Bernanke Fed's September Taper Call Closer As Job Market Improves: QE To Be Cut To $70B
Despite being the dominant force in the markets today, the Federal Reserve seems to have moved into the background, as markets digested the possibility of a reduction in quantitative easing beginning in September and focused on geopolitics, particularly on military action in Syria. Recent data gives further support to the view that Chairman Ben Bernanke could announce tapering in the upcoming FOMC meeting, with a decent ADP employment report and continued momentum on the jobless claims front. The Fed would thus cut asset purchases by about $15 billion to $70 billion, particularly if Friday’s non-farm payrolls remain consistent with the recent trend, and come in around the consensus number of about 180,000.
Market freak outs about the Fed beginning to leave the market no longer dominate trader chatter. Yet, with the FOMC meeting around the corner (scheduled for September 17 and 18 with an ensuing press conference by the Chairman), it is slowly coming back to the fore.
Indeed economic data has supported Fed Chairman Ben Bernanke’s projection that the unemployment rate will fall below 7% by mid-2014, indicating the once-feared taper should come before the end of the year. On Thursday, jobless claims fell to 323,000 from a downwardly revised 332,000, beating consensus breaking the 330,000 mark for the first time since before the financial crisis.
“Claims continue to signal no let-up from the recent pace in employment growth, which has been strong enough to keep unemployment trending down,” said HFE’s chief economist, Jim O’Sullivan, who added, “if anything, claims are suggesting further acceleration.” The four-week average in jobless claims ticked down to 329,000, from 332,000 previously.
The Fed has kept a watchful eye over the labor market, pointing to strength in jobs as one of the main reasons to begin to ease on their monetary easing. A few months ago, Chairman Ben Bernanke spooked investors telling them on repeated occasions the Fed was ready to reduce its asset purchases as long as economic projections remained on track.
The employment situation seems to have done exactly: job growth was averaged 192,000 this year, according to the Bureau of Labor Statistics, and the unemployment rate has fallen to 7.4%. This “cumulative progress” in labor markets, according to Nomura, is consistent with a September taper as the jobless rate works its way to 7% by the middle of next year. The ADP report added a little more oomph to the argument, showing the private sector added 176,000 jobs in August, just below the 184,000 consensus.
You underestimate the local funds, ASEAN bloc and improved business climate. Had the index been 1800 or thereabout, then I can agree with what you post. Market is overvalued then.
Anyway, medicine is bitter in the short run but good overall for the longer duration in the case of US!
now up 30 .. so siok leh like roller - coaster ,.. must hav a lot of opportunity to make money .. also see the number that they revise from last month ..162000 to 104000 , 35% error ,,what going on ? much more boleh than bolehland ..
ya lo .. .. or because they din study carefully the unemployment rate that drop to 7.3% simply bcos ... bra bra bra ........... any how is good news , right ? bye bye margin call ,fxxking xxinvestment bank.. hehe ...
but don't forget, Putin did say if UN inspectors did find chemical weapons, they will act on it! I think Putin is a smart man, he won't tie himself down on such statement!
Share prices on Bursa Malaysia are likely to stage more corrective rebounds next week to neutralise its deeply-sold situation and track upswings on Wall Street and Asian regional markets.
Affin Investment Bank vice president and head of retail research, Dr Nazri Khan, said the local bourse should get support from the buoyant Wall Street based on fresh optimism about the global economy and burst of corporate deal activities.
"We see rising corporate deals and mergers as bullish and is consistent with market re-leveraging where cash-rich companies hunt for undervalued assets.
"Underpinning investor sentiment is the recent bullish upbeat economic data where well-received manufacturing and service sector surveys from China and Europe have raised hopes of a broadening global recovery," he told Bernama.
Meanwhile, he said the tabling of 2014 fiscal-friendly budget, expectation of UMNO election play, neutral Bank Negara monetary policies and rising local merger and acquisition talks will be market-supportive for sentiment near term.
"Strategy-wise, aggressive investors should 'long' index futures on strength while conservative investors should stick with event play blue-chips after the recent sell-off," he said.
On a Friday-to-Friday basis, the FBM KLCI slipped 3.78 points to 1,723.8, Finance Index declined 19.44 points to 16,182.73, Plantation Index fell 49.37 points to 8,153.7 and the Industrial Index shed 8.75 points to 2,901.07.
