Morning Market Report

The jobs report is the talk of the morning and it may continue into next week. We were expecting a loss of 130,000 jobs and we got a loss of 11,000 jobs. (remember what I've always said about that consensus prediction) CNBC is calling the report almost "too good to be true".

US employers cut far fewer jobs than expected last month in the best showing for the labor market since the recession began, boosting the U.S. dollar and global stock prices on hopes for a strong economic recovery.

The economy shed only 11,000 jobs in November, well below the 130,000 loss financial markets had braced for, while the unemployment rate unexpectedly dropped to 10 percent from October's 10.2 percent, a government report on Friday showed.

There is near euphoria almost everywhere but in bonds. The most exciting part is that equities are gaining along with the dollar instead of at the expense of it. Right now all three indices are up about 1.5% and climbing. The Dow has been testing and sometimes crossing 10500 for the last twenty minutes. The NASDAQ has crossed 2200 and the S&P is testing 1120.

There's no spinning this number, note to the pessimists. This was a fabulous number. This number may have even more impact politically than economically but that's for another post. The bottom line is that the jobs market is stabilizing. Now, the question is what will the recovery look like.

Keep in mind that about 150,000 people enter the job market every month. As such, that's the real number necessary to really break even. Of course, the economy has shed in the neighborhood of 6 million jobs since the end of 2007. So, we'll need a recovery of 300,000-500,000 consistently for several months before the jobs market is really beginning to recover. Still, it lost north of 700,000 jobs in February and now it's lost on 11,000 jobs and that's a very healthy sign. The unemployment rate actually fell to 10% but that's mostly the manner in which job rates are calculated.

U.S. Treasury bonds, meanwhile, are near full panic mode. The ten year U.S. Treasury is at 3.48. It was just over 3.20% earlier in the week. The three month T bill is at .04%. I don't want to call that solidly above zero but it was at a negative rate just two weeks ago. The yield spread between the two and ten year continues to tighten. It's now at 2.56%. Gold is trading back below 1200 an ounce to $1194. That's still near all time records but it's another one to watch. Oil is up over a dollar a barrel to $77.60.

Markets in Europe are up across the board. The FTSE in London is up .8%, the DAX in Germany is up 1.08%, and the Spanish index is up 1.13%. Markets in the Far East are mixed and some not open. The NIKKEI in Japan was up .45% and the Straits Time Index in Singapore was down .61%. It should be noted that they closed before our own jobs numbers were announced while the Euros are just finishing trading now.

The dollar is generally up though the Euro is showing even more strength. The dollar is weaker against the Euro by .72%, up by 1.55% against the Japanese Yen, and down by .17% against the British Pound. It's up however against other currencies like the Aussie/New Zealand dollar and the Swiss Franc and is generally showing strength.

Today is the first day that the dollar moved in the same direction as equities. I've been talking about a dollar bubble. If this continues to occur I, along with others, will have been wrong. The story of next week may be the direction of the dollar following the employment data.