Equities experienced a modest pullback last week with most of the averages giving up 2% or so. Holding true to form buyers stepped in today offering support although stocks closed off their highs. Some pundits might point to the strong October retail sales report released this morning with a reading of 1.2% which was nearly double the increase expected. I think that helped a bit and certainly if the consumer can begin to demonstrate strength on a consistent basis this would bode very well for the market going forward.
I still believe the main reason equities will continue to be met with support when the markets do indeed retreat is when you have the Fed as your partner stepping into the marketplace as they have, couple that with the continuing record low interests rates that exist, it’s no wonder we have the floor that we do. Having said this, this type of market support cannot go on forever and at some point the Fed must hand the baton over to true capitalism in order to have an environment that is real and sustainable. The $million dollar question is when will this occur? Well Washington it’s time to get to work on the economic and tax policies at hand (aka don’t raise taxes) to get this country and it’s business leaders confident to start expanding and hiring in a meaningful way, it could indeed be as simple as that. 🙂
Have a healthy and prosperous week.