Keystone's Morning Wake-Up 10/2/15; Monthly Jobs Report

The jobs circus comes to town once each month. Strike up the calliope and cue the dancing dogs. The Monthly Jobs Report is released at 8:30 AM EST about 40 minutes away. US futures and European stocks are in a happy mood ahead of the jobs report. S&P +7. Dow +60. Nasdaq +20. DAX +1.6%. CAC +2%. FTSE +1.6%. MIB +1.6%. IBEX +1.2%. Euro 1.1162. Dollar/yen 120.20. Gold 1106.

US Treasury yields are; 2-year 0.66%, 5-year 1.38%, 10-year 2.05%, 30-year 2.86%. German bund 0.564%.

The consensus is for 203K jobs and an unemployment rate remaining unchanged at 5.1%. Last month’s jobs were a weak 173K so any potential revision is important. The critically important average hourly wages are expected to retreat slightly up +0.2% versus the previous +0.3%. Fed Chair Yellen must see an increase in wages to create confidence in raising rates. The Fed’s 6-1/2 years of obscene Keynesian money-printing is trying to create inflation but instead the US remains mired in disinflation and deflation. Inflation cannot exist without wage inflation so the wage number is arguably more important than the headline jobs number.

Note Added 8:00 AM EST: S&P + 8. Dow +68. Nasdaq +23. DAX +1.5%. CAC +1.8%. FTSE +1.4%. MIB +1.8%. Greece ASE +0.4%. WTIC oil 45.21. Brent oil 47.85. Gold 1106. 10-year yield 2.05%.

Note Added 9:27 AM EST:

At 8:30 AM EST, the Monthly Jobs Report is a huge disappointment. The United States economy is far weaker than anyone realizes. The BLS reports a paltry 142K jobs and the unemployment rate remains steady at 5.1%. Last month’s jobs (August) are revised lower from 173K down to 136K a loss of 37K jobs. July is revised lower from 245K jobs down to 223K a loss of 22K jobs. For the two-month period, the revisions are 59K jobs lower which stuns market participants. Jaws drop on Wall Street.

The average hourly earnings are dead flat actually a tiny hair negative at -0.04%. The weak data hints that the Federal Reserve will be in no hurry to raise rates; many analysts are now saying the Fed will not move until March 2016, however, US stock futures are in collapse. Central banker easy money is no longer of interest to traders as everyone realizes the economy may have deeper problems. With the Fed maintaining ZIRP, Fed Chair Yellen has no ammunition to fight a recession.

Healthcare, professional and business services and retail trade experience job gains but mining, manufacturing and wholesale trade sectors show job losses. Construction jobs are higher. Government jobs are higher which does not instill confidence. The Labor Participation Rate is 62.4% remaining at multi-decade lows below last month’s 62.6%. Jobs are scarce and the middle class and poor have not benefited from the 6-1/2 years of Fed easy money but the upper middle class, wealthy and elite classes have raped the system for huge stock market gains since 2009. Average weekly hours fall 0.1 to 34.5 hours which is concerning since there is a lack of business activity to keep workers busy.

At 8:31 AM EST, S&P -9. Dow -65. Nasdaq -13. An immediate near-20 handle reversal occurs in S&P futures.

At 8:32 AM, S&P -16. Dow -102. Nasdaq -28. Traders and investors are concerned that the US economy is far weaker than analysts proclaim. The 10-year yield collapses to 1.953% a dramatic drop in yield. Bond traders are screaming in the pits to buy bond calls (higher prices lower yields). More traders now believe the Federal Reserve will not hike rates until into 2016.

S&P -16. Dow -130. Nasdaq -35. DAX is flat at +0.1%. CAC +0.4%. FTSE +0.7%. Euro 1.1267. Dollar/yen 119.42. Pound 1.5194. US dollar index 95.57 dropping like a stone since a rate hike is nowhere in sight.

WTIC oil 44.96. Brent oil 47.69. Natural gas 2.426. Gold 1124. Silver 14.87. Copper 2.314.

At 8:37 AM, S&P -14. Dow -124. Nasdaq -34. The S&P futures slip under 1900.

At 8:41 AM, the euro moves above 1.13 to 1.1301 a dramatic move higher from 1.1158 over the last one-half hour. USD 95.32 so US dollar basket is down so euro is up. S&P -21. Dow -165. Nazzy -47. The S&P futures have reversed 30 handles, Dow 236 handles and Nasdaq 70 points in the last one-half hour. WTIC oil 44.99. Brent oil 47.65.

At 9:01 AM, S&P -23. Dow -185. Nasdaq -50. Euro 1.1291. Euro/yen 134.51. Dollar/yen 119.13. Canadian dollar 1.3208. Russian ruble 66.6391. Mexican peso 16.9574. Dollar/yuan 6.3571. Gold is up 21 bucks to 1134.

US Treasury yields are; 2-year 0.56%, 5-year 1.25%, 10-year 1.94%, 30-year 2.787%. The 2-10 spread is 138 bips. German bund 0.515%.

At 9:07 AM, S&P -24. Dow -195. Nasdaq -53.

At 9:15 AM, S&P -30. Dow -240. Nasdaq -66. Euro 1.1301. Mexican peso 17.0123. WTIC oil 44.73. Brent 47.46. Gold 1134. Silver 14.94. Copper is down -0.4% to 2.296 giving up gains before the jobs data.

At 9:24 AM, S&P -30. Dow -237. Nasdaq -65. The DAX and CAC are negative and FTSE flat. Euro 1.1298. Dollar/yen 119.08. US 10-year yield 1.9317%. German bund 0.51%. The German 10-year yield was above 0.80% only a few days ago now 30 basis points lower.

(As always, the daily market price action, economic data and events are explained at Keystone the Scribe's site.)