Market Alert - Pre-Market

Futures vs FV: SP +9.39; DJ +81.9; NASDAQ +21.66

Jobs missed but the headline is not the story. After all, at 150K that is still well above the 100K the Fed says is needed to keep the unemployment rate flat in this pathetic shadow of what used to be the US economy. The numbers under the headlines are more important and as usual not very encouraging.

Nonfarm: 151K vs 180k exp vs 275K July (from 255K); June 271K vs 292K orig)

Hourly wages: 0.1% vs 0.2% exp vs 0.3% July

Workweek: 34.3 vs 34.5 exp vs 34.4 prior (from 34.5). This is BIG. July revised lower, August a miss. Part of the problem: minimum wage hikes and the resultant reduction in hours worked. It was first reported as SBUX but it is a common reaction to an artificial rise in wages such as minimum wage increases.


Participation Rate: 62.8% versus 62.8%

Household numbers: jobs added 97K. Not in workforce +58K

Jobs:
Food and Beverage: +34K
Professional/Business services: +20K
Retail +15K
Govt: +25K
Mining -4K
Manufacturing -14K
Construction -6K
Temp -3K


This is on the heels of a string of disappointments this week: Chicago PMI, ISM flipping to contraction, pending home sales, existing home sales before that. Yet, Dianne Swonk was being quite rude on CNBC, talking about how the 'wait until next year' Q3 was already stronger and things were going to be better this year. I cannot stand it when the self-righteous people invited to speak on these shows interrupt. If your argument is valid it can wait a few seconds. Indeed, it is more powerful when you respond with raw facts that defeat the counter argument. Okay, the old lawyer coming out in me. As usual, I digress.

Things are so solid the Fed Funds Futures contract downgraded rate hike odds.
Sept: 22% vs 36% prior to the report
December: 55.4% versus 59.0 prior


OTHER MARKETS
Bonds: 1.592% vs 1.57%. Interestingly, bonds are selling even though FFFutures contract puts less chance of a hike in 2016.

EUR/USD: 1.1196 VS 1.1198. Dollar sold first but has recovered

USD/JPY: 103.695 vs 103.23

Oil: 43.07, +0.71

Gold: 1327.40, +10.3


Futures are up and after a pause immediately after the initial jump, they are on their way higher. It would appear that at the open the pullback ahead of the report once again will yield some upside.

That is great but it is Friday and this market has an MO of posting a nice session then getting sold back the following session. That means a long weekend (Labor Day Monday) for things to change. Not saying they will; this market has weathered all kinds of issues. But, this market tends to give up big gains but not all of them over the following few sessions. That is how it is still trending higher, even if slowly.

We would like the chance to bank some more gain on moves higher. Will see what plays can give us that opportunity. Won't rule out more upside positions as we have several good positions ready to go if they can show the moves.


Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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