The Day Ahead: Channel Your Inner Financial Bushwhacker
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This week was pretty weird. Did we get assorted earnings warnings and comments providing reassurance of zilch? Yes, but not on that next level of intense velocity I expected on Monday. Did the market struggle for decent enough chunks of individual sessions to make you go "huh?" while watching last minute buying? Yup, stocks appear to be pricing in this worldly philosophy: incremental improvement in key data components still entice the Fed to buy more debt we are unable to physically touch, and that could transmit quite effectively to the real economy should an apparent tax-slasher (Mitt Romney) gallop hard into the ribbon. Hey, it's no skin off my teeth who wins (maybe money from my mobile wallet), I am just picking the market's brain.
- We know it will be below the magic number of 250,000.
- We know it could sway the opinion of voters.
- We know to ignore government inflation data and realize meager income growth is killing low-income households that enjoy consuming things.
- The employment population ratio will continue to be a problem.
- Global multinationals will continue to lay people off because they are global multinationals and because old ways of doing business are being proven outdated. For example, the Hewlett-Packard (HPQ) workers that will have the axe swing over their necks, where do they go as the "next gig" may not exist. It existed 10 years ago, not now. This is structural unemployment if I have ever seen it before.
- Companies are unlikely to entertain any broad hiring decisions in front of tax and regulatory uncertainty, leaving the market to speculate that Fed Fairy Dust will do the trick sometime in 2013 -- because they will be spreading more of it than they divulged to us last month (Fed minutes signaled this, I fancy).