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Friday, August 4, 2017

Market Alert - Pre-Market

Futures vs FV: SP +5.59; DJ +57.90; NASDAQ +7.20

Futures were on the rise ahead of the jobs report. Post report they are about the same with NASDAQ actually 5 points lower than pre-report levels.

The jobs report was stronger than expected across the board: wages, jobs, participation, revisions. "A little bit of a pickup" says CNBC's Kelly Evans, hating the number. Okay, Zandi says the jobs market is in "high gear." The report blows out anticipated non-farm numbers and CNBC says it is a 'little bit' better. What is it? Decent but likely lagging the economic numbers that are sliding. Without tax reform, healthcare reform, the numbers will regress because the economic increase expectations will temper even more.

Non-Farm: 209K vs 175K exp vs 231K June (from 187K)
195K jobs last 3 months, 184K/month in 2017

Unemployment: 4.3 vs 4.3 vs 4.4

Wages/earnings: 0.3% vs 0.2%. +2.5% year/year

Workweek: 34.5 vs 34.5

U-6 (less than full employed): 8.6% vs 8.6%

Participation: 62.9% vs 62.8%. Workforce +349K, increasing the last 4 months.

Employment +345K. Unemployed +4K

The Mix: There is change occurring, and it is without any tax or healthcare reform. Regulatory reduction is helping. Structural changes, however, remain and are still occurring as retail has to adjust on top of all other areas. Retail continues to show weak growth as retailers shutter stores and try to figure out how to compete with Amazon. Manufacturing shows solid gains. Those latter are high paying jobs. Some improvement, but still the same, serious problems.

Part-time: +349K
Full-time: -54K

Food & Beverage (waiters): +53K

Prof/Business services: +49K

Healthcare: +39K

Manufacturing: +16K

Construction: +6K

Retail: +9K

Greenspan: Bond bubble is about to burst due to 'abnormally low' rates, meaning big gains in interest rates as Fed loses control.

Bonds: 2.267% vs 2.221%. Bonds off after stronger than expected jobs report.

EUR/USD: 1.1829 vs 1.18718. Dollar recovers some lost ground on jobs

USD/JPY: 110.64 vs 109.913. Dollar gains some ground here.

Oil: 49.06, +0.03

Gold: 1268.40, -6.00

Futures are basically where they were before the jobs report, a better than expected report. Dollar reacts, bonds react, stocks 'ho-hum.'

So where were stocks before the report? DJ30 is on a freakish move higher and will put in another high on the open. SP500 is at the upper channel line from 2009, sliding along just below that level.

NASD sitting on the June high support. SP400, RUTX right at the 50 day MA (more or less), where they bounced last time. SOX is at some support as well.

So, the stage is set: will these indices bounce or is the recent lethargy something that continues and starts busting support? Thus far the non-reaction to the jobs report indicates a lack of excitement, but also no breakdown. It is also Friday in the summer so what happens this Friday may stay just with this Friday. Thus, even if the indices hold and perhaps bounce a bit, that does not mean all is clear upside. Same for the downside. I know, that does not give much guidance for the day and we plan on playing rather close to the vest and see how the jobs report is digested and how the market reacts to this support next week.

Jon Johnson, Chief Market Strategist
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