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Hope you are all doing well.  With earnings season nearly over, the S&P 500, the NASDAQ, and the Dow rose for the fifth consecutive week, and all three indexes pushed their record levels higher. The NASDAQ added about 3 percent. U.S. large-cap growth stocks outperformed their value counterparts, extending the growth equity style’s run of outperformance to four weeks in a row.  The latest weekly result solidifies growth’s year-to-date performance lead over value.  This week NYC elected a new mayor, so I have broken down this week’s news using quotes from Mayor Shinn of the Music Man.

It's as clear as a buttonhook in the well water.

— Mayor Shinn of the Music Man

It is clear to see that the U.S economy is back.   People are working and corporations are making record profits. U.S. jobs growth in October exceeded most economists’ expectations, and the addition of 531,000 jobs signaled a resurgence in the labor market following recent weakness. In addition, the government adjusted initial jobs growth estimates for August and September upward by a total of 235,000, and the unemployment rate fell to 4.6% from 4.8%. As for corporate profits, earnings season is nearly completed.  The proportion of S&P 500 companies that had beaten analysts’ net income expectations stood at 81% as of Friday. That so-called beat rate ranks above the 76% five-year average.

You watch your phraseology.

— Mayor Shinn of the Music Man

The Federal Reserve continues to be very careful with what they say and do. The Fed is trying to pull back some of their monetary stimulus without upsetting markets. The central bank will soon begin to trim the $120 billion in bond purchases that it’s been making each month to support economic growth. The Fed continued to characterize the recent spike in inflation as “transitory,” but acknowledged that price increases have been faster and more enduring than they had forecast.

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