Saturday, December 7, 2013

Weekly Market Update: Solid Economic Gains tell Traders to be Ready for Tapering

- After data released this week, it is more than likely the Fed will taper QE spending at the Dec 17-18 or the Jan 28-29 meetings.

The highlights of the week were the second reading of US Q3 GDP and the November jobs report. The GDP numbers were good and the jobs figures were very good, and taken with the already unambiguously positive housing data, it's hard not to see that the US economy is seeing substantial improvement.

After Friday's jobs report, PIMCO's Bill Gross said that he believes there is a 50% chance of a December taper at this point, while Goldman Sachs Chief Economist Hatzius opined that the numbers were not a blockbuster and that the Fed would not taper in December.

Retail names suffered all week thanks to a few bad quarterly reports and a rather tepid view of Thanksgiving holiday sales. ShopperTrack saw sales on Thanksgiving and Black Friday up just 2.3% y/y, while the National Retail Federation saw weekend spending falling to $57.4B from $59.1B y/y.

Stock indices spent much of the week well into the red with tapper talk and profit booking identified as the likely catalysts, but Fridays jobs report opened to door for rally that recouped much of what had been lost.
For the week, the DJIA declined 0.4%, while the S&P500 and NASDAQ were essentially unchanged.

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