Weekly Commentary: Witches’ Brew

October 31, 2011

10.31.11

Last week was a witches’ brew of economic data & events with a volatile mix of stock and bond returns. The major point of discussion was the decision to cut 50% of Greek debt, a potential turning point in the European debt debacle. Stocks in the S&P 500 responded very favorably to the decision which was a big contributor to the 3.8% weekly gain. We’ll take the upside for now but we are still skeptical about the plan’s implementation and efficacy.

A majority of U.S. companies have posted 3rd quarter earnings with an average of 75% beating their projected earnings per share. As the reporting season winds down, markets will shift their focus back to economic data. This week will include:
1. Auto sales
2. Manufacturing
3. Employment situation
The private sector has been the linchpin to job creation however the overall jobs picture is still subpar. We’ll need to see nonfarm payrolls sustainably exceed 150,000 jobs per month to get the economy moving and reduce the still elevated 9.1% unemployment rate.

Happy Halloween

“Thinking is easy, acting is difficult, and to put one’s thoughts into action is the most difficult thing in the world.”
– Johann Wolfgang von Goethe