The FBM Emas Index declined 11.22 points to 11,957.36 and FBMT100 fell 12.2 points to 11,717.03.
The FBM 70 Index rose 41.58 points to 13,581.11 and the FBM ACE Index surged 446.04 points to 4,975.85.
Weekly turnover declined to 6.6 billion shares valued at RM7.62 billion from 9.490 billion shares valued at RM12.550 billion last week.
Main market volume decreased to 4.81 billion units worth RM7.3 billion from 7.385 billion units worth RM12.177 billion previously.
Warrants edged up to 313.36 million shares valued at RM44.02 million from 260.341 million shares valued at RM24.637 million last week.
The ACE market volume fell to 1.16 billion units worth 264.57 million from 1.750 billion units worth RM336.379 million last Friday.-- Bernama
" NEW YORK (Reuters) - U.S. stocks could be in for a jolt of volatility in the week ahead as Congress debates whether to authorize a military strike against Syria and as the Federal Reserve's pivotal decision on winding down its stimulus grows near.
U.S. equity markets have remained on a relatively even keel recently even as others such as U.S. Treasuries and emerging markets have been roiled by worries over what the Fed is likely to do at its meeting later this month and by the Obama administration's campaign to punish Syria for an alleged chemical weapons attack against civilians."
Hafiz, when dow dived 100pts you said better throw on monday. Then after Dow u-turn, you said monday maybe a better day. Hehe, dont blame those guys who changed tune 360degree la.
not only me, quite a lot of ppl thought that way too. stock market is no supermarket, no need buy/sell everyday. sometime keep a distance help a lot. only certain ctr with strong catalyst may be diff, but still a bad idea to contra
Prediction:(1) US Congress unlikely to approve action on Syria - US has more internal issues to handle now. (2) QE taper defer to next year - seems too many uncertanties now.
Mana Boleh drop 20 cent and 20 cents....commonllah.......price will bottom out earlier than KLCI....that I am sure.....it will stay there maybe except OnG....
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Posted by greatinvestor > 2013-09-06 21:35 | Report Abuse
Bernanke Fed's September Taper Call Closer As Job Market Improves: QE To Be Cut To $70B Despite being the dominant force in the markets today, the Federal Reserve seems to have moved into the background, as markets digested the possibility of a reduction in quantitative easing beginning in September and focused on geopolitics, particularly on military action in Syria. Recent data gives further support to the view that Chairman Ben Bernanke could announce tapering in the upcoming FOMC meeting, with a decent ADP employment report and continued momentum on the jobless claims front. The Fed would thus cut asset purchases by about $15 billion to $70 billion, particularly if Friday’s non-farm payrolls remain consistent with the recent trend, and come in around the consensus number of about 180,000. Market freak outs about the Fed beginning to leave the market no longer dominate trader chatter. Yet, with the FOMC meeting around the corner (scheduled for September 17 and 18 with an ensuing press conference by the Chairman), it is slowly coming back to the fore. Indeed economic data has supported Fed Chairman Ben Bernanke’s projection that the unemployment rate will fall below 7% by mid-2014, indicating the once-feared taper should come before the end of the year. On Thursday, jobless claims fell to 323,000 from a downwardly revised 332,000, beating consensus breaking the 330,000 mark for the first time since before the financial crisis. “Claims continue to signal no let-up from the recent pace in employment growth, which has been strong enough to keep unemployment trending down,” said HFE’s chief economist, Jim O’Sullivan, who added, “if anything, claims are suggesting further acceleration.” The four-week average in jobless claims ticked down to 329,000, from 332,000 previously. The Fed has kept a watchful eye over the labor market, pointing to strength in jobs as one of the main reasons to begin to ease on their monetary easing. A few months ago, Chairman Ben Bernanke spooked investors telling them on repeated occasions the Fed was ready to reduce its asset purchases as long as economic projections remained on track. The employment situation seems to have done exactly: job growth was averaged 192,000 this year, according to the Bureau of Labor Statistics, and the unemployment rate has fallen to 7.4%. This “cumulative progress” in labor markets, according to Nomura, is consistent with a September taper as the jobless rate works its way to 7% by the middle of next year. The ADP report added a little more oomph to the argument, showing the private sector added 176,000 jobs in August, just below the 184,000 consensus.