Is it Groundhog Day in the stock market?

Stocks continue to advance higher, again setting new all-time high records.  It feels like Groundhog Day in the stock market, day after day making the same comments about the irrational exuberance of the stock market and how someday this unprecedented run will come to an end.  However, until stock investors have a VERY compelling reason to pull back, this conversation will continue.  In the meantime, bonds will remain under the pressure of stocks.  As stocks climb higher, it adds upward pressure to interest rates.  This is one of the primary reasons mortgage rates have experienced continued increases over the past month or so.

The ADP Employment Report was released this morning, showing an estimated 135,000 new jobs created in the month of September.  This was very close to initial estimates of 140,000, and is stronger than I would have predicted.  Of course, a deeper look at the report shows the service sector once again led the gains.  However, Friday’s Bureau of Labor Statistics report is the primary measure of job activity.  After factoring in the jobs lost to the flooding, that lowers the expectations on the BLS report down to just 70,000 or so for this report. With potential slowing of seasonal jobs, we could be in for an interesting report.  Stand by.

Bonds are still weak.  There is very little incentive to float.  We will maintain our locking bias.