Morning Market Report

The jobs number came out about an hour and a half ago and it disappointed.

U.S. employers unexpectedly cut 85,000 jobs in December, government data showed on Friday, cooling optimism on the labor market's recovery and keeping pressure
on President Barack Obama.

The Labor Department said November payrolls were revised to show the economy actually added 4,000 jobs rather than losing 11,000 as initially reported. With revisions to October, however, the economy lost 1,000 more jobs than previously estimated over the two months.

Now, we can take solace in the fact that after revisions the November number was positive. This step back shows just how difficult a slog the recovery will be. The economy is in a critical stage of the recovery and there must be some exponentially measurable improvement soon. If not, we'll be stuck at near double digits for quite a while.

The markets aren't reacting too terribly. The Dow is down 30 points. It's currently trading at 10575 after crossing over 10600 at the close yesterday. Bonds have also shrugged off the news. The ten year is holding steady at 3.83%. The two and five year are better. As such, the yield spread between the two and ten year has extended to 2.86% and is now pushing all time highs again. The three month t bill is also holding steady at .041%.

Both crude oil and gold are down slightly. Crude oil is at $82.15 a barrel while gold is at $1123 an ounce. Oil is down about 50 cents a barrel while gold is down $6 an ounce.

So, everything is generally moving in the direction one would expect but not nearly with the force. It was a very cold December and some analysts are blaming the cold on at least 25,000 jobs. That's fine, but that would still mean that our recovery is taking a step back. The job market has to really gain 150,000 new jobs just to stay up with the new entrants every month. So, we're still about 200,000 jobs short. We're now 24 months into this bad jobs cycle and we're still in a position to take two steps forward and one step back. Yet, so far at least, the markets have largely shrugged it off.

Markets in both the Far East and in Europe were much improved this morning though they all closed prior to the jobs number in the Far East. The Hang Seng in China was up .17%, the NIKKEI in Japan was up 1.09% and the Straits Time Index in Singapore was up .33%. In Europe, the FTSE is just barely down .01%, the DAX in Germany is up .3% and the Spanish Index is down .09%.

The dollar is showing slight weakness. It's down .03% against the Euro, it's down .38% against the British Pound and .39% against the Japanese Yen.

Finally, here's an interesting story from China.

China approved stock index futures, giving investors a tool to protect against losses and profit from any declines in a market that rose 80 percent last year.

The government also approved margin trading and short selling, the China Securities Regulatory Commission said in a statement on its Web site today. It may take three months to complete preparations for index futures, the regulator said.

Some followers of China say that the economy is creating a bubble. That comes when you consistently have near 10% growth. Of course, nothing perpetuates bubbles more than high risk trading. Obscene margins lead directly to the crash of 1929. This is a story that will be interesting in a year or two when investors are given a chance to use these new tools.