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Ahead of Wall Street

December 3, 2013

This is Mark Vickery covering for Sheraz Mian, who will be away on business until the second week of December.

With the initial surge of holiday retail season receding in the rear-view, focus now changes to November employment numbers. Wednesday's ADP private sector report  will be followed by Friday's Bureau of Labor Statistics (BLS) non-farm payroll report.

The year 2013 has been quite decent for the jobs market overall. Unemployment has fallen from 7.9% in January of this year to 7.2% in September, then 7.3% in last month's report. (Remember it wasn't all that long ago -- October 2009 -- that we saw unemployment hit 10%.) Hopefully, with federal government issues like The Shutdown also in our rearview mirror, we'll see a "pure" jobs report, free of any dysfunctional static.

Expectations are for roughly 180,000 new jobs created in the previous month. This is down from the previous 3-month average of 202,000, so feel free to consider the possibilities of a positive surprise.

Holiday season is always better for employment, generally, with seasonal employees manning the retail shops while customers go bonkers trying to buy gifts for their loved ones (and themselves) at attractive discount prices. But perhaps that will manifest itself in the employment figures for December (next month's report) than this week's.

And if we do happen to see better-than-expected employment numbers, its implied positive impact on the economy would naturally lead analysts to conclude the Federal Reserve's tapering policy may move closer to the front burner. And while tapering is unlikely during the remainder of Ben Bernanke's tenure as Fed Chair, the spotlight moves straight to Janet Yellen, the question not being "if" but "when."

Of course, that brings about this rare conundrum our market has been experiencing of late: a more-rapidly improving economy actually puts a damper on market futures, as the "free lunch" of the tapering program would finally expect companies to earn profits on their own. This would add uncertainty to the market, and we all know how much the market loves uncertainty. Then again, it's got to happen sometime for the health of our economy to improve, so…

In any case, though 2013 was ultimately a mildly positive one overall for investors (who hadn't bought Tesla [(TSLA - Analyst Report)] in 2012 and sold in the first week of October), there are plenty of reason to feel 2014 will be even better. A continued strengthening in employment, and therefore the economy, will do a great deal to heighten investors' expectations further.

Mark Vickery
Senior Editor

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