“I’m Thankful For Every Minute” -Al Green


Markets Await Debt Ceiling Resolution

The Toronto stock market was little changed Friday following a strong advance the previous session as traders took a wait-and-see attitude on where negotiations go on extending the U.S. debt limit.  The S&P/TSX composite index edged 2 points lower to 12,892, pressured by falling gold stocks as optimism about ending the U.S. government impasse pushed bullion sharply lower.  The Canadian dollar was up 0.39 of a cent to 96.53 cents US as job creation for September narrowly beat modest expectations and the unemployment rate fell to the lowest level since December 2008.  Statistics Canada said job creation came in at 11,900 last month while the jobless rate fell 0.2 of a point to 6.9% as fewer young people looked for work. Economists had been looking for the economy to have created about 10,000 jobs in September after cranking out almost 60,000 in August.

U.S. indexes were slightly higher on top of big gains registered Thursday, with the Dow Jones industrials up 111 points to 15,237, the Nasdaq ahead 31 points to 3,791 and the S&P 500 index up 10 points at 1,703.  North American markets surged after Republican House Speaker John Boehner proposed extending the debt limit through Nov. 22, conditioned on President Barack Obama agreeing to negotiate over spending cuts and the government shutdown. Hopes rose that the U.S. would avoid a possible default after the current borrowing limit expires next Thursday. “The sentiment changed about 180 degrees,” said Bob Gorman, chief portfolio strategist at TD Waterhouse. But he cautioned that it’s far too early to sound the all-clear on the debt ceiling issue. The president conferred with Boehner and other GOP House leaders on Thursday. They reported no agreement but said talks would continue.


New Fed Chief

President Barack Obama has nominated Janet Yellen as the new chairman of the U.S. central bank. Yellen would be the first woman to head a major central bank anywhere in the world. A close ally of the current chairman Ben Bernanke, Yellen has been a key architect of the Fed’s efforts under Bernanke to keep interest rates near record lows to support the economy, and she likely would continue steering Fed policy in the same direction as Bernanke. Democratic Sen. Tim Johnson, who heads the Senate Banking Committee, which must approve Yellen’s nomination, said he would work with the panel’s members to advance her confirmation quickly. “She has a depth of experience that is second to none, and I have no doubt she will be an excellent Federal Reserve chairman,” Johnson said in a statement.

Yellen drew outspoken support from Senate Democrats, a third of whom signed a letter this summer urging Obama to choose her. This month, more than 350 economists signed a letter to Obama urging him to nominate Yellen. At the Fed, Yellen has built a reputation as a dove, which is someone who is typically more concerned about keeping interest rates low to reduce unemployment than about raising them to avert high inflation. Still, Yellen has said that when the economy finally begins growing faster and rates will need to be raised to prevent high inflation, she will move in that direction.


Sources: Bloomberg, advisor.ca, TD, Investment Executive