From the way markets have been acting overnight, one would think that the Fed had made a big pronouncement about tapering asap in its decision. In reality, it did nothing of the sort. The central bank essentially said it remains data driven and yesterday’s data suggests that there’s no reason to start cutting back QE. First, inflation in the US and around the world continues to fall. With the balance of risk shifting toward deflation there’s no reason for most central banks to tighten and some may need to ease further in the coming months. Second, US ADP payrolls showed that the employment remains sluggish and has weakened since tapering talk started in May. Even today’s jobless claims, while improved over recent weeks, remains above August and September levels. With no data to support tapering any time soon, no change to the timing of the leadership change at the Fed and no change to the next set of political deadlines, it’s hard to understand how the odds of a December taper could have increased. More likely, the neutral on the surface Fed statement is being used as an excuse for profit taking. There had been big runup in stocks in the days leading up to the decision and USD has been under a lot of pressure lately. Some markets had become overextended and overdue for a retrenchment. It’s possible that this shakeout could continue for a few days but over time the broader trends may reassert themselves. In the wake of the decision, USD is on the rebound retaking 80.00 but remains short of its previous high. NZD has been the top performer on the day after the RBNZ maintained its relatively hawkish stance, indicating it is still considering raising interest rates in 2014. The other resource dollars (AUD and CAD) are also holding their own against the greenback along with GBP. Better than expected Canadian GDP could help to support the loonie after recent declines. Defensives have been getting knocked back, particularly gold, silver and CHF, with EUR and SEK also among the worst relative performers. US crude remains under pressure today following yesterday’s higher than expected inventory build. Today the focus turns to natural gas with storage numbers due later in the morning. Facebook has had a wild night of trading. In my earnings previews and on BNN yesterday I had indicated that the stock could be vulnerable with some traders looking for any flimsy excuse to take money off the table after the shares doubled in the last three months. The shares rallied in initial aftermarket trading after the company beat the street. They then plunged back under $50 after the company indicated that it won’t increase the frequency of ads in its news feed on fear of driving customers away and also noted usage among young teens has dropped a bit. Broker comments this morning appear to have shored up support but the shares may remain volatile today as bulls and bears battle for supremacy. There is still potential for significant action through the rest of the week with Manufacturing PMI data due from around the world. This month, traders may be looking for signs of whether the impact of the US government shutdown and budget crisis was contained to North America or if it had wider ramifications. The first release from Japan suggests the first option as it rose over month, confirming that the positive impact of the Japanese QE program continues to have the biggest effect. Corporate News Facebook $0.25 vs street $0.19 MasterCard $7.27 vs street $6.94 Exxon Mobil $1.79 vs street $1.77 ConocoPhillips $1.47 vs street $1.46 Suncor Energy $1.13 vs year ago $1.01, Suncor, Teck and Total to proceed with development of the $13.5B Fort Hills oil sands project Imperial Oil $0.76 vs street $0.88 Canadian Oil Sands $0.51 vs street $0.41 Barrick Gold $0.58 ex items vs street $0.49, sales $2.99B vs street $2.91B AltaGas $0.21 vs street $0.19 Methanex $1.22 vs street $1.01 Bombardier $0.08 vs street $0.10 TransAlta $0.15 vs street $0.18 Economic News Significant economic announcements released yesterday afternoon and overnight include: Canada GDP 2.0% vs street 1.7% US jobless claims 340K street 338K NZ interest rate decision 2.50% no change as expected, maintained tightening bias Japan interest rate decision no change as expected, raised GDP and inflation estimates slightly Japan manufacturing PMI 54.2 vs previous 52.5 UK nationwide house prices 5.8% vs street 5.1% Germany retail sales 0.2% vs street 1.1% Italy unemployment rate 12.5% vs street 12.3% Eurozone unemployment rate 12.2% street 12.0% Eurozone consumer prices 0.7% vs street 1.1% NZ building permits 1.4% same as previous 1.4% NZ ANZ bus confidence 53.2 vs previous 54.1 NZ ANZ outlook 47.1 vs previous 45.3 Australia building approvals 18.6% vs street 1.2% Singapore unemployment rate 1.8% vs street 2.1% Japan housing starts 19.4% vs street 12.1% Economic reports due later today include: 9:45 am EDT US Chicago PMI street 55.0 10:30 am EDT US natural gas storage street 33 BCF

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