The Long-Term Global Impact of the Gov't Shutdown

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Oct. 21 (Bloomberg) -- Newedge's Robbert van Batenburg and JPMorgan's Anastasia Amoroso preview this week's U.S. payrolls data and the long-term global impact of the U.S. government shutdown. They speak with Pimm Fox on Bloomberg Television's "Taking Stock." (Source: Bloomberg)


The government shutdown is over.

The data will be coming out.

We are waiting for the payroll report tomorrow.

What are you expecting?

I expect a pretty good number.

In july and august, the numbers were artificially suppressed by the furlough of a lot of defense workers as a result of the sequester.

That held the numbers down.

You will not see that in september, the nonfarm payrolls number.

A lot of people are looking at a very robust number.

The government shutdown is not going to affect those data.

The mean estimate is looking at 180,000. there are some crazy estimate of 240,000. the market is looking at her strong set of numbers.

Let's not forget, a lot of retailers have started to higher temporary workers for the fourth quarter, the seasonal boom where a lot of part-time workers are being put on the payroll.

I think that will affect it as well.

Anastasia, do you think we will get a robust jobs report tomorrow?

It is something all investors should be watching.

I think what is going to be really important about the report tomorrow and going forward is to see what it has done to the most recent data.

We know in august report that we got that the pace of improvement has weakened.

We think that is one of the reasons why the fed delayed or prolonged the tapering process.

We will see what the trend is proving.

If the trend does continue, will it be good for the stock market?

Will it indicate the federal reserve will continue its easing monetary policy?

First of all, if you have substantial improvement, relative to what it was when the program started, it has to satisfy consensus expect haitians and set up expectations for ongoing improvement.

The last point is, is it self- sustaining?

Even if we get a strong set of data, it doesn't override the fact that we did have a government shutdown, and we have no way of knowing what sort of expectations to form.

On mortgage applications, it does not convey a story of ongoing improvement.

What does all of that currently convey to you about the valuation of the stock market and bonds?

The stock market is a function of quantitative easing.

As long as the market is comfortable with the current pace of quantitative easing, and as anastasia said, that whole government shutdown has actually prolonged expectations for the fed.

Based on our calculations, every dollar that the fed pumps into the market for quantitative easing adds about five dollars to the stock market.

If you translate that at the current expectations for when the fed phases out its current form of quantitative easing, it could be between 1850 and 2000. i'm not saying it will get there, but for now, the coast is clear.

What about foreign investors in the united states?

That is something we looked into.

The constant and continually recurring government dysfunction -- there are two main buyers of u.s. treasuries abroad, the chinese and japanese.

They buy the treasuries not because they love the united states so much, they have to offset their account checkbooks.

They are not really buying that much treasuries anymore.

The chinese, however, have been concerned about it.

One credit ratings agency in china downgraded us again last week.

They are looking into property, gold, in order to wean itself off the treasury market.

As the global market strategist, what investments would you look at in the united states, if there are any at this time?

Certain fixed instruments such as convertible bonds, if you look overseas you can go to europe.

It seems like investors are returning to the periphery banks.

That is the biggest catch up late.

The european union is in the first innings of the deleveraging process.

That could be a very positive environment for the stock market , if the policies are in the right place.

Also looking to emerging markets, we think there is a window of opportunity from the emerging market perspective.

Perhaps shifting away from washington fears to holiday

This text has been automatically generated. It may not be 100% accurate.


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