They say that there is no such thing as a free lunch but the October employment situation report, released last Friday came pretty close for the market, particularly equity bulls.

As we talked about many times, we have been in a strange market where bad news is good and good news is bad as the market pays more attention to how the Federal Reserve will react to fundamental information that the fundamentals themselves. We had hoped that this would be over or perhaps begin to wane with the announcement of a tapering policy in June but market forces (as well as political dysfunction) have stymied the taper and Friday’s market action was a testament to where we are.

Thanks to our dysfunctional politics that threatened a technical default on our debt and Congress’s inability to extend the debt ceiling beyond next February, there is little chance the Federal Reserve will taper until that debt ceiling is extended for a more substantial period. Most analysts don’t expect a repeat of the government shutdown and debt ceiling fight that once again went down to the wire but the assumption regarding the Fed is they dare not do anything until we are past those twin deadlines in January and February.  Why take the chance?

What that meant is that the market was free to rally on the better than expected jobs number without the threat of it bringing on the beginning of tapering. Hence the free lunch. The good news did not—so the market reacted—foretell a change in QE3.

Of course this is just speculation and the Fed could still stay on track of its initial target of beginning tapering before yearend and taper at its December meeting. But that doesn’t seem likely.

One thing is probably certain, which is with Friday’s numbers if there was no shutdown or debt ceiling fight, the Fed would have been hard pressed not to begin the taper.