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TheStreet Open House

Global Macro: The Fed Put Reemerges

NEW YORK ( TheStreet) -- Weak jobs data released Tuesday confirmed the need for continued monetary stimulus as the jobs numbers came in below expectations.

The chart below is of SPDR S&P 500 (SPY). Equities briefly pushed up to record highs at the open, but soon fell lower in a "flash crash"-like event.

One takeaway from the morning fall and ultimately where we closed at was the reemergence of the "Fed put" theme. The Fed put is an euphemism for the limited downside of equity markets due to monetary intervention from the Federal Reserve.

Payrolls data were weak, but the Fed isn't expected to pull stimulus till at least 2014. That expectation has halted an all-out free fall from ensuing at our present lofty levels.

A push toward the 1800 level in the S&P may not be warranted just yet, but the deep correction many have been looking for may not be in the equation, either. Indicators look to be pulling back in equity indexes, but to assume that means a fall to 1500 in the S&P may be premature.

The next chart below is of SPDR Gold Shares Price (GLD). Although the Fed put may be reemerging, investors don't have the courage to invest fully in a tech-heavy portfolio.

Tech stocks sold off heavily in the panic sell early Tuesday afternoon, while gold stocks showed overwhelming strength. Gold has broken out of its channel lower and looks to be pushing toward multi-month highs.

The dollar continues to be hurt by weak economic data and continued monetary stimulus, which bodes well for gold.

Expect gold to continue to trade higher as stimulus remains on the table and equity investors remain fearful of getting too long at already elevated levels.

At the time of publication the author had no position in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Andrew Sachais' focus is on analyzing markets with global macro-based strategies. Sachais is a chief investment strategist and portfolio manager at the start-up fund, Satch Kapital Investments. The fund uses ETF's traded on the U.S. stock market to gain exposure to both domestic and foreign assets. His strategy takes into consideration global equity, commodity, currency and debt markets. Sachais is a graduate of Georgetown University, where he earned a degree in Economics.

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