August's tepid jobs report presents a benign economic backdrop for stocks and increases the Fed's latitude in the timing and magnitude of any tapering of its balance sheet expansion. Only 169,000 employees were added to payrolls in August, below expectations for 180,000, while the prior two months were revised down by 74,000, bring the three-month average to just 148,000. The unemployment rate's downtick to 7.3% occurred mainly because more people left the labor force - the participation rate fell to 63.2% of the overall US population, its lowest level since 1978. As Fed Chairman Ben Bernanke has stated previously, he thinks the unemployment rate "overstates the health of our labor markets."

David Fuller's view The RiverFront team remain in form.

I agree with Ben Bernanke's statement on unemployment in the last sentence of the paragraph above. This is a long-term problem, as I have often said, because accelerating technological innovation is replacing jobs more quickly than new ones are being created. Inevitably, not everyone agrees as you will see in Eoin's section below.