Markets Focus on Employment

[Excerpted from Bill Cara's Daily Report]

Wednesday was another day like Monday where the Bulls got off to a quick start and then tired during the run, but still managed to close ahead. Thursday, the final one in the US market, ahead of Independence Day, is going to be focused on the earlier reported National Employment Report.

At the close of Wednesday’s session, the S&P 500 (923.33 +4.01 +0.44%), the DJIA (8,504.06 +57.06 +0.68%), and the NASDAQ (1,845.72 +10.68 +0.58%) were stronger, but with Biotechs and Banks both down ($BTK -1.4% $BKX -0.7%) and Goldminers and Hospitals leading the way up ($XAU +3.8% $RXH +2.8%), it was clear there was no rally underway.

The leading sectors were in fact Consumer Staples and Utilities (XLP +1.7% XLU +1.3%), and the loser was Financial (XLF -0.6%).

The Toronto markets were closed for Canada Day.

Earlier Thursday, Austral-Asian markets were mixed and patiently waiting for the US employment report. China (3,060.3 +1.73%) was stronger, while Aussie All Ordinaries (3,875.2 +0.07%) and India (14,658.5 +0.09%) were flat. Japan’s Nikkei 225 (9,876.2 -0.64%), and the Hong Kong market (18,178.1 -1.09%) lost ground.

As for the European equity bourses, prices were quite negative following the release of the dour employment data in the US. The French CAC (3,145.3 9:07AM ET -2.23%), German DAX (4,781.1 8:52AM ET -2.54%) and UK FTSE 100 (4,264.6 8:52AM ET -1.75%) were all down about -2%.

In US trading on the Wednesday, the winners among Cara 100s were Kookmin Bank, Kinross Gold, Buenaventura Gold, Teck Corp and Goldcorp (KB +10.3% KGC +6.8% BVN +5.7%).

A massive loser appeared to be Myriad Genetics (MYGN -27.0% on +416% average daily selling volume). However Myriad is a terrific company that simply did a tax-related subsidiary spin-off.

The trade-weighted $USD index gained while the Euro (140.55 -0.93 -0.66%), Pound (163.90 -0.90 -0.55%), Yen (103.33 -0.17 -0.16%) and Cdn Loonie (86.70 -0.30 -0.34%) were all soft against the US Dollar.

In quiet bond market trading, the US long Bond was a bit soft ($USB 118.23 -0.12 -0.11%). The yields for 30-year (4.347 +0.36 +0.84%), 10-year (3.544 +0.21 +0.60%), and 5-year (2.518 -0.40 -1.56%) indicated that the 5-year notes were being heavily bought and the longer term maturities were being sold. This may have been a pre-employment data report tactic, expecting the bad numbers that did come in. Treasury bill yields dropped (0.165 -0.15 -8.33%), which was an extension of the move into shorter-term paper as the economic data weakened.

After $GOLD pulled back sharply (926.60 -11.20 -1.19%) on Tuesday, it reversed course Wednesday (940.80 +14.20 +1.53%). Trading is very volatile in the precious metals and that has continued this morning.

Crude Oil however remained weaker (69.31 -0.58 -0.83%), which did boost the airline group.

Spot gold, palladium, platinum and silver are experiencing weakness this morning: (930.32 -7.98 -0.85% 09:12am ET); (247.5 -2.5 -1.00% 09:12am ET); (1181.5 -6.5 -0.55% 09:12am ET); and (13.3725 -0.3275 -2.39% 09:12am ET), respectively.

That was a surprise as the Euro was stronger (80.400 +0.525 +0.66% 08:55).

Crude oil was also getting hit (67.83 -1.48 -2.14% 08:55).

Comments

[Mad Hedge F...:]

Mayday, Mayday. Ouch! The non-farm payroll came in at minus 467,000. What a spanking! The monthly figure is 100,000 worse than the expectations of most economists, and took the unemployment rate up to 9.5%. There are now 14.5 million unemployed, an all time high, 20 million underemployed, and who knows how many more who have taken pay cuts, unpaid vacations, and furloughs. Commodities got slammed across the board, stocks got trashed, and for a minute I thought they were going to run out of red arrows. Traders shorting the long bond got stopped out of their positions yet again. Looking at the data, it is clear that this is the worst case scenario. Even construction and government jobs, the beneficiaries of so much Federal largess, are still falling. Only employment in education and health care is still rising. This comes on top of yesterday’s disastrous figures showing sales at Chrysler fell 42%, Toyota (TM) 34.6%, General Motors (GMGMQ) 33.6%, and Honda (HMC) 29.5%. At least this will put that annoying “green shoots” crowd out to pasture. The Obama crowd has to be sweating bullets now, having fired their best shot at the enemy, with no apparent impact. Here comes the “L”. Please see my “Sell in May and Go Away” report at Ouch! The non-farm payroll came in at minus 467,000. What a spanking! The monthly figure is 100,000 worse than the expectations of most economists, and took the unemployment rate up to 9.5%. There are now 14.5 million unemployed, an all time high, 20 million underemployed, and who knows how many more who have taken pay cuts, unpaid vacations, and furloughs. Commodities got slammed across the board, stocks got trashed, and for a minute I thought they were going to run out of red arrows. Traders shorting the long bond got stopped out of their positions yet again. Looking at the data, it is clear that this is the worst case scenario. Even construction and government jobs, the beneficiaries of so much Federal largess, are still falling. Only employment in education and health care is still rising. This comes on top of yesterday’s disastrous figures showing sales at Chrysler fell 42%, Toyota (TM) 34.6%, General Motors (GMGMQ) 33.6%, and Honda (HMC) 29.5%. At least this will put that annoying “green shoots” crowd out to pasture. The Obama crowd has to be sweating bullets now, having fired their best shot at the enemy, with no apparent impact. Here comes the “L”. Please see my “Sell in May and Go Away” report at www.madhedgefundtrader.... .

Jul 02 11:05 AM