Market Digest \u2013 Week Ending 6\/7\r\n\r\nFriday\u2019s Labor Department report showed the US added 175,000 jobs in May, exceeding most expectations and signaling the US economic recovery continues to advance, albeit slowly. It also increased expectations the Fed will begin tapering bond purchases sooner than later, creating selling pressure for most interest rate sensitive assets. Bond prices declined. The S&P 500 posted a modest gain for the week as market participants balanced good economic news with potential of reduced stimulus.\r\n\r\nWeekly Returns:\r\n\r\nS&P 500: 1,643 (+0.8%)\r\n\r\nMSCI ACWI ex-US: (+0.2%)\r\n\r\nUS 10 Year Treasury Yield: 2.17% (+0.04%)\r\n\r\nGold: $1,381 (-0.4%)\r\n\r\nUSD\/EUR: $1.322 (+1.8%)\r\n\r\nMajor Events:\r\n\r\n \tMonday - Federal Reserve Bank of Atlanta President Dennis Lockhart said central bank officials are committed to record stimulus measures.\r\n \tTuesday \u2013 IBM bought SoftLayer Technologies in a deal thought to be worth around $2 billion.\r\n \tTuesday \u2013 Salesforce acquired ExactTarget for $2.5 billion.\r\n \tWednesday \u2013The International Monetary Fund admitted missteps in its handling of the bailout of Greece, suggesting austerity measures harmed the economy more than anticipated.\r\n \tFriday \u2013 The Labor Department reported that US payrolls added 175,000 jobs in May, more than expected. The official unemployment rate ticked up from 7.5% to 7.6% as more workers entered the job market.\r\n\r\nOur Take:\u00a0\r\n\r\nBoth in media and anecdotally, we notice a lot of people who envision the following scenario: the economy continues to grow, the Fed reduces stimulus, disaster ensues and the market falls.\r\n\r\nThe Fed has enormous power. We don\u2019t dispute this in any way. But if the economy surprises to the upside, we consider it a good thing. In fact, to the extent the economy can do well and add jobs with less creative forms of credit or liquidity, even better.\r\n\r\nWhen the Fed starts to take away the punch bowl, it may cause a short term correction as people re-evaluate. But if the economy is doing well it means companies should be making a lot of money. In the long term, this makes them more valuable. Keep in mind the Fed isn\u2019t talking about selling a bunch of bonds. They are simply suggesting a reduction in the amount they purchase, or a move back toward normal conditions.\r\n\r\nAs long term investors, we will be perfectly happy to see the economy growing and the Fed reducing its presence regardless of short term market moves. Good CEOs think this way too. That\u2019s why we continue to see M&A deals (two decent sized ones this week) and buybacks like Walmart\u2019s $15 billion announcement this week.