When it was released that preliminary estimates of 3rd quarter GDP came in at 2.8%, traditional response would be that of joy. This was the highest GDP level in a year. The stock market once again reverted attention to Federal Reserve Board (FRB) policy and viewed the data as affirmation that the FRB policy will lean towards tapering sooner rather than later.
On Friday, Unemployment numbers released (as well as prior month revisions) showing signs of life and strengthening on the hiring front; however the overall (survey) rate increased to 7.3%. That data lead a Friday rally on the market for the same reason the GDP report caused the markets to struggle.
At this time the only caveat I would say could cause the expectation of tapering to delay would be a lack of resolution with regards to the budget (1/15/2014 deadline) and the debt ceiling (2/7/2014 deadline). Those items could have a substantial impact to our economy (again), which the FRB may not want to lead the charge in causing additional head winds. It was very similar head winds in September that prompted the FRB decision to delay at that time as well.
Internationally, after several weeks of improved data, we saw the weakening inflation and the European Central Bank (ECB) cut the key interest rate to .25% to fight deflation.
Always remember that while this is a week in review, this does not trigger or relate to trading activity on your account with Financial Future Services. Broad diversification across several asset classes with a long term holding strategy is the best strategy in any market environment.
If you would like an in-depth analysis of your current positions and allocation, please feel free to call Jason Roque at 719-313-7536 to schedule an appointment.
Sources: mfs.com, oppenheimerfunds.com, and morningstar.com
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