Keystone's Morning Wake-Up 3/6/15; Monthly Jobs Report

The consensus estimate for the Monthly Jobs Report is 235K jobs with a range of 200K to 252K jobs and the unemployment rate is expected to dip one tick from 5.7% last month to 5.6%. Last month’s job number was a robust 257K jobs. Average hourly earnings (wage data) is equally or more important than the actual headline jobs and rate numbers.

The success or failure of the Fed’s six-year Keynesian stimulus program depends on whether inflation increases and inflation will not move higher unless there is wage growth. Considering the large number of layoffs this year, many employees will not be raising wages for the remaining workers. On the other hand, the wage increases in the retail sector at WMT, TGT, Marshall’s may help to boost the wage numbers. Average hourly earnings are expected to rise +0.2% below last month’s robust blowout +0.5% increase but a +0.2% or higher number will signal that the first Fed rate hike is likely in the June-July timeframe rather than later in the year. The average workweek is expected to remain flat at 34.6 hours. The jobs data may be slightly delayed due to the winter weather. Analysts and traders are anticipating soft jobs numbers due to the severe winter weather in the States.

Shortly before the Monthly Jobs Report, the US futures are S&P +2. Dow +14. Nasdaq +8. Euro 1.0971. Euro/yen 131.56. Dollar/yen 119.92. Pound 1.5190. WTIC oil 50.98. Brent 60.95. Natural gas dips -1% lower to 2.81 (warmer weather is ahead for the States). Gold 1196. Silver 16.05. Copper 2.6435.

Treasury yields are; 2-year 0.63%, 5-year 1.56%, 10-year 2.11%, 30-year 2.72%.

Note Added 9:21 AM: Here are the results of the jobs circus;

At 8:30 AM, the BLS website displays a message, “Temporarily Unavailable.” About 90 seconds later the numbers hit (the robots react at 8:31:01 driving markets lower before retail traders receive the information so the HFT traders once again receive a preferential advantage in the rigged markets). The Monthly Jobs Report is a robust 295K jobs with an unemployment rate of 5.5%. Last month’s 257K jobs are revised 18K lower to 239K. The strong jobs number is surprising considering all the recent layoffs in energy, retail, industrials and financial sectors. Average hourly earnings are up a paltry +0.1% missing the +0.2% estimate and well under last month’s +0.5%. Wages are not moving higher. The Federal Reserve will be disappointed with the lack of wage growth since their grand Keynesian money-printing experiment is not working to increase inflation.

The disconnect between GDP and jobs is astounding. The jobs numbers keep moving higher each month with over 200K jobs per month for several months but GDP is lackluster. It does not make sense that jobs are increasing but GDP is flat and may leak lower. One of them is wrong. Perhaps GDP numbers will be revised higher in the future, or, a dramatic drop off in employment may begin starting next month.

The private sector (government jobs) adds 288K jobs. The labor participation rate is 62.8% maintaining a steady keel at 62.7%-62.9% for several months at multi-decade lows. Millions of Americans remain unemployed and underemployed. Average hours worked are 34.6 hours as expected remaining steady for five consecutive months.

US futures are all over the map, higher then lower then higher then lower. Treasuries are feeling the most impact on the knee-jerk reaction. European stocks on the continent remain higher with the FTSE lower. At 8:35 AM, the 10-year yield spikes to 2.17%. The euro drops under 1.09 to 1.0881. The dollar/yen moves higher to 120.62. Pound 1.5122. S&P +1. Dow +10. Nasdaq +6.

At 8:39 AM, S&P -3. Dow -22. Nasdaq -1. WTIC oil 50.57. Brent 60.89. Natty 2.806. Gold drops to 1185. Silver 15.905. Copper 2.62.

Treasury yields are; 2-year 0.695%, 5-year 1.64%, 10-year 2.168%.

At 8:43 AM, S&P -2. Dow -13. Nasdaq +1. Euro 1.0899. Euro/yen 1311.46. Dollar/yen 120.64. Pound 1.5145 WTIC oil 50.67. Brent oil 60.95. Natty gas 2.81. Gold 1184. Silver 15.87. Copper 2.6285.

Treasuries are selling off in force taking out support levels (lower prices higher yields). The yields are; 2-year 0.69%, 5-year 1.65%, 10-year 2.18%, 30-year 2.77%.

At 9:06 AM, S&P -10. Dow -96. Nasdaq -6. Euro 1.0895. Euro/yen 131.56. Dollar/yen 120.76. Pound 1.5122. WTIC oil 50.13. Brent oil 60.62. Natty 2.80. Gold 1181. Silver 15.85. Copper is down -1.2% to 2.62.

Treasury yields are; 2-year 0.70%, 5-year 1.66%, 10-year 2.19%, 30-year 2.78%. The 10-year yield prints above 2.20%.

In the middle of the jobs circus excitement, the Dow Industrials announces plans to add Apple to the Dow replacing AT&T. AAPL pops +1.4% almost recovering yesterday’s losses but not quite. T drops -1.4%. Comically, the Dow has a perfect record of consistently removing a stock that is about to break out with performance while adding a stock that fizzles. AA was left for dead so the Dow booted it from the index a couple years ago and days afterwards Alcoa launched higher and never looked back. The path for Apple and AT&T ahead will be fun to watch. AAPL conducts a product release for the Apple Watch on Monday.