By Greg Peel

The Dow lost 32 points or 0.2% while the S&P dropped 0.2% to 1767 and the Nasdaq was flat.

Bridge Street lost its bottle again yesterday for the second session in a row, rising from the open before losing ground into the afternoon. While Monday's session was likely influenced by foreign selling, yesterday's home grown NAB business confidence survey provided cause for pause.

The bottom line is NAB's measure of business confidence shot up after the election win and settled back last month, down from a three-year high plus 12 to a more modest, yet nevertheless "confident", plus 5. Business conditions -- the "now" part -- remained steady at a lacklustre minus 4 but that is of little surprise. Beyond that, the results were a little confusing.

Confidence improved in the manufacturing and retail sectors, indicating the lower Aussie and lower cash rate are having some effect. Yet capacity utilisation fell sharply in manufacturing and retail, as well as mining, which seems at odds, and at odds with last month's manufacturing PMI. Confidence in service sectors fell, which is at odds with last month's PMI, and confidence in finance and property services in particular fell, despite stronger markets and fund flows and a rebounding housing market.

Perhaps best to see what happens next month. One might suggest that issues here and offshore had an impact on October confidence ? the carbon tax repeal bill (and opposition to it) and the US shutdown and taper-talk.

Speaking of taper-talk, the Fedheads were out doing what they do best last night ? confusing the hell out of everyone. In the wake of last week's surprising strong US jobs numbers, Atlanta Fed president and FOMC member, and known dove, Dennis Lockhart said with regard to tapering, "I don't think the circumstances rule out a consideration in December". Non-voting Dallas Fed president Richard Fisher noted, with regard to the Fed, "Our balance sheet has become bloated and at some point we will have to taper back on the pace of purchases, but that doesn't mean we'll stop".

But Minneapolis Fed president Narayana Kocherlakota later suggested markets are puzzled by taper-talk at a time when the US economy does not appear strong enough to sustain it. Kocherlakota will become a voting member next year and is advocating a drop in the rate rise trigger unemployment threshold to 5.5% from 6.5%.

Weighing up the comments, Wall Street pulled away from all-time highs and bungled along in a limbo of uncertainty. The bond market did not post any major reaction, aside from adding a couple more basis points to the ten-year yield to 2.77%, but the big move was already booked after the jobs numbers. Wall Street wobbled, but the VIX was little moved. The suggestion is markets will remain poised ahead of Janet Yellen's Fed chair nomination hearing on Thursday. Yellen will need to testify before the Senate, and what she has to say will likely provide clues on taper-timing.

Precious metal markets nevertheless appear unwilling to hang around and wait to see what happens. Gold fell US$16.50 to US$1267.50/oz last night and silver dropped 3%. The US dollar index rose only slightly to 81.15. Taper-talk nevertheless helped the Aussie down another half a cent to US$0.9301.

The LME remained in its own state of limbo, with all metals down around 0.5% or so. But it was all happening in the oil market.

We still have uncertainty surrounding the Iran-West nuclear talks, which reached no resolution on the weekend but seemed to perhaps suggest one in the near term. Brent crude is more impacted by whether or not Iranian oil is flowing (it isn't at present) and by halted Libyan exports, given North America is moving towards self-sufficiency. Last night the International Energy Agency suggested in a report that the US could become the world's largest oil producer by 2020, surpassing Saudi Arabia.

OPEC is finally waking up and smelling the roses, having to date rather scoffed at US shale. In its own report last night OPEC forecast global oil demand to increase by 34,000bpd in 2014 but non-OPEC supply to increase by 35,000bpd. OPEC suggested demand for its own oil could fall by 300,000bpd next year. The IEA nevertheless dismissed suggestions OPEC supply will no longer be relevant in a world of shale.

The upshot of the above is that Brent crude ticked down US29c to US$106.09/bbl last night but West Texas plunged US$2.15 to US$92.99/bbl, further widening the Brent-WTI spread that analysts expected to tighten this year.

Spot iron ore was again unchanged at US$135.90/t.

The SPI Overnight fell 18 points or 0.3%.

There are quite a few AGMs to be held today amongst larger companies, including Fortescue Metals ((FMG)) and Wesfarmers ((WES)). CSR ((CSR)) will release its interim result while DuluxGroup ((DLX)) and Graincorp ((GNC)) will release full-years. Myer ((MYR)) will report quarterly sales numbers.

Rudi will appear on Sky Business this evening from 5.30-6.00pm and then again (repeat broadcast) between 6.00-6.30pm.

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