The government shutdown hasn't seemed to affect the economy with non-farm payrolls way above estimates at 204,000 jobs added last month. Combined with a strong Q3 GDP number, some in the market are wondering if the Fed may begin tapering sooner than the March expectation. Interest rates jumped in response.
Though the GDP number was artificially high on a big inventory build-up, it was still stronger than expected. Removing the upside on inventories, the economy would have increased by 2% in the quarter.
Nothing seems to want to keep this market down, which may be a signal that investors need to be careful over the next couple of years. I wrote an article a couple of weeks ago describing the #1 reason investors lose money. After five years of strong gains, is it time to revisit your return needs for your financial goals?
The ECB surprised the markets with an interest rate cut this week. The eurozone broke six straight quarters of falling growth in the last quarter and is set to release Q3 GDP on Wednesday of next week. A strong number could mean a big jump in commodities, especially oil which has been weak recently. Oil and Gas production is ramping up in offshore and deep water areas but the rig supply for most drillers is more than 20 years old. I wrote an article last week that presents the best investment in the sector, not an explorer but a company that will sell the 'picks and shovels' for the next commodities boom.
Next week is pretty light as far as econ data with US industrial production on Friday and the Eurozone GDP on Wednesday. Japan also reports GDP on Wednesday and may support markets if easy money policies can keep the economy going. Earnings reports are starting to slow next week as well with Walmart reporting on Thursday.
Check out these other recent articles if you missed them.
Joe Hogue, CFA
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