Muddy Waters



Last week’s temporary resolution that saw the debt ceiling raised and government employees return to work has not done much to clear up the uncertainty around the economy and the stock market. Many data reports were delayed during the shutdown. Data releases should start trickling out this week, but it will likely take several weeks until the data flow is back to normal.

The Labor Department has released a revised schedule, including new release dates for reports that were supposed to be issued during the shutdown along with the postponement of reports for which data should have been collected while employees were furloughed. While some reports on October’s economic activity will only be held up for a brief period (for example, October’s employment report will now be published on November 8 rather than November 1), there may also be concerns over how comparable the data may be to prior periods given that the survey collection periods were slightly different.

In addition, prior month data is normally revised for the next one to two reports based on improved information. We believe it is possible that there will be more meaningful adjustments than normal until the process is back on track.

The delay in the data and its potential related impact on the quality of the data could also impact the timing of any efforts by the Fed to start tapering the pace of its asset purchases. Similarly, the possibility of another government shutdown early in the New Year could also delay the Fed’s actions.

Against this backdrop, we will continue to look for opportunities to acquire equities with the potential to deliver strong long-term returns at attractive prices.