Keystone's Morning Wake-Up 3/8/13; Monthly Jobs Report

The bank stress tests were in-line as expected with only one of the 18 failing. Ally, the old GM finance division, will likely need to boost capital requirements. GM remains a national embarrassment and a glowing example of how capitalism ended in America. C popped last night on news it may be able to buy-back shares. GS and JPM receive lackluster results.  The Fed prefers the banks to stay well-capitalized to reduce risk. Watch the financials, XLF, today.  The big event is the Monthly Jobs Report.  The consensus is 165K jobs and the 7.9% unemployment rate remaining the same. The estimate was 160K a couple days ago but the ADP Jobs Report at 198K has traders pumped and looking for higher numbers. The consensus is 165K but the street is fully pricing in and expecting to see over 200K jobs, at least 180K and higher. Thus, the 150K to 180K range may be the Goldilocks scenario which would create flat markets with perhaps some continued upward buoyancy. The 200K number that is expected is tricky since it may signal that the Fed will pull back stimulus but it also would reflect a stronger economy. A lower number say under the 150-160K level would likely result in a market sell-off.  The Fed is running forward with QE4 Infinity and Beyond so the money pump is in full force already so a weak number may signal that the economy is far worse than expected and the Fed's actions are not helping.

The 10-year Treasury yield is up over 2% this morning and that verifies that traders are looking for 200K jobs. The risk appears to be to the downside since the whisper numbers and expectations are very high. Watch the hours worked and wages components to see if employers are moving towards hiring future workers. The Productivity data was weak yesterday showing that companies can squeeze more out of the current workers so there is no reason to hire. Copper and commodities continue to verify the bear case for markets while nearly all other major sectors verify the bull case. Volatility is dancing in the middle and is the most influential parameter determining market direction currently. Watch VIX 15.50. Volatilty is down at 13 so the bulls are happy. Bears need a VIX above 15.50 before they can growl strongly. For the SPX starting at 1544, the bulls only need to touch the 1546 handle, two points higher, and the upside will accelerate to 1548 then 1553.  The bears need two points lower, to push under 1542 and the downside will accelerate. The Jobs Report is one-half hour away and will likely decide the winner.

Note Added 3/8/13 at 8:35 AM:  Monthly Jobs Report is a blow-out 236K number, well over the 200K that traders expected. The rate drops two ticks to 7.7%.  Average hours worked and wages bump a smidge higher. This is the best jobs report in a long time and helps to maintain the bull case.  The futures leaped higher. The S&P futures are up about seven or eight, a gain of about three or four points due to the jobs number. The 10-year yield is 2.07% which reinforces the move higher in equities. The euro 1.3022. Gold is down 10 to 1564. Crude oil 91.44.