Keystone's Morning Wake-Up 4/5/13; Monthly Jobs Report

The S&P futures are dropping; two hours ago flat, now -10. Japan markets are experiencing volatility, especially the bond market, due to the BOJ intervention. Today is all about the Monthly Jobs Report released at 8:30 AM EST about one hour away.  The Fed has linked the unemployment numbers to deciding if QE4 Infinity and Beyond continues, or not, so the jobs number is the most important economic data point each month. The consensus was over 200K jobs but the weak ADP number this week at 158K lowered the expectations.  The consensus is from 170K to 200K jobs with the unemployment rate remaining unchanged at 7.7%. Last month's job number was a big 236K that knocked everyone's socks off so pay particular attention to the revision of this number. The hours worked and wages are important components as well.  If the hours worked are increasing, then businesses are more open to bringing on new employees to handle the load.  However, a continued flat move in hours worked shows there is no need for new employees.  Companies are squeezing every last drop of blood out of the existing workers; the kid's soccer games be d*mned. Wages are extremely important in reference to the ongoing inflation-deflation arguments. If wages remain stagnant, there is no need to hire new workers. Low wages are deflationary. Inflation cannot exist until wages start rising strongly.

SOX 425 is key today, as highlighted in the previous chart, and Keybot the Quant will likely remain short as long as SOX stays under 425. The market bulls will rule into the weekend if SOX moves above 425 and Keybot will likely flip long.  VIX 14.47 is key as well. The bulls are not particularly worried as long as volatility stays low under 14.47. The game changes if VIX moves above 14.47, as witnessed yesterday. If VIX moves above 14.47, with SOX remaining under 425, the markets will be selling off in force.  For the SPX starting at 1560, the bulls need three points, to touch 1563, and the upside will accelerate with the bulls drinking booze and throwing confetti into the weekend. The bears need to push under 1553 to pull out the party favors and accelerate the downside.  A move through 1554-1562 is sideways action today.

Consumer Credit data is released at 3 PM today which will show the great American consumer using credit cards, the magic plastic, to continue buying. The Monthly Jobs Report will set the tone and dictate market direction today. As shown on the Other Market Signals page, Jobs Friday is important since the way markets move today is typically the way the month moves. Thus, use 200K jobs and a 7.7% rate as the consensus and pay attention to last months revision of the 236K number. The 10-year yield is printing 1.74% as highlighted and targeted in this morning's charts. This 1.74% print serves as a test of the critical moving averages and yield will either bounce, or die today, probably based on the jobs number.

Note Added 8:43 AM:  The jobs number is a paltry 88K hugely disappointing. A huge miss. The clock at the Eccles Building just fell off the wall shattering on the floor. Chairman Bernanke just crawled under his mahogany desk.  All the obscene QE for four years, sending America deeper into debt, results in a sick economy. Absolutely shameful. The unemployment rate is 7.6% a tick better but this was due to people giving up hope of finding a job. The labor participation rate is the lowest since 1979; one-half million folks dropped out of the work force last month. Last month's 236K was revised higher to 268K, which is a bright note, as well as January's numbers increased, but these are subject to future revisions, and the Hurricane Sandy likely had a large effect on hiring, just like Sandy likely boosting auto sales in the same period. Retailers reduce staff since higher taxes are reducing consumer spending. People are eating out less since there is less money for discretionary spending. Higher taxes and sequester cuts are hurting the economy.  Average hours worked and wages are up tiny smidges, call them flat overall. The 10-year yield collapses under 1.70%.  S&P futures drop to -20.  Nasdaq -35. Dow -165. Copper is weak.  Crude oil has a 92 handle.  Euro jumps higher now tagging 1.30 but pulling back.  Banks should get hit this morning. Markets are hit in the head with a 2x4. The German DAX is now under 7700. Gold bounces off the critical 1550-ish support.