September bucked its historical trend as the worst performing month of the year.  The market cap weighted index was up over 3.5% for the month, with the equal weighted index being up less than 1%. 

With the Federal Reserve’s focus on employment, all eyes will be on Friday’s job report.  That is, if we have a job’s report on Friday! 

With a looming Government shutdown, and with a data dependent Fed, any interruption to data releases on the economy could make the outlook for Fed action even that much more unpredictable. 

Assuming we get non-farm payroll data (sometime) prior to the next FOMC meeting, scheduled for October 28/29, investors will be focusing on jobs, as will the Fed.  If job growth remains muted, then this will be another data point indicating further rate cuts ahead.  If job growth is strong, then the FOMC will want to further determine which of its mandates is of greater importance - jobs or stable pricing?

The fact that we might not have this data in a timely manner is yet another unknown that seems to be eluding investor concerns as the market marches higher.  At some point, it seems all the uncertainty could tip the scales to greater concern over further upside.  Keep in mind, historically, government shutdowns have not greatly impacted the markets – at least longer term.  Assuming this to be true, again.  However, not only will a shutdown add to greater uncertainty, if data releases cease, or are postponed, how can a data dependent Fed operate without data?

For now, it seems a bit like a FOMO market trade.  If it weren’t for impressive earnings growth, which over time drives the markets, we’d be more concerned.  We remain bullish over earnings, yet bearish over uncertainty.

CPI and PPI scheduled to be released on 10/15 and 10/16 respectively, and per the BLS website, should not be impacted by a government shutdown.  Time will tell.