Tapering

See how stock market moved last week, just like riding on roller coaster.  One day STI down by 39 point and the next day up by 24 point.  Syria war, tapering and numbers of important reports released from the US moved the index high and low.  Lots of investors and traders just confused and did not know what to do.    

How I looked at Syria war was posted earlier.  Today, let’s look at some of the US reports numbers.

	Actual	Forecast	Previous
ISM Manufacturing PMI	55.7	54.2	55.4
Unemployment Claim	323K	332K	332K
ISM Non-Manufacturing PMI	58.6	55.2	56
Non-Farm Employment Change	169K	178K	104K (162K)
Unemployment Rate	7.3%	7.4%	7.4%

July non-farm employment change was revised down from 162,000 to just 104,000.  This number was the lowest in more than a year.  August number was 169,000, versus forecast 178,000.  This brings the average monthly job growth for 2013 to 160,000, which is just barely enough to keep up with the US population growth.  Friday, DOW came down hundred over point to 14,789 before the release of employment data.  After number was released, DOW went up and closed at 14,922.  Economists, analyst and investors used this opportunity to push the index back to track as they anticipated that the US economic recovery is not yet robust enough to sustain itself without the additional help of the FED.  Probably tapering may not kick off so soon. 

Let’s rewind back.  Back in late May, global markets fall after Ben Bernanke announced its QE tapering.  The markets rebounded in July but started falling again in August with stock market and Asia currencies like the India, Indonesia…. which was badly hit.  Some economists believe that tapering will kick off in September, while others think that it should be October.  With so much speculating plus the uncertainty from Syria war, the market is just moving high and low like the roller coaster. 

If we look how the stock market, currencies…..moved over the past 3 months, in fact FED officials have already been preparing investors for the inevitable, which is why stock markets are falling and money was leaving the emerging markets.  In other words, market is catering in those bad news.  And given the way on how Ben Bernanke handle the stock market, I believe the first round of tapering will kick off before Ben Bernanke step down/retire.  The questions is how much will be push out for the first round of tapering.  If the numbers is minor, lesser than economists predicted, market may move up instead of going down.  However, a major adjustment will cause the market to tumble.  Having say that, Bernanke wouldn’t want to become  历史罪人 .   As what I said, let’s see how the politicians and big fishes move the market up and down.