Keystone's Midday Market Action 7/2/15; Monthly Jobs Report

Taking a break from the ongoing Greece drama, the Monthly Jobs Report is on tap today. Due to the timing of the Independence Day holiday, the Monthly Friday Jobs Report is released on a rare Thursday morning since markets will be closed tomorrow. The consensus is 233K jobs and an unemployment rate one tick lower at 5.4%. Last month was a 280K job gain with a 5.5% unemployment rate. Average Hourly Earnings are expected to increase +0.2%.

This year’s job gains are as follows; January 201K jobs, February 266K jobs, March 85K jobs, April 223K jobs, May 280K jobs, June (today; estimated) 233K jobs. There are two more jobs reports before the September Fed meeting where the first rate hike may be announced.

At 8:28 AM, S&P +3. Dow +28. Nasdaq +9. DAX +0.2%. CAC is flat. FTSE +0.4%. Euro 1.1057. Euro/yen 136.66. Dollar/yen 123.62. Pound 1.5570. WTIC oil 57.00. Brent oil 62.40. Natty gas 2.82. Gold 1158. Silver 15.49. Copper 2.6250.

At 8:30 AM, the Monthly Jobs Report is 223K jobs and a 5.3% unemployment rate. Average Hourly Earnings are dead flat at +0.0% and only a paltry +2.0% annually. The revision to the last two months of reports decrease jobs by 60K. The 223K headline jobs number is a disappointment since many traders and analysts were whispering a 300K expectation. Sadly, the Labor Participation Rate drops -0.3% to 62.6% the lowest since October 1977. Americans cannot find jobs and are simply giving up. The decline in the labor force does not forecast a healthy economy. Average Hourly Workweek is unchanged like the wages. Unemployment Claims are up 10K to 281K.

Stocks pop on the news since the lack of wage inflation means the Federal Reserve will not raise rates anytime soon. The low labor participation rate will also cause angst in the hallway of the Eccles Building. Equities rise because central banker easy money will continue indefinitely  making the rich richer. The whole idea behind the Fed’s obscene six-year Keynesian monetary policy is to raise inflation but if wage inflation does not exist inflation will not exist and the grand experiment will fail.

S&P +5. Dow +43. Nasdaq +13. The 10-year yield is trailing lower from 2.415% down to 2.389%.

At 8:40 AM, S&P +7. Dow +55. Nasdaq +16. DAX +0.1%. CAC -0.1%. FTSE +0.4%. Euro 1.1095. Euro/yen 136.58. Dollar/yen 123.12. Pound 1.5615. WTIC oil 57.19. Brent oil 62.63. Natural gas 2.82. Gold 1162. Silver 15.57. Copper 2.63.

US Treasury yields are; 2-year 0.65%, 5-year 1.66%, 10-year 2.40%, 30-year 3.20%. The 2-10 spread continues expanding slightly to 175 basis points.

Traders and analysts remain bullish across the board since the central bankers keep printing money. Permabull strategist Richard Bernstein proclaims higher stock markets to end the year and two or three more years of upside for stocks. He predicts that in three years everyone will be bullish which will identify the market top.

Stocks tend to trade higher at the start of a new month especially the new quarter and second half of the year as new money is put to work. Stocks are typically buoyant into a holiday weekend. The full moon peaked last evening for this month and stocks are typically bullish moving through the full moon. Seasonality factors are in the bull camp but trading will be impacted by the jobs report and the ongoing Greece drama.

At 9:06 AM, S&P +5. Dow +39. Nasdaq +11. Euro 1.1092. Gold 1165. Silver 15.63. Copper 2.6315. 10-year yield 2.386%. German bund 0.861%. Centene announces plans to buy Health Net for $6.3 billion. HNT +17%. CNC +4%. The healthcare M&A continues. JPM upgrades HealthSouth. TSLA is up +4% on strong sales numbers.

AN reports strong auto sales. GRUB gains +2.5% on a RBC upgrade. BP gushes +4.2% higher after announcing a settlement concerning the 2010 Gulf Oil spill. XOOM zooms +21% higher on news that EBAY’s PayPal is buying the digital money transfer service. BA gains +0.4% after raising prices on its jets. FB gains +0.4% after detailing plans to increase its share of the mobile video market dominated by YouTube.

US futures leak lower into the opening bell. S&P +2. Dow +17. Nasdaq +7.

The session begins with equities marching marginally higher. The S&P 500, Dow Industrials and Nasdaq Composite are positive but the Russell 2000 small caps are negative. VIX 15.91 remaining above the important 200-day MA at 15.39 signaling bearish markets ahead. UTIL is up +1.3% as yields slip lower. Energy stocks lead. XLE +0.7%. Stocks appear headed for a boring sideways pattern with low volume as traders sneak out the back door to begin the barbeque weekend early.

At 10 AM, Factory Orders are down -1% missing the -0.5% expectation. The prior month is revised lower from -0.4% down to -0.7%. Factory Orders are down for the largest month on month drop (-1%) since February. The SPX is down 4 points, the Dow is up 36 points and Nasdaq up one point. The RUT is negative. VIX 15.95. Euro 1.1096. USD 96.06. 10-year yield 2.38%.

(As always, Keystone the Scribe chronicles the daily market action and response to key events.)