A look at economic data and other market drivers for the week of March 4:
According to Steve Grasso, New York Stock Exchange governor and CNBC market analyst, this is a traders market characterized by buying in the dips and selling during the pops. This market still listens and reacts to the Federal Reserve Chairman Ben Bernanke and Europe. Europe still matters. The central banks' "ultra-accomadotive" monetary policy is the support for this market, as the agency is focused on keeping interest rates low for the foreseeable future. Grasso said "Bernanke's confidence in the exit strategy provides investors the optimism, whatever the outcome, but realists say that is impossible." The only place to get yields now is the equity market, regardless of the fiscal cliff, debt ceiling, budget negotiations, or sequester until the day of reckoning, which is continuously being put off by lower rates.
This week investors will get the ADP Employment report, Challenger Job-Cut Report, and the Non-Farm Payroll data from the Labor Department. Grasso is predicting the job report will be in line with expectations, approximately 250K jobs created by the private sector. However, he pointed out, lots of companies are still not hiring. Small and big businesses are not hiring because they don't know what effects Obamacare will have on their business. He added the jobs numbers are so uneven from month to month, its hard to predict what the numbers will be, particularly when its revised the following month. He is more concerned with the anemic growth we are having in this recovery. He pointed out, investors have been desensitized to bad data and the equity market doesn’t even care if the numbers go up or down anymore.
View From the Trading Floor
Grasso said this type of market, where all the major indices are hitting all time highs, is good for the trading floor and traders, although he would prefer more volatility. He is expecting a 5% to 10% pull back as investors take a breather and take some profits off the table.
He is amazed how Republicans continue to be steamrolled by liberal politicians in Washington, taking the country in the wrong direction for the foreseeable future. Grasso commented, "the 1 percenters should not have any say in the direction of the country, and should also have to pay for the 99 percenters."
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