment trends index slipped to 113.65 from 114.68 in September; however, somewhat positive was that the result increased 4.9 percent from the year-ago level. Clearly, most economic data points from October have had some form of effect from the government shutdown, whether real of not. The Conference Board also conveyed that four of the eight components that make up the index declined, with the sharpest drop coming from jobless claims.

    At the moment investors are becoming increasingly worried that the Federal Reserve might be prompted to start reducing stimulus by paring back on its $85-billion-a-month bond purchase program. And comments from Richard Fisher, president of the Dallas Federal Reserve Bank and an outspoken critic of the Fed's easy monetary policy, did is not helping to ease this Fed tapering anxiety. With little in terms of significant economic data to move markets in a firm direction, we can expect stocks to remain volatile, particularly in light of more speeches from Fed members scheduled for later in the session.

    Government Weighs on America's Small Businesses
    By David Urani

    So that October government shutdown came and went and while Congress and Wall Street sit atop their perches and look at it from the birds-eye view you can see by the NFIB's Small Business Optimism Index that it wasn't taken lightly by America's small businesses, the engine of the economy. The index fell from 93.9 in September to 91.6 in October, the lowest point since March. Small business owners' outlooks took a dive, from a reading of -10 to -17. The main problem was, you guessed it, the government and alarmingly a record high 37% of the respondents cited the government as their main problem.

    Of course, the rollout of Obamacare was another event to contend with late in the month, and that disastrous website launch weighed on small business owners as well. In fact, 68% of owners said now is a bad time to expand, citing that poor launch as a reason. The total effect of the Obamacare changes are yet to be known, and you have to wonder if sentiment will be hit further as small businesses are confronted with the additional costs.

    NFIB's chief economist Bill Dunkelberg always sums it up well, and this month he says, "Small employers are not fooled by headlines announcing record high stock market indices; everyday they live the economic realities of overregulation, increased taxes, weak sales and a government without any direction or plan for the future."


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