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Always expect the unexpected. Yesterday the dollar tumbled even after FRB Chair Yellen strongly inferred a rate hike is all but assured in 2 weeks. Oil gained ahead of an OPEC meeting where most believe a production cut will not occur. German bond yields rose as ECB action was not as stimulative as anticipated while the US 10-year Treasury note rate had its biggest advance since August. The 30-year Treasury was crushed over 3 ½ points, the biggest rout in almost a year.
Because of the above, the US equities traded significantly lower violating its 200 day moving average line, trading that I believe was greatly influenced by HFT.
At 8:30 the BLS will post November’s employment data. To remind all, September was surprisingly weak, causing all to change their monetary policy timetable. October was surprisingly strong which again caused another revision in monetary policy.
Will November’s data validate October’s strength? Consensus is expecting a 5.0% unemployment rate, a 200k and 190k increase in non-farm and private sector payrolls, respectively, a 0.2% increase in average hourly earnings and a 62.4% labor participation rate.
What are the odds of an upside surprise? What about a downside surprise, an event some are speculating could occur given the lower than expected readings for both the ISM and ISM Non Manufacturing indices? I must note the employment sub index indicated greater strength than expected.
And then there is the OPEC meeting. A production cut is not expected but the strains in OPEC—fiscal, political, and societal—are extremely evident leading into the meeting. Will an unexpected event occur?
The International Energy Agency quantified the impact of falling energy prices has had upon OPEC member countries. The 12 member group 2015 revenue will fall about 45% from its average of the past five years.
Today can potentially be significant.
Last night the foreign markets were down. London was down 0.25%, Paris down 0.68% and Frankfurt down 0.69%. China was down 1.67%, Japan down 2.19% and Hang Sang down 0.81%.
The Dow should open nominally higher but his could change radically given the significance of the 8:30 data. The 10-year is unchanged at a 2.31% yield.

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Ken Engelke

Chief Economic Strategist Managing Director

The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. This material is being provided for informational purposes only. Any information should not be deemed a recommendation to buy, hold or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. This report is not a complete description of the securities, markets, or developments referred to in this material and does not include all available data necessary for making an investment decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. If you would like to unsubscribe from this e-mail distribution, please reply to this e-mail and indicate that you wish to unsubscribe in your response